MACPAC Makes DSH, UPL Recommendations

Changes could come in Medicaid DSH and UPL payments if new MACPAC recommendations are adopted.

Last week the Medicaid and CHIP Payment and Access Commission released its annual report to Congress, with most of the report focusing on its analysis and recommendations for policy updates involving Medicaid disproportionate share hospital payments (Medicaid DSH) and Medicaid upper payment limit payments (UPL payments).

With Affordable Care Act-mandated cuts in Medicaid DSH payments scheduled to start in FY 2020 – this coming October – MACPAC recommended that these cuts be reduced and phased in over a longer period of time “…to give states and hospitals more time to respond to the cuts…”

MACPAC also recommended that Congress and the administration revise the current methodology for distributing Medicaid DSH money to the states to “…provide a stronger link between the distribution of those allotments and measures of hospital uncompensated care…”

The commission also addressed UPL payments, expressing concern about “…the discrepancy between reporting by states to show that they are complying with the UPL and the spending data they report to claim federal matching funds” and recommending “…instituting better data and process controls to ensure that state reporting on compliance with UPL lines up with those amounts they are claiming, and existing limits are enforced.

Medicaid DSH and UPL payments are especially important to NASH and private safety-net hospitals because of the significant number of low-income, Medicaid-covered, and uninsured patients they serve.

Learn more from MACPAC’s news release summarizing its recommendations and the entire MACPAC annual report.

More Potential Budget Obstacles for Private Safety-Net Hospitals

Part two of the Trump administration’s proposed FY 2020 budget brought more potential bad news for private safety-net hospitals.

 

Last week’s “lean budget” released by the White House included a number of challenges for private safety-net hospitals and this week’s release, intended to fill in some of the blanks that last week’s document left, brought more of the same.

Proposed Medicare challenges include:

  • a call for establishing a new process for calculating Medicare disproportionate share (Medicare DSH) uncompensated care payments
  • slashing Medicare bad debt reimbursement from 65 percent to 25 percent
  • continued movement toward site-neutral payments for outpatient services provided at hospital outpatient facilities

Newly proposed Medicaid challenges include:

  • extending Medicaid disproportionate share (Medicaid DSH) cuts beyond the currently planned six years
  • redesigning the formula for allocating Medicaid DSH funds to the states
  • authorizing states to verify beneficiaries’ Medicaid eligibility more than once a year
  • permitting states to apply means tests to Medicaid eligibility

The latest FY 2020 budget proposal also calls for:

  • consolidating Medicare, Medicaid, and children’s hospital medical education payments into single new capped medical education grant program
  • reduced 340B prescription drug discount program payments for some hospitals
  • reducing the grace period for payment of premiums for health insurance purchased on an insurance exchange
  • income-based increases in premiums for low-cost insurance purchased on those exchanges

All of these changes, if implemented, would pose problems for NASH members and most private safety-net hospitals.

Learn more from this week’s White House budget document.

“Medicaid Shortfall” Definition Changing?

The Medicaid and CHIP Payment and Access Commission last week discussed possible changes in how “Medicaid shortfall” is defined for the purpose of determining how much Medicaid disproportionate share money (Medicaid DSH) safety-net hospitals should receive.

The discussion came in the wake of a court decision last year that ruled that third-party payments toward Medicaid-covered services could not be included in hospitals’ Medicaid shortfall calculations.

MACPAC commissioners discussed several statutory changes that would seek to minimize the impact of the court ruling:

  • Include third-party payments in the definition of Medicaid shortfall.
  • Exclude from the Medicaid DSH definition of Medicaid shortfall all payments and costs for patients who have third-party coverage.
  • Explore new rules that address different types of third-party coverage.

MACPAC is an advisory body whose recommendations to Congress are not binding but its views are respected and often find their way into future public policy.

This subject is important to private safety-net hospitals because the vast majority of those hospitals receive Medicaid DSH payments.

Learn more about MACPAC’s deliberations on Medicaid shortfalls and Medicaid DSH from the Fierce Healthcare article “MACPAC considers recommending change to definition of ‘Medicaid shortfall’ at safety net hospitals.”

 

Trump Budget Brings Bad News for Private Safety-Net Hospitals

The FY 2020 federal budget proposed by the Trump administration this week would bring pain for private safety-net hospitals if adopted.

Highlights of the proposed spending plan include:

  • More than $135 billion in cuts in Medicare uncompensated care payments (Medicare DSH) and Medicare bad debt reimbursement over the next 10 years.
  • Continued extension of Medicare site-neutral payment outpatient policies.
  • $48 billion in cuts in graduate medical education spending over the next 10 years.
  • $26 billion in new Medicaid disproportionate share (Medicaid DSH) cuts.
  • Repeal of the Affordable Care Act’s Medicaid expansion and all funding to pay for that expansion.
  • Support for legislation to introduce Medicaid block grants and limits on spending per recipient.
  • New restrictions on the 340B program.

Responsibility for adopting a budget rests with Congress, not the president, and this proposed budget is considered unlikely to gain much support in Congress.

As appropriate, NASH will engage in advocacy in support of the needs of the nation’s private safety-net hospitals.

Learn more about the administration’s proposed budget from numerous media reports or by going directly to the source:  fact sheets the White House has prepared offering budget highlights and the budget document itself.

 

Hospital Groups Join NASH in Calling for Delay of Medicaid DSH Cuts

Seven hospital trade groups have written to congressional leaders asking them to delay Affordable Care Act-mandated cuts in Medicaid disproportionate share hospital payments (Medicaid DSH) that are scheduled to take effect in October of this year.

Their letter echoes a long-time advocacy priority of the National Alliance of Safety-Net Hospitals.

In their letter the groups, led by the American Hospital Association and the Association of American Medical Colleges, write of the underlying rationale for the Affordable Care Act mandate for Medicaid DSH cuts that

…the coverage rates envisioned under the ACA have not been fully realized, and tens of millions of Americans remain uninsured. In addition, Medicaid underpayment continues to pose ongoing financial challenges for hospitals treating our nation’s most vulnerable citizens.

NASH has long advocated such delaying Medicaid DSH cuts, most recently in comments to Congress in response to the proposed State Accountability, Flexibility, and Equity for Hospitals Act.

Delaying Medicaid DSH cuts also is identified as an advocacy priority of private safety-net hospitals in NASH’s 2019 policy and advocacy agenda.

MACPAC: Slow Medicaid DSH Cuts

Slow the pace of scheduled cuts in Medicaid disproportionate share hospital payments (Medicaid DSH), the non-partisan agency that advises Congress and the administration will tell Congress in its next report of policy recommendations.

The Medicaid and CHIP Payment and Access Commission voted 16-1 recently to recommend to Congress that Medicaid DSH cuts, mandated by the Affordable Care Act but delayed three times by Congress, be reduced in size and spread out over a longer period of time.

Currently, Medicaid DSH allotments to the states are scheduled to be reduced $4 billion in FY 2020 and then $8 billion a year in FY 2021 through FY 2025.  MACPAC recommends that the cuts be reduced to $2 billion in FY 2020, $4 billion in FY 2021, $6 billion in FY 2022, and $8 billion a year from FY 2023 through FY 2029.

MACPAC commissioners also voted to urge Congress to restructure the manner in which Medicaid DSH allotments to the states are calculated based on the number of low-income individuals who reside in the states.

Most private safety-net hospitals receive Medicaid DSH payments and consider them a vital resource in helping to underwrite the uncompensated care they provide to uninsured patients.  NASH supports delaying the implementation of Medicaid DSH cuts and reducing the size of the cuts once implementation begins, doing so most recently in a letter to Senator Marco Rubio in response to Mr. Rubio’s introduction of Medicaid DSH legislation.

MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the State Children’s Health Insurance Program.

Learn more about MACPAC’s actions on Medicaid DSH in the Fierce Healthcare article “MACPAC calls for Congress to delay cuts to safety-net hospitals.”

NASH Comments on Proposed Medicaid DSH Revamp

In mid-December, Senator Marco Rubio (R-FL) introduced the State Accountability, Flexibility, and Equity (SAFE) for Hospitals Act, which seeks to restructure the federal Medicaid disproportionate share hospital payment program (Medicaid DSH).  Hospitals that care for especially large numbers of Medicaid, low-income, and uninsured patients often receive supplemental payments, called Medicaid DSH payments, from their state government to help underwrite costs associated with such patients for which they are not reimbursed.  Medicaid DSH payments are funded in part by the federal government and in part by the individual states.

As part of his introduction of his bill, Senator Rubio contacted many stakeholder groups and invited them to review and comment upon his proposal.

Among the groups contacted was the National Alliance of Safety-Net Hospitals, and last week, NASH wrote to Senator Rubio to convey its views.

Instead of addressing specific aspects of the proposal, NASH offered three principles it believes should guide any effort to modify the Medicaid DSH program.  Those principles are:

  • Delay the scheduled Medicaid DSH cuts. (Significant reductions of Medicaid DSH allotments to states, mandated by the Affordable Care Act but delayed three times by Congress, are scheduled to take effect in FY 2020.)
  • Any changes in Medicaid DSH must reflect the role Medicaid DSH plays in state Medicaid programs.
  • Any changes in Medicaid DSH must preserve states’ flexibility to use Medicaid DSH resources in the manner they believe best serves their individual Medicaid programs.

Learn more about the SAFE Hospitals Act from Senator Rubio’s news release outlining the proposal and learn about NASH’s response to his request for stakeholder input from the letter NASH sent to Senator Rubio last week.

 

Bill Would Overhaul Medicaid DSH

A new Senate proposal would change how the federal government allocates Medicaid disproportionate share money (Medicaid DSH) to the states.

The State Accountability, Flexibility, and Equity (SAFE) for Hospitals Act, introduced by Senator Marco Rubio (R-FL), seeks to

…create equity for all states by updating a metric used to determine how much each state is allotted, which has not been reformed since the early 1990s.

A news release issued by Senator Rubio explains that the bill

  • Gradually changes the DSH allocation formula so states’ allocations are based on the number of low-income earners living in the state, as a percentage, of the total U.S. population earning less than 100% of the Federal Poverty Level (FPL).
  • Prioritizes DSH funding to hospitals providing the most care to vulnerable patients, while providing states with the necessary flexibility to address the unique needs of hospitals in each state.
  • Expands the definition of uncompensated care to include costs incurred by hospitals to provide certain outpatient physician and clinical services, which is a change recommended by MACPAC.
  • Allows states to reserve some of their DSH funding allocations to be used in future years in order to give hospitals more certainty or consistency in the amount of DSH funding they can expect when planning for the future.

The news release also explains that one of the purposes of the bill is to benefit Florida.

NAUH will monitor the bill’s progress closely, evaluate its potential impact on private safety-net hospitals, and respond appropriately, if needed.

Learn more about the new Medicaid DSH bill by reading the news release and this one-page summary of the bill.

MACPAC Looks at Medicaid DSH

Last week the Medicaid and CHIP Payment and Access Commission met in Washington, D.C. and one of the subjects on its agenda was Medicaid DSH.

The Affordable Care Act mandated major reductions of Medicaid disproportionate share (Medicaid DSH) allotments to states and those reductions have been delayed by Congress several times but are now scheduled to begin in FY 2020.

At the MACPAC meeting the commission’s staff presented three proposed recommendations that address Medicaid DSH allotments; these recommendations were based on a consensus reached by MACPAC commissioners at their October meeting.  Those recommendations are:

  1. Phase in Medicaid DSH reductions more gradually over a longer period of time.
  2. Apply reductions to unspent DSH funds first.
  3. Distribute reductions in a way that gradually improves the relationship between DSH allotments and the number of non-elderly, low-income individuals in a state.

Current regulations call for Medicaid DSH cuts to begin in FY 2020 and for DSH payments to decrease $4 billion a year in FY 2020, rising to $8 billion the following year.  It appears MACPAC may suggest slowing the pace of these cuts by starting with $2 billion in cuts in FY 2020 and then raising that amount $2 billion a year through 2023, when they would reach $8 billion a year.  MACPAC does not appear to prepared to suggest another delay in beginning the Medicaid DSH cuts.

As the third recommendation suggests, MACPAC is considering recommending a change in how DSH cuts are calculated on a state-by-state basis.  In particular, MACPAC appears to be focusing on how better to target cuts so that Medicaid DSH money continues to reach the hospitals that most need this money.  As a Medicaid expansion state, PEACH needs to pay particular attention to any such change in the methodology for determining how DSH cuts are allocated among the states.

MACPAC is expected to vote on these recommendations during its January 24-25 meetings.

All private safety-net hospitals participate in the Medicaid DSH program and rely heavily on these funds to serve the low-income communities in which they are located.  NAUH will monitor MACPAC’s upcoming deliberations, evaluate the potential impact of any MACPAC recommendations on NAUH members, and develop and implement an appropriate legislative strategy based on that analysis, if needed.

For a closer look at the draft MACPAC recommendations and the rationale underlying each, go here to see the presentations that guided last week’s MACPAC discussion about Medicaid DSH.

MACPAC Meets

The Medicaid and CHIP Payment and Access Commission met for two days last week in Washington, D.C.

The following is MACPAC’s own summary of the sessions.

The October 2018 MACPAC meeting covered a range of front-line issues in Medicaid, leading off with an analysis of disproportionate share hospital (DSH) allotments on Thursday morning. Following the analysis, the Commission discussed options for March recommendations on how to structure DSH allotment reductions that are scheduled to begin in fiscal year 2020. The Commission later resumed the discussion it began in September on work and community engagement requirements, presenting new data from Arkansas on compliance and disenrollments, as well as information gathered since that meeting about Arkansas’s approach to implementation.

On Thursday afternoon, the Commission looked at the Department of Homeland Security’s proposed public charge regulations and their implications for Medicaid and the State Children’s Health Insurance Program (CHIP). A session responding to a congressional request to look at issues facing the Medicaid program in Puerto Rico was next on the agenda. A presentation from an ongoing project on how Medicaid drug coverage compares with Medicare Part D and commercial plans closed out the day.

On Friday, the Commission heard from Tom Betlach, director of the Arizona Health Care Cost Containment System, and Karen Kimsey, chief deputy at the Virginia Department of Medical Assistance Services, on their experiences integrating care for dually eligible beneficiaries.* At the final October session, the Commission reviewed the findings from a study of how six states carried out simplified Medicaid eligibility and enrollment established by the Patient Protection and Affordable Care Act (P.L. 111-148, as amended).

Supporting the discussion were the following presentations:

Because NAUH members serve so many Medicaid patients, MACPAC’s deliberations are especially relevant to them because its recommendations often find their way into future Medicaid and CHIP policies.

MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the State Children’s Health Insurance Program.  Find its web site here.