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.

“Rejected” Medicaid Reforms May Resurface

Partial Medicaid expansion, desired by some Republican governors but rejected by the Trump administration last year, may not be so rejected after all.

At least not according to Seema Verma, administrator of the Centers for Medicare & Medicaid Services, which oversees the federal Medicaid program.

In a recent interview, Verma said the administration is reconsidering its rejection of partial Medicaid expansion, an idea she supports and that

What I have said to states and to governors [is] “Tell me what you want to do, and it’s my job to help you get to where you want to go.”

To emphasize this point, Verma also said that

We are changing the partnership between the federal and state government.  We are trying to empower states.

The National Alliance of Safety-Net Hospitals supports Medicaid expansion everywhere.

Learn more about Verma’s recent remarks about Medicaid expansion in the Politico article “Seema Verma:  Medicaid reform rejected by Trump is ‘under review.’”

 

HHS Talking to States About Medicaid Block Grants

In the absence of legislation to turn Medicaid into a block grant program, the U.S. Department of Health and Human Services is talking to some states about granting waivers that permit them – voluntarily – to turn their individual Medicaid programs into block grants.

HHS Secretary Alex Azar acknowledged this last week during a hearing of the Senate Finance Committee.  He did not disclose which states, or how many, with which HHS has had such discussions and he also noted that his staff is talking to state officials about waivers to permit them to adopt Medicaid per capita spending limits.

NASH has long been concerned about any effort to impose artificial limits on state Medicaid spending; such limits could be especially harmful to private safety-net hospitals because they care for so many Medicaid patients.  NASH’s most recent expression of this concern can be found in its 2019 advocacy agenda.

Learn more from the article “Trump health chief reveals talks with states on Medicaid block grants,” which can be found in the online publication The Hill.

Sneak Preview of Medicaid Spending Limits?

The imposition of spending limits for individual Medicaid recipients has been discussed in Washington policy circles for years and was offered in the White House’s recent FY 2020 budget proposal.  While deliberations on such a proposal have never advanced in a meaningful way, the state of Utah is doing more than talking about such an approach:  it has petitioned the Centers for Medicare & Medicaid Services for a Medicaid waiver that would enable it to introduce such a system in its state Medicaid program.

Under the state’s proposed Medicaid waiver, Utah asks the federal government to limit its own Medicaid contributions to a fix amount for each Medicaid enrollee – a per capita limit, as this approach has often been called.  Utah has joined this request with a proposal to expand its Medicaid program, as permitted under the Affordable Care Act – but to do so only for individuals earning up to 100 percent of the federal poverty level and not the 138 percent level authorized by the 2010 health care reform law.

While the request is still under consideration in Washington, state officials are reportedly optimistic:  they expect to begin enrolling new recipients on April 1.

NASH has long been concerned about any effort to impose artificial limits on state Medicaid spending; such limits could be especially harmful to private safety-net hospitals because they care for so many Medicaid patients.  NASH’s most recent expression of this concern can be found in its 2019 advocacy agenda.

Learn more about Utah’s effort to implement a policy that some in Washington have sought for years but that has failed to gain wide support in the Washington Post article “Utah is testing the Trump administration’s dream of limiting Medicaid spending.”

“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.

 

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.

MACPAC looked ahead to its June 2019 report to Congress on the initial day of the March 2019 Commission meeting. In the morning, sessions focused on potential recommendations to create a grace period for states to determine coverage policies for outpatient prescription drugs and removing or raising the rebate cap; a uniform definition of therapeutic foster care; and treatment of third-party payment when determining hospitals’ Medicaid shortfall for disproportionate share hospital payments.

In the afternoon, the Commission turned its attention to Puerto Rico’s Medicaid program, with a new analysis on Puerto Rico’s Medicaid enrollment, spending, available financing, and implications for the future. The Commission also considered potential June recommendations focusing on improving performance and return on investment for state program integrity activities.

Several other important topics were also on the March agenda, including a session on Medicaid coverage of recovery support services for beneficiaries with substance use disorders (SUDs) in the afternoon. On the meeting’s second day, the Commission reviewed a draft letter to the Secretary of the U.S. Department of Health and Human Services, laying out the eligibility groups that should be included in the department’s forthcoming data book on Medicaid beneficiaries with SUDs. MACPAC’s input on eligibility groups was required in the SUPPORT for Patients and Communities Act. A review of the proposed rule affecting safe harbors for prescription drug rebates was the topic of the second session, with the final session presenting findings on how various states have approached care coordination in integrated care models.

Supporting the discussion were the following presentations:

  1. Potential Recommendations on Coverage Grace Period and Rebate Cap
  2. Mandated Report: Therapeutic Foster Care
  3. Treatment of Third-Party Payment in the Definition of Medicaid Shortfall: Potential Recommendations
  4. Medicaid in Puerto Rico: Financing and Spending Data Analysis and Projections
  5. Medicaid Program Integrity: Proposed Recommendations
  6. Recovery Support Services for Medicaid Beneficiaries with Substance Use Disorder
  7. Responding to SUPPORT ACT Requirement: Eligibility Groups for HHS Data Book on Medicaid and Substance Use Disorders
  8. Proposed Rule Affecting Safe Harbors for Prescription Drug Rebates
  9. Analysis of Care Coordination Requirements in Integrated Care Models

Because NASH members and private safety-net hospitals 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 variety of issues affecting Medicaid and the State Children’s Health Insurance Program.  Find its web site here.

States Taking Different Paths to Pay for Medicaid Expansion

With the federal share of Medicaid expansion falling to 90 percent next year, states that expanded their Medicaid programs under the Affordable Care Act are now exploring new ways to raise the money to pay for the 10 percent for which they will soon by responsible.

Some are implementing hospital or insurer taxes while others are increasing existing taxes on hospitals and health insurers.  New Hampshire is directing part of the proceeds from a liquor tax for this purpose and other states have introduced cigarette taxes.  Some are charging premiums to Medicaid beneficiaries and introducing Medicaid work requirements so they can reduce overall enrollment.  Many are using money from their general revenues.

This all comes at a time when many states are finding that their budget situations have improved and are better than they have been in years.

Learn more about how states are dealing with this challenge, and whether they are finding that it is worth it, in the Washington Post article “States scramble to head off future Medicaid shortfalls.”

Protections Overlooked as Medicaid Reforms are Implemented

In its eagerness to help states introduce changes in their Medicaid programs and reduce administrative burdens, the Centers for Medicare & Medicaid Services is ignoring regulatory requirements designed to understand and measure the impact of those changes on beneficiaries.

According to an analysis by the Los Angeles Times, many states seeking to implement Medicaid work requirements have not projected how many of their beneficiaries would be affected by those requirements nor have they projected how many beneficiaries who are removed from the Medicaid rolls will gain employment after losing their Medicaid benefits.  Both projections are required under Medicaid regulations adopted in 2012, which call for states to assess the anticipated impact of proposed policy changes when seeking federal permission to implement such changes.

Similarly, many states have not proposed commissioning independent assessments to determine the impact of the Medicaid changes they have implemented with CMS’s approval – another requirement under 2012 regulations.

When pressed to explain its failure to enforce these regulations, according to the Times, CMS said only that regulations “…do not require that states provide precise numerical estimates of coverage impacts…” and that it is developing strategies for states to evaluate the impact of new work requirements.  The Medicaid and CHIP Payment and Access Commission wrote to Health and Human Services Secretary Alex Azar about Medicaid disenrollment in states with new work requirements but after three months, Secretary Azar has not responded to MACPAC’s inquiry.

Medicaid disenrollment is a particular challenge for private safety-net hospitals because they serve more Medicaid patients than most hospitals and patients who lose their Medicaid coverage and need hospital care typically cannot afford to pay for that care, leaving such hospitals with growing amounts of uncompensated care.

Learn more about the process for reviewing state requests to implement Medicaid work requirements and CMS’s enforcement of regulations governing its approval of such requirements in the Los Angeles Times article “In rush to revamp Medicaid, Trump officials bend rules that protect patients.”

 

Government More Effective Than Private Sector at Controlling Health Care Costs

For the past dozen years, Medicare and Medicaid have done a better job of controlling rising health care costs than private insurers.

Since 2016, according to a new report from the Urban Institute, private insurers’ costs per enrolled member have risen an average of 4.4 percent a year.  By contrast, Medicare costs have risen an average of 2.4 percent per enrollee and Medicaid costs have risen just 1.6 percent per enrollee.

The primary driver of Medicare cost increases has been prescription drug spending.  For Medicaid the primary driver has been physician services and administrative costs.  For private insurers, the main reason for increasing costs has been spending for hospital care.

Learn more about the differences in cost containment in these different sectors and the implications of those differences in the Urban Institute report “Slow Growth in Medicare and Medicaid Spending Per Enrollee Has Implications for Policy Debates.”