Federal Health Policy Update for Thursday, August 5

The following is the latest health policy news from the federal government as of 2:45 p.m. on Thursday, August 5.  Some of the language used below is taken directly from government documents.

Final Medicare Inpatient Prospective Payment System Regulation for FY 2022

CMS has published its final Medicare inpatient prospective payment system regulation for FY 2022.  Highlights include:

  • An increase in hospital inpatient rates of 2.5 percent and an increase in long-term hospital rates averaging 0.9 percent.
  • The Medicare disproportionate share (Medicare DSH) payments uncompensated care allocation has been cut $1.1 billion, to $7.2 billion, with distribution to be based on hospitals’ FY 2018 Medicare cost reports.
  • A reduction of the labor-related share of Medicare payments from 68.3 percent to 67.6 percent.
  • Repeal of the requirement that hospitals report median payer-specific negotiated charges with Medicare Advantage plans on their Medicare cost reports.
  • Extension of the COVID-19 treatment add-on payment through the end of the fiscal year in which the public health emergency ends.
  • A new requirement that hospitals include in their Medicare quality program reporting information about the vaccination status of their staffs.

CMS noted that this regulation is not comprehensive and that it will issue an additional regulation or regulations about the FY 2022 Medicare inpatient prospective payment system in the future.  Among other subjects, this regulation does not address graduate medical education, organ acquisition payment policies, and health equity.  To learn more about this final rule, see the following resources:

CMS’s news release

CMS’s fact sheet

the final rule itself

The White House

Provider Relief Fund

  • HHS has updated the “Reporting Requirements and Auditing” section of its Provider Relief Fund web page.  Find the updated web page here.

Department of Health and Human Services

COVID-19

  • HHS has invoked a provision in the Public Readiness and Emergency Preparedness (PREP) Act to authorize pharmacy technicians and interns to administer adult flu vaccines.  See the Federal Register notice announcing this policy.
  • HHS’s Office of the Assistant Secretary for Preparedness and Response has developed a “COVID-19 Monoclonal Antibody Therapeutics Calculator for Infusion Sites” (mAbs Calculator).  The mAbs Calculator is a free, data-informed decision support tool that is based on a comprehensive simulation framework.  The mAbs Calculator can be used to inform staffing decisions and resource investments needed for COVID-19 monoclonal antibody therapeutic infusion sites.  Learn more about this tool here.
  • HHS’s Office of the Assistant Secretary for Preparedness and Response has published a guide to resources on the role of medical support services in the response to COVID-19.
  • HHS’s COVID-19 Health Equity Task Force met recently to consider interim recommendations addressing future pandemic preparedness.  Go here to find a summary of the meeting and links to video of the proceedings.

Health Policy News

  • HHS announced that it is providing nearly $90 million to help rural communities combat opioid use disorders and other forms of substance use disorders and to improve access to maternal and obstetric care.  HHS’s Health Resources and Services Administration distributed this money through four programs:  the Rural Communities Opioid Response Program, the Rural Communities Opioid Response Program-Psychostimulant Support Program, the Rural Maternity and Obstetrics Management Strategies Program, and the Rural Northern Border Region Planning Program.  Learn more from this HHS announcement.

Centers for Medicare & Medicaid Services

Health Policy News

Centers for Disease Control and Prevention

COVID-19

  • The CDC has updated its guidance on how families can protect themselves from COVID-19 when they include members who have not been vaccinated or who have compromised immune systems.  Find this updated guidance here.

Food and Drug Administration

COVID-19

  • The FDA has revised its emergency use authorization for REGEN-COV (casirivimab and imdevimab, administered together) to add an authorization of REGEN-COV for emergency use as post-exposure prophylaxis (prevention) for COVID-19 in adults and pediatric individuals (12 years of age and older weighing at least 40 kilograms) who are at high risk for progression to severe COVID-19, including hospitalization or death.  Learn more here.
  • The FDA has revised its emergency use authorization for baricitinib (sold under the brand name Olumiant), now authorizing baricitinib alone for the treatment of COVID-19 in hospitalized adults and pediatric patients two years of age or older requiring supplemental oxygen, non-invasive or invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO). Under the revised EUA, baricitinib is no longer required to be administered with remdesivir (Veklury).  Baricitinib is not FDA-approved as a treatment for COVID-19.  Learn more here.
  • The FDA has authorized an extension for the shelf life of the refrigerated Janssen (Johnson & Johnson) COVID-19 vaccine, allowing the product to be stored at 2-8 degrees Celsius for six months.  Learn more here.

National Institutes of Health

Stakeholder Events

Wednesday, August 11 – CMS

Price Transparency Stakeholder Webinar

Wednesday, August 11 at 2:00 p.m. (eastern)

This webinar will focus on how to meet the requirements of the Hospital Price Transparency Final Rule for posting standard charge information in a comprehensive machine-readable file.  For further information about the webinar go here and to register for the webinar go here.

Thursday, August 12 – CMS

Ambulance Open Door Forum

Thursday, August 12 at 2:00 p.m. (eastern)
The subject of this forum is the Medicare Ground Ambulance Data Collection System.  Learn about the Medicare Ground Ambulance Data Collection System, including current status and activities, information sampled that organizations need to collect and report, and proposed revisions and clarifications in the 2022 physician fee schedule proposed rule.  Go here for further information about the forum and how to participate.

Monday, August 23 – CMS

Advisory Panel on Hospital Outpatient Payment

Monday, August 23 from 9:30 a.m. to 5:00 p.m. (eastern)

CMS’s Advisory Panel on Hospital Outpatient Payment will meet virtually to advise the agency about the clinical integrity of the Ambulatory Payment Classification groups and their associated weights and about supervision of hospital outpatient therapeutic services.  The advice provided by the panel will be considered as CMS prepares its annual updates for the hospital outpatient prospective payment system.

The public may participate in this meeting by webinar or teleconference.  Teleconference dial-in and webinar information will appear on the final meeting agenda, which will be posted here when available.

 

Federal Health Policy Update for Friday, July 2

The following is the latest health policy news from the federal government as of 2:45 p.m. on Friday, July 2.  Some of the language used below is taken directly from government documents.

Supreme Court

  • The Supreme Court has announced that it will hear a case in its next term challenging cuts in 340B payments and another involving Medicare disproportionate share.

White House

Provider Relief Fund

  • HHS has published new information about use of Provider Relief Fund grants, accounting for the use of those grants, expense and lost revenue calculations, changes in ownership, reporting on the use of Provider Relief Fund resources, and more.  The changes, including links to new documents, worksheets, instructions, an FAQ, a link to a webinar to learn about these changes, and more can be found on the Provider Relief Fund’s “reporting requirements and auditing” web page.  Recipients of Provider Relief Fund grants should review this new information carefully.
  • HHS also has updated its Provider Relief Fund FAQ site to reflect the changes introduced on the primary Provider Relief Fund web site (described above).  The update includes 24 new or updated items addressing the expenditure of Provider Relief Fund grants, accounting for and reporting on the use of those grants, recoupments, FEMA funds, and more.  The changes, marked “7/1/2021,” can be found on pages 8, 9, 11, 12, 16, and 22-27.

Department of Health and Human Services

COVID-19

  • HHS’s Office of the Assistant Secretary for Preparedness and Response has introduced a COVID-19 monoclonal antibody therapeutics calculator for infusion sites (mAbs Calculator) to inform staffing decisions and resource investments needed for COVID-19 monoclonal antibody therapeutic infusion sites.  Go here to learn more about the calculator and to find a link to it.
  • HHS’s COVID-19 health equity task force met this week to consider interim recommendations addressing the inequities and the impact of long-COVID or Post-Acute Sequelae COVID-19 infection and access to personal protective equipment, testing, and therapeutics.  Go here for a summary of the meeting and links to a recording of the event.

Health Policy News

Centers for Medicare & Medicaid Services

Health Policy News

  • CMS has released the final notice for the Basic Health Program federal funding methodology for program year 2022.  This document provides the methodology and data sources necessary to determine federal payment amounts for program year 2022 to states that elect to establish a Basic Health Program to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through qualified health plans in the exchange.  Learn more in the proposed rule.
  • CMS has proposed updating its End-Stage Renal Disease (ESRD) prospective payment system rates, changing the ESRD Quality Incentive Program, and modifying the ESRD Treatment Choices (ETC) Model.  The proposed changes to the ETC Model policies seek to encourage dialysis providers to decrease disparities in rates of home dialysis and kidney transplants among ESRD patients with lower socioeconomic status.  Other changes in the proposed ESRD regulation address rates, wage index, an update of the outlier policy, a transitional add-on payment adjustment for new and innovative equipment and supplies applications, and more.  Learn more from the following resources:

Centers for Disease Control and Prevention

COVID-19

  • The CDC has published a report in which it evaluates the effectiveness of COVID-19 vaccines among health care workers during the early phase of vaccinations.  Find the report here.
  • The CDC has updated its guidance for laboratories on the use of pooling for COVID-19 testing.  The new guidance notes that while pooling specimens for public health surveillance purposes is still acceptable, the focus now is on its use for diagnostic and screening testing.
  • The CDC has issued a guide for jurisdictions on expanding COVID-19 vaccine distribution to primary care providers to address disparities in immunizations.  Find it here.
  • The CDC has published research on the efficacy of portable air cleaners and masking for reducing indoor exposure to simulated exhaled COVID-19 aerosols.  Read the report here.

Health Policy News

  • The CDC reports that the number of cancer screenings received by women through the CDC’s National Breast and Cervical Cancer Early Detection Program declined 87 percent for breast cancer and 84 percent for cervical cancer during April 2020 compared numbers for that month over the past five years.  The CDC attributes this to delayed in seeking care because of COVID-19.  Learn more here.

Food and Drug Administration

COVID-19

  • With improved access nation-wide to N95 masks, the FDA has revoked emergency use authorizations for certain respirators and decontamination systems.  See the FDA announcement.  The FDA also will hold a webinar to share information and answer questions about its revocation of EUAs for non-NIOSH-approved respirators and decontamination systems.  Go here to learn more about the webinar.

Health Policy News

  • The FDA has alerted users of Philips Respironics ventilators, BiPAP, and CPAP machines and their health care providers that Philips Respironics has recalled certain devices due to potential health risks.  Go here to see the FDA announcement.
  • The FDA has approved Rylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn) as a component of a chemotherapy regimen to treat acute lymphoblastic leukemia and lymphoblastic lymphoma in adult and pediatric patients who are allergic to the E. coli-derived asparaginase products used most commonly for treatment.  Learn more here.
  • The FDA has released a Cyclospora prevention, response, and research action plan.  The plan focuses on improving prevention, enhancing response activities, and filling knowledge gaps to help prevent Cyclospora contamination of foods and to help prepare for responding to future outbreaks.  See the FDA announcement for more.

National Institutes of Health

  • The NIH announced that it is funding five additional projects to identify ways of safely returning students and staff to in-person school in areas with vulnerable and underserved populations. Learn more about the new projects and other NIH-funded projects with similar objectives in this NIH announcement.

FEMA

  • FEMA has revised its COVID-19 funeral assistance policy to assist with COVID-19-related fatalities that occurred in the early months of the pandemic.  The change is intended to help families paying for funeral costs for people who died of COVID-19 but for which that cause of death was not noted on their death certificate.  Learn more from FEMA’s announcement of the change, which also has links to additional resources.

Stakeholder Events

Thursday, July 8 – HHS

HHS’s “We Can Do This” campaign is a national initiative to build confidence in COVID-19 vaccines and get more people vaccinated.  This campaign offers tailored resources and toolkits for stakeholders to use to provide COVID-19 vaccine information to at-risk populations.  CMS is partnering with the campaign to offer several webinars to walk through each toolkit and its resources and train community organizations, local voices, and trusted leaders to use the campaign tools for vaccine outreach efforts to diverse communities.  A webinar will be held on Thursday, July 8 at 1:00 p.m. (eastern)  Register here.

Wednesday, Thursday, and Friday, July 7, July 8, and July 9 CMS

CMS – Revisions to the Healthcare Common Procedure Coding System (HCPCS) Code Set.

CMS will hold virtual meetings on July 7, 8, and 9, to discuss its preliminary coding recommendations for revisions of the HCPCS Level II code set.  For information about times, registration, submission of materials, signing up to speak, and submitting comments, click here.

Wednesday, July 8 – HHS – Provider Relief Fund

HHS will host a webcast on Wednesday, July 8 at 3:00 p.m. (eastern) to present updated information on the use of Provider Relief Fund grants and reporting and auditing requirements associated with the receipt and use of those grants.  Go here to register.

Tuesday, July 13 – Food and Drug Administration

The FDA will host a webinar to share information and answer questions about its revocation of EUAs for non-NIOSH-approved respirators and decontamination systems.  It will present information about its June 30, 2021 “Update:  FDA No Longer Authorizes Use of Non-NIOSH-Approved or Decontaminated Disposable Respirators – Letter to Health Care Personnel and Facilities.”  To join the webinar:

Zoom Webinar Link: https://fda.zoomgov.com/j/1600971341?pwd=UTJMTlZmYzVScmNZamd2d2J4SU92Zz09External Link Disclaimer

Webinar Passcode: $vrC6z

Dial: 833-568-8864
Webinar ID: 160 097 1341
Passcode: 292602

Tuesday, July 13 Office of the National Coordinator for Health Information Technology (ONC)
ONC Workshop: Advancing SDOH Data Use and Interoperability for Achieving Health Equity
Tuesday, July 13 at 10:00 am – 4:00 pm ET  Click here for connection information
This workshop will explore existing and emerging data standards, tools, approaches, policies, models, and interventions for advancing the use and interoperability of non-clinical health data for individual and community health improvement.  It will share varying perspectives of health policy-makers and health improvement implementers to highlight inventive solutions, share challenges, and offer ideas on data modernization to advance health equity.  The workshop offers introductory content as well as deep exploration of key topics as part of social determinants of health IT data use and interoperability including facilitated, expert stakeholder engagement.

 

NASH Comments on Proposed Changes in S-10 Uncompensated Care Reporting

NASH has expressed support for several new federal proposals on hospital uncompensated care data reporting and conveyed its opposition to other proposed changes in federal data collection requirements in a new letter to the Centers for Medicare & Medicaid Services.

In response to changes CMS has proposed in the uncompensated care data hospitals must submit to the federal government, NASH expressed:

  • Support for CMS’s proposal to clarify aspects of how hospitals must report data on the uncompensated care they provide on the Medicare cost report’s S-10 form.
  • Expressed concern that some of the new data reporting requirements violate current HIPAA requirements.
  • Asked CMS to defer reporting on the rates hospitals negotiate with Medicare Advantage plans until after the end of the COVID-19 public health emergency.

NASH is especially interested in proposed changes in uncompensated care data reporting on the S-10 form because that form is used in the calculation of private safety-net hospitals’ Medicare disproportionate share payments (Medicare DSH).  Those Medicare DSH payments are a vital tool in helping these hospitals serve the low-income and uninsured residents of the communities in which they are located.

Learn more about NASH’s response to CMS’s proposed new information collection activities in this NASH letter to CMS.

CMS Finalizes FY 2021 Payments to Hospitals

Medicare has announced how it will pay hospitals for inpatient care in FY 2021 with publication of its annual inpatient prospective payment system regulation last week.

Among the changes announced by the Centers for Medicare & Medicaid Services:

  • A 2.9 percent increase in fee-for-service inpatient rates.
  • A compromise on its proposal to require hospitals to report their payer-specific negotiated rates with Medicare Advantage plans.
  • Changes in how Medicare will calculate Medicare disproportionate share (Medicare DSH) uncompensated care payments.
  • A much smaller cut than originally proposed in the pool of funds for Medicare DSH uncompensated care payments.  Medicare DSH uncompensated care payments are especially important to private safety-net hospitals.
  • Minor adjustments in the Medicare area wage index system.
  • Refinements in the Medicare graduate medical education program.
  • A new DRG for CAR T-cell payments and a new pathway to Medicare add-on payments for FDA-approved antimicrobial products.

Learn more from CMS’s fact sheet or see the final regulation itself.

Feds Propose Changing Medicare DSH Calculation

Medicare DSH payments would reflect hospitals’ Medicare Advantage inpatient days under a new regulation proposed by the Centers for Medicare & Medicaid Services.

Under the newly proposed rule, the formula for calculating Medicare disproportionate share payments would incorporate hospitals’ Medicare Advantage inpatient days and not just their fee-for-service inpatient days.

Medicare DSH payments are made to hospitals that serve especially high proportions of low-income and uninsured patients and are intended to help them with the cost of providing those services.  All private safety-net hospitals qualify for Medicare DSH payments and consider the program an essential tool in their efforts to serve their communities.

The National Alliance of Safety-Net Hospitals will review the proposed regulation and model its potential impact on private safety-net hospitals.  As appropriate, NASH also will submit formal comments to CMS.

Go here to see the proposed regulation.

 

NASH Comments on Proposed Changes in Medicare Payments

NASH has submitted formal comments to the Centers for Medicare & Medicaid Services in response to CMS’s proposed FY 2021 Medicare inpatient prospective payment system regulation.

In its letter, NASH addressed six specific aspects of the proposed rule:

  • Medicare disproportionate share (Medicare DSH) proposals
  • The Medicare area wage index
  • Negotiated rate reporting
  • Medicare bad debt policy
  • Medicare graduate medical education policy
  • CAR-T cell therapy payments

Of particular note, NASH maintained that instead of decreasing the size of the pool of money for Medicare DSH uncompensated care payments, CMS should actually increase that pool in anticipation of increased hospital inpatient volume in FY 2021 – and increased hospital uncompensated care – as people return to hospitals for non-emergency procedures delayed by the COVID-19 emergency.

NASH also conveyed its opposition to the methodology CMS proposes using to calculate Medicare DSH uncompensated care payments, suggesting an alternative approach that makes better use of more current, more accurate data in that calculation.

Medicare DSH and Medicare DSH uncompensated care payments are especially important to private safety-net hospitals because those hospitals care for so many low-income, low-income elderly, and uninsured patients.

Read NASH’s comment letter to CMS here.

NASH Asks Senate for COVID-19 Help

Private safety-net hospitals need help with the challenges posed by the COVID-19 public health emergency, NASH wrote yesterday in a letter to Senate majority leader Mitch McConnell and minority leader Charles Schumer.

In its letter, NASH asked for:

  • An additional $100 billion for hospitals.
  • Forgiveness for money provided to hospitals through the federal CARES Act’s Accelerated and Advance Payment Program.
  • Action to prevent implementation of the Medicaid fiscal accountability regulation.
  • An increase in the federal Medicaid matching rate (FMAP).
  • An increase in states’ Medicaid disproportionate share (Medicaid DSH) allotments.
  • A moratorium on changes in hospital eligibility for the 340B prescription drug discount program, Medicare indirect medical education program, Medicare disproportionate share (Medicare DSH) program, and other programs.

See NASH’s letter here.

 

NASH Unveils 2020 Advocacy Agenda

The National Alliance of Safety-Net Hospitals has published its 2020 advocacy agenda.

To advance the interests of private safety-net hospitals, in the coming year NASH will:

  • Continue to address the major policy challenges of 2019 that had not been resolved as that year ended:  an extended delay of Medicaid disproportionate share (Medicaid DSH) cuts, surprise medical bills, and prescription drug prices.
  • Respond to administration-driven policies such as the calculation of Medicare disproportionate share (Medicare DSH) payments, reduced payments for prescription drugs under the 340B prescription drug discount program, and efforts to reduce Medicaid eligibility and benefits and to limit the means through which states may finance their share of Medicaid payments.
  • Respond to expected judicial decisions addressing the extension of site-neutral Medicare outpatient payments to additional outpatient settings and the implementation of a new public charge regulation.

For a more detailed look at NASH’s advocacy plans for the coming year, see its complete 2020 advocacy agenda.

NASH Comments on Proposed Medicare Regulation (Part 2 of 3)

The National Alliance of Safety-Net Hospitals has submitted formal comments to the Centers for Medicare & Medicaid Services in response to the latter’s proposed hospital payment plan for FY 2020.

Responding to the proposed inpatient prospective payment system published by CMS in April, NASH primarily addressed a CMS proposal to change how it calculates Medicare disproportionate share (Medicare DSH) uncompensated care payments and proposed changes in the Medicare area wage index system.

Yesterday, the NASH blog presented the alliance’s written comments about proposed changes in Medicare DSH uncompensated care payments.  Today, it presents a detailed alternative proposal to CMS’s April 2019 recommendation for calculating those payments.  On Thursday the blog presents NASH’s response to proposed changes in the Medicare area wage index system.  The complete NASH response to the proposed CMS regulation can be found here.

Calculation of Medicare DSH Uncompensated Care Payments for FY 2020

Factor 3 represents a hospital’s share (as estimated by the Secretary) of the total uncompensated care provided by all hospitals eligible to receive DSH payments.  CMS has, in recent years, calculated UCC DSH payments using an average of three factor 3 calculations subject to a budget neutrality adjustment that modifies the average factor 3 for each hospital to spend the appropriate amount of money (i.e., factor 1 times factor 2) for the fiscal year.

For the reasons stated in the accompanying comment letter, NASH recommends that for FY 2020, CMS implement year one of a three-year transition to using a three-year average of audited post-transmittal 11 data.  The schedule for this transition would be as follows:

  • Year one (FY 2020) would consist of a blend of 2/3 of a hospital’s 2019 UCC DSH payment with 1/3 of the hospital’s UCC DSH payment based on unaudited 2017 S-10 data. During FY 2020, CMS could engage in audits of the 2017 data.
  • Year two (FY 2021) would consist of a blend of 1/3 of a hospital’s 2019 UCC DSH payment with 2/3 of the hospital’s UCC DSH payment based on the average factor 3 derived from the hospital’s audited 2017 data and unaudited 2018 data. During FY 2021, CMS could engage in audits of the 2018 data.
  • Year three (FY 2022) would consist of an equally weighted blend of the hospital’s audited 2017 and 2018 data and unaudited 2019 data.

Each year thereafter, CMS could continue to engage in audits while rolling forward the three-year average, adding a new year of data to the calculation and dropping the oldest year of data.  The result balances timeliness and accuracy while also maintaining year-over-year stability.

Specifically, for FY 2020, a hospital’s final factor 3 would be calculated by:

  • Calculating for each hospital a preliminary 2017 factor 3 by dividing the hospital’s reported line 30 uncompensated care (subject to any adjustments or trims) by the total reported line 30 uncompensated care (subject to any adjustments or trims) reported by all hospitals expected to receive DSH in FY 2020 on their 2017 cost reports.
  • Calculating for each hospital a blended FY 2020 factor 3 by summing the hospital’s preliminary 2017 factor 3 plus its FY 2019 final factor 3 plus its FY 2019 final factor 3 and dividing by 3 if the hospital received a payment in 2019 and 1 if the hospital received no payment in 2019.
  • Deriving a standardization factor by calculating the average factor 3 for all hospitals projected to receive DSH and dividing the result by 1.0.
  • Calculating each hospital’s final FY 2020 factor 3 by multiplying its blended FY 2020 factor 3 by the standardization factor.

Puerto Rico hospitals, Indian Health Service and Tribal hospitals would continue receive a factor 3 based on low-income insured days from FY 2013.

For 2021, each hospital’s factor three would be based on the three-year average of its 2019 final factor 3, its 2017 factor 3 and its 2018 factor 3.

*          *          *

Tomorrow, see NASH’s comments on CMS’s proposal for changes in the Medicare geographic wage classification system.

See NASH’s entire response to the proposed Medicare regulation here.

NASH Comments on Proposed Medicare Regulation (Part 1 of 3)

The National Alliance of Safety-Net Hospitals has submitted formal comments to the Centers for Medicare & Medicaid Services in response to the latter’s proposed hospital payment plan for FY 2020.

Responding to the proposed inpatient prospective payment system published by CMS in April, NASH primarily addressed a CMS proposal to change how it calculates Medicare disproportionate share (Medicare DSH) uncompensated care payments and proposed changes in the Medicare area wage index system.

In this first of three parts, the NASH blog presents the alliance’s written comments about proposed changes in Medicare DSH uncompensated care payments. Tomorrow the blog presents a more detailed look at NASH’s alternative proposal for calculating Medicare DSH uncompensated care payments. On Thursday the blog presents NASH’s response to proposed changes in the Medicare area wage index system. The complete NASH response to the proposed CMS regulation can be found here.

The Calculation of Medicare DSH Uncompensated Care Payments

The Present Challenge

When the Affordable Care Act divided Medicare DSH payments into two components, one of which was a Medicare DSH uncompensated care payment that was to be based entirely on how much uncompensated care hospitals provide, it created a major challenge for policy-makers: how to determine how much uncompensated care hospitals provide. Lacking a clear, credible source of uncompensated care data to use for this purpose, CMS for three years – from 2014 through 2016 – used a proxy for hospital uncompensated care based on two low-income variables: eligible hospitals’ Medicaid patients and their SSI patients.

In 2017, CMS announced that it would move away from this proxy and begin a three-year transition into a different source of data for hospital uncompensated care: line 30 of the S-10 worksheet of the Medicare cost report, where hospitals report their uncompensated care. At that time CMS also announced that it would begin calculating hospitals’ Medicare DSH uncompensated care payments based on three years worth of data. The purpose of using three years of data was to reduce undue fluctuations in hospitals’ Medicare DSH uncompensated care payments from one year to the next.

For years, NASH (previously the National Association of Urban Hospitals) and others have urged CMS to prepare for future use of S-10 data for this purpose in two ways:

  • By improving the instructions for completing the form, which have widely been viewed as confusing and have led to hospitals reporting their uncompensated care in many different ways – including ways it is virtually inconceivable that CMS ever intended. Representatives of NASH met with CMS officials on several occasions in recent years to share examples of hospitals reporting uncompensated care data that totally lacked credibility and to discuss specific aspects of the S-10’s instructions that give rise to inconsistent and inaccurate data reporting.
  • By auditing hospitals’ reported S-10 data to ensure that they are reporting this data accurately and in compliance with the S-10’s instructions. NASH has been urging CMS to audit S-10 data for nine years – ever since passage of the Affordable Care Act created the new Medicare DSH uncompensated care payment and it appeared inevitable that the S-10 would eventually be used in the calculation of that payment. Auditing is necessary because NASH’s reviews of the uncompensated care data hospitals reported on their S-10 in recent years revealed that some hospitals are reporting enormous amounts of uncompensated care that simply cannot be believed in the context of their size, their operating expenses, and their other patient revenue. NASH has shared these reviews with CMS officials on a number of occasions. If left unaddressed, this inaccurate reporting would greatly skew the distribution of the limited pool of Medicare DSH uncompensated care money, inappropriately rewarding some hospitals for their inaccurate data and unfairly penalizing others.

Now, NASH is concerned that while work on both of these tasks is under way, that work remains incomplete at this time. CMS has made progress in improving the S-10’s instructions, as can be seen by what NASH believes are improvements in the quality of the data hospitals are reporting. Despite this, further improvements may still be needed. The auditing is not nearly as far along: as described below, the very limited auditing that has been undertaken so far has been troubled and insufficient.

CMS Proposes Using Flawed Data for FY 2020

In its proposed FY 2020 Medicare inpatient prospective payment system regulation, CMS calls for using uncompensated care data from hospitals’ FY 2015 S-10 forms when calculating FY 2020 Medicare DSH uncompensated care and also asks interested parties to share their view on the possibility of using FY 2017 S-10 data instead of the 2015 data. NASH believes that neither FY 2015 data nor FY 2017 data is suitable for this purpose.

NASH opposes the use of hospitals’ FY 2015 data as the single source of data in the calculation of FY 2020 Medicare DSH uncompensated care reports because while this was the first such uncompensated care data CMS audited, that auditing so far has been not sufficient to give hospitals – and taxpayers – confidence that federal Medicare DSH uncompensated care funds will find their way to the hospitals providing the greatest verified amount of uncompensated care. Among the problems that arose during the first round of auditing were inadequate time frames for hospitals to submit data to auditors; rushed auditing; the use of different auditing methodologies in different parts of the country, between the different Medicare Administrative Contractors (MACs), and even within individual MAC regions; and the lack of comprehensive auditing, with only about 20 percent of affected hospitals actually audited. In its proposed FY 2020 Medicare inpatient prospective payment system regulation, CMS revealed that “approximately 10 percent of audited hospitals have more than a $20 million difference between their audited FY 2015 data and their unaudited FY 2016 data.” CMS also observed that some hospitals have suggested that had the S-10 instructions developed for FY 2017 – instructions that clearly represented an improvement over past instructions – been in place when they completed their FY 2015 S-10 reports, those 2015 reports would have had fewer errors and been more accurate. Together, these problems lead NASH to oppose the use of S-10 data from hospitals’ FY 2015 Medicare cost reports in calculating hospitals’ FY 2020 Medicare DSH payments, even when that data has been audited, because auditing was only undertaken for a relatively small proportion of hospitals.

NASH also opposes CMS’s suggested alternative to using FY 2015: using FY 2017 data as the single source of data in the calculation of Medicare DSH uncompensated care payments. That data remains entirely unaudited, and while the instructions that guided hospitals during completion of their S-10 forms for FY 2017 are generally thought to be clearer and better than those used in FY 2015, there is, at least at this time, little reason to believe this unaudited data as a whole is any more accurate and any more credible than FY 2015 data. Upon reviewing this data, NASH found evidence of some improved data but also numerous examples of reported uncompensated care data that simply lack credibility – generally, hospitals reporting so much uncompensated care that it seems inconceivable that their doors could remain open. In addition, while hospitals that did undergo auditing of their FY 2015 data undoubtedly learned lessons that will improve their ability to complete future S-10 reports, 80 percent of DSH-eligible hospitals have not yet undergone those audits and therefore are not better prepared to complete future S-10s worksheets.

One Year of Data is Insufficient

The proposed FY 2020 regulation also calls for another change: calculating FY 2020 payments based on one year of data instead of three, as has been the case in recent years. NASH opposes this shift in approach. With so little auditing completed and the auditing that has been done of questionable value, NASH opposes any methodology for calculating hospitals’ Medicare DSH uncompensated care payments that relies on data from just a single year. In addition to the problems specific to 2015 and 2017 data, outlined above, NASH objects to using data from just one year because the possibility of aberrant data from any one year skewing the distribution of Medicare DSH uncompensated care payments is too great.

CMS is on record expressing this same view, writing in the final FY 2017 regulation that

…because the data used to make uncompensated care payment determinations are not subject to reconciliation after the end of the fiscal year, we believe that it would be appropriate to expand the time period for the data used to calculate Factor 3 from one cost reporting period to three cost reporting periods. We stated that using data from more than one cost reporting period would mitigate undue fluctuations in the amount of uncompensated care payments to hospitals from year to year and smooth over anomalies between cost reporting periods.

Also,

We stated that we believe that computing Factor 3 using data from three cost reporting periods would best stabilize hospitals’ uncompensated care payments while maintaining the recency of the data used in the Factor 3 calculation. We indicated that we believe using data from two cost reporting periods would not be as stable while using data from more than three cost reporting periods could result in using overly dated information.

Until now, CMS had insisted on basing these payments on three years of data even after it shifted from basing payments on the low-income proxy to uncompensated care data as reported on the S-10. Now, however, it proposes changing its approach and basing the payments’ calculation on just a single year of data, leaving hospitals potentially vulnerable to precipitous declines in their Medicare DSH uncompensated care payments because of either one unusual year of their own activity or questionable reporting by other hospitals.

Accuracy in S-10 reporting is so important because Medicare DSH payments are made out of a single pool of federal funds, with hospitals drawing from that pool based on the amount of uncompensated care they provide in comparison to other DSH-eligible hospitals. As a result, every hospital’s reporting affects how much Medicare DSH uncompensated care money every other DSH-eligible hospital receives. Whether the result of misinterpreting the S-10’s instructions, placing the wrong data on the wrong line on the form, an accounting or mathematical error, or an attempt to maximize their potential Medicare DSH uncompensated care revenue, some hospitals could unfairly receive a windfall of Medicare DSH uncompensated care money – and they would do so at the expense of other hospitals, including those that reported their data exactly as CMS intended. Conversely, the same reporting mistakes could result in aberrant data in which some hospitals’ uncompensated care is under-reported, resulting in such hospitals not receiving the Medicare DSH uncompensated care payments to which they should reasonably be entitled.

An Alternative Approach: NASH’s Proposal

NASH proposes an alternative to CMS’s plan for calculating hospitals’ FY 2020 Medicare DSH uncompensated care payments: a three-year proposal that would cover FY 2020, FY 2021, and FY 2022. At the heart of this proposal is NASH’s belief – a belief CMS in the past made very clear that it shares – that these payments should be made based on more than one year of hospitals’ S-10 data. Using more than one year of data would help smooth the overall data and ensure that no single year’s aberrant data, whether the result of reporting error or just an unusual year in the life of a hospital, inappropriately skews calculations in ways that unfairly benefit or harm any hospitals or has wide-ranging effects that can be felt throughout the universe of the approximately 2,430 hospitals that will be eligible for Medicare DSH uncompensated care payments in FY 2020.

NASH has concluded that the more recent the data is, the more likely it will be reliable – or at least closer to reliable – for three reasons: first, CMS has improved the S-10’s instructions since 2015, suggesting that data reported after 2015 should be more reliable than it was that year or prior to that year; second, future auditing should uncover flaws in hospitals’ data reporting practices that hospitals will correct in the future, leading to more accurate reporting as time passes; and third, improved auditing will enable CMS to adjust hospitals’ reported uncompensated care totals, which also should make future data more accurate.

With this in mind – using more recent data, including audited data, and the value of using data from more than one year – NASH suggests that instead of adopting its proposed methodology, CMS instead use the following methodology for calculating Medicare DSH uncompensated care payments over the next three years:

For FY 2020 (year one of three):

Calculate Medicare DSH uncompensated care payments based on a blend that consists two-thirds of the Medicare DSH uncompensated care payments hospitals receive in FY 2019 and one-third on hospitals’ calculated share of the overall Medicare DSH uncompensated care pool for FY 2017.

For FY 2021 (year two of three):

Calculate Medicare DSH uncompensated care payments based on a blend that consists one-third of the Medicare DSH uncompensated care payments hospitals receive in FY 2019 and two-thirds on the average of hospitals’ calculated share of the overall Medicare DSH uncompensated care pool for FY 2017 and FY 2018.

For FY 2022 (year three of three):

Calculate Medicare DSH uncompensated care payments based on the average of hospitals’ calculated share of the overall Medicare DSH uncompensated care pool for FY 2017, FY 2018, and FY 2019.

By using this approach, CMS would reduce the importance of unreliable 2015 data in the calculation of Medicare DSH uncompensated care payments and instead use the most credible data available at the time of the calculation for each of the three years. Most important, adopting NASH’s alternative proposal would buy CMS time: time to improve its auditing, time to do more auditing, time to engage in additional provider education to ensure that hospitals understand how to comply with Medicare’s uncompensated care data reporting requirements, and time to refine the S-10’s instructions still further if the outcome of future auditing suggests that improvements are still needed. NASH’s proposed alternative also would eliminate the need for any auditing of hospitals’ FY 2016 S-10 data, which is not needed to implement this alternative approach. NASH’s proposed approach also takes advantage of the two major advances CMS has implemented in recent years: better S-10 instructions and a commitment to auditing. Together, these steps can help ensure that future uncompensated care data reporting is more accurate and can constitute an appropriate foundation for the calculation of Medicare DSH uncompensated care payments during the next three years and do so without the volatility inherent in potentially significant swings in hospitals’ annual Medicare DSH uncompensated care payments – swings that CMS made a point of expressing its concern about in the past. Until then, NASH believes our alternative approach to that calculation for the next three years would produce more appropriate payments to hospitals

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See NASH’s entire response to the proposed Medicare regulation here.

Tomorrow:  more details about NASH’s alternative Medicare DSH uncompensated care proposal.