Federal Health Policy Update for Tuesday, April 27

The following is the latest health policy news from the federal government as of 3:00 p.m. on Tuesday, April 27.

The White House

COVID-19

Health Policy News

Congress

  • The New Democrat Coalition is a group of 94 mostly centrist Democrats working to bridge the gap between left and right on health care by offering proposals that seek to build on the policy infrastructure that currently exists rather than replacing it.  The coalition has written to President Biden with its list of policy recommendations that it asks him to incorporate into the American Families Plan.  Learn more about the New Democrat Coalition here and learn more about the health care policies it espouses in its recent letter to President Biden.
  • A group of 17 Democratic senators has written to President Biden asking him to pursue expansion of Medicare in his soon-to-be-unveiled American Families Plan.  Read that letter here.

Department of Health and Human Services

COVID-19

Health Policy News

  • HHS has announced the availability of $1 billion in American Rescue Plan money for Health Resources and Services Administration (HRSA)-Health Center Program-funded health centers to support major construction and renovation projects across the country.  Health centers that receive this funding will be able to use it for COVID-19-related capital needs and to construct new facilities, renovate and expand existing facilities, and purchase new equipment.  All of the nation’s nearly 1,400 HRSA-funded health centers will be eligible for these funds.  See the HHS announcement here and find information about submitting applications, which are due June 24, here.
  • HHS has released new buprenorphine practice guidelines that, among other things, remove a long-time requirement tied to training, which some practitioners have cited as a barrier to treating more people.  The order exempts eligible physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives from federal certification requirements related to training, counseling, and other ancillary services that are part of the process for obtaining a waiver to treat up to 30 patients with buprenorphine.  For additional resources, consult:
  • HHS has published a request for information in the Federal Register about the development of a national public health strategy for the prevention and control of vector-borne diseases in humans.  The RFP solicits “…specific input regarding strategic goals, benchmarks, gaps, duplicative federally funded programs, and opportunities to enhance coordination data collection, research, and the development of diagnostics, treatments, vaccines and other related activities…” Submissions are due by June 11.  Go here to see the notice.
  • The administration has announced a new round of appointments to staff positions at HHS.  They are:

Office of the Secretary
Cynthia Palafox (she/her), Director of Scheduling and Advance
Karuna Seshasai (she/her), Executive Secretary
Alia Schechter (she/her), Special Assistant to the Secretary

Office of Intergovernmental and External Affairs
Carrie Pugh (she/her), Director of External Affairs

Office of the Assistant Secretary for Public Affairs
Tericka Lambert (she/her), Director of Digital Engagement

Office of the Assistant Secretary for Legislation
Rose Sullivan (she/her), Principal Deputy Assistant Secretary for Legislation

Office of the Assistant Secretary for Health
Arsenio Mataka (he/him), Senior Advisor for Health Equity and Climate

Administration for Children and Families
Kathryn “Kate” Wolff (she/her), Senior Advisor

Centers for Medicare and Medicaid Services
Hannah Katch (she/her), Senior Advisor

Food and Drug Administration
Erica Jefferson (she/her), Associate Commissioner for External Affairs

Food and Drug Administration

COVID-19

  • The FDA and CDC have lifted the pause on use of the Johnson & Johnson Janssen vaccine.  See the agencies’ joint news release announcing and explaining their decision.
  • The FDA has published a notice in the Federal Register about the authorization of emergency use of certain medical devices during the COVID-19 emergency.  The notice, found here, includes COVID-19 diagnostic tests.

Centers for Disease Control and Prevention

COVID-19

Medicaid and CHIP Payment and Access Commission

COVID-19

  • MACPAC has published a report on provider use of Medicaid retainer payments during the COVID-19 pandemic.  Retainer payments are temporary payments intended to preserve the financial viability of providers during disruptions in care, and unlike most other types of Medicaid payments, they are not tied to specific services used by a Medicaid enrollee.  During the COVID-19 pandemic, many states have used retainer payment authority as a source of relief for home and community-based providers experiencing decreases in utilization, temporary practice closures, or other circumstances that limit their ability to provide covered services to Medicaid beneficiaries.  See the MACPAC report here.

Stakeholder Events

Tuesday, April 27

FDA Webinar Series – Respirators and Other Personal Protective Equipment (PPE) for Health Care Personnel Use During the COVID-19 Pandemic
Tuesday, April 27 at 12:00 pm ET.  Click here for connection information.
The FDA hosts a webinar series to keep stakeholders informed about the latest resources and news related to PPE use during the COVID-19 pandemic.

Wednesday, April 28
FDA Virtual Town Hall SeriesCoronavirus (COVID-19) Test Development and Validation
Wednesday, April 28 at 12:15 pm ET.  Click here for connection information.
The FDA will host a virtual town hall for COVID-19 test developers.  The purpose of this event is to help answer technical questions about the development and validation of tests for COVID-19.

Thursday, April 29
FEMA National Business Emergency Operations Center Business & Infrastructure Conference Call
Thursday, April 29 at 3:00 pm ET.  Conference Dial-in:  800-619-3427, Participant PIN: 2725748.
This is a business and infrastructure partners call in alignment with President Biden’s plan to respond to COVID-19.  FEMA will work with other federal agencies to coordinate with state, tribal, and territorial authorities and private sector partners and others to assist, augment, and expedite vaccinations in the United States.

Wednesday, May 5
FDA Product-Specific Guidances:  Lighting the Development Pathway for Generic Drugs
Wednesday, May 5 at 9:00 am – 12:30 pm ET.  Click here for connection information.
The FDA will provide an overview of product-specific guidances, including how they are developed and revised and their role in facilitating generic drug development and generic drug application review.  The FDA will also discuss ways prospective and current generic drug applicants can use PSGs, including those for complex products, to improve the efficiency of generic drug development.

Wednesday, May 5
CDC Zoonoses and One Health Update (ZOHU) Call
Wednesday, May 5, at 2:00 pm – 3:00 pm ET.  Click here to learn more.
ZOHU calls are one-hour monthly webinars that provide education on zoonotic and infectious diseases, One Health, antimicrobial resistance, food safety, vector-borne diseases, recent outbreaks, and related health threats at the animal-human-environment interface.

Friday, May 7
FDA -Common Labeling Deficiencies and Tips for Generic Drug Applications
Friday, May 7 at 1:00pm – 2:00pm ET.  Click here for connection information.
The FDA will discuss the most common labeling mistakes found in abbreviated new drug applications (ANDAs) and how to avoid them and offer other labeling tips.  The FDA also will provide answers to common labeling questions asked by generic drug applicants.

Friday, May 12
Cybersecurity and Infrastructure Security Agency (CISA)
CISA 2021 Hurricane Webinar
Wednesday, May 12 at 10:30 am – 12:00pm ET.  Click here for registration.

This webinar will focus on providing awareness of CISA’s role and resources in hurricane preparedness and response activities associated with systems that make landfall on the continental U.S. or U.S. territories while in a COVID-19 environment.  It will also feature presentations from the NOAA Liaison to the National Operations Center and FEMA’s National Business Emergency Operations Center.

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 Raises Concerns About Proposed Budget in News Release

Medicare and Medicaid cuts detailed in the administration’s proposed FY 2021 budget could be harmful to private safety-net hospitals, the National Alliance of Safety-Net Hospitals declared in a news release issued in response to that proposed budget.

Among those cuts:  $465 billion in Medicare payments and $920 billion in Medicaid reductions over the next ten years.

“The extent of the proposed spending cuts is daunting,” said Ellen Kugler, NASH’s executive director.  “The payments that have been targeted for the biggest cuts are the very payments that enable safety-net hospitals to provide vital services to their communities.  Without them, the capacity of private safety-net hospitals across the country to continue serving the low-income, low-income elderly, uninsured, and medically vulnerable residents of their communities could be in serious jeopardy.”

Among the payments targeted for major cuts are Medicare disproportionate share (Medicare DSH), Medicaid disproportionate share (Medicaid DSH), Medicare graduate medical education payments, Medicare bad debt reimbursement, and payments for some Medicare-covered outpatient services.

Learn more about NASH’s objections to the proposed cuts in this NASH news release.

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

*       *       *

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

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