New Approach to Readmissions Program to Take Effect October 1

Medicare’s hospital readmissions reduction program will move in a new direction beginning in FY 2019 after Congress directed the Centers of Medicare & Medicaid Services to compare hospitals’ performance on readmissions to similar hospitals instead of to all hospitals.

The policy change, driven by a belief that safety-net hospitals were harmed by the program and excessive penalties because their patients are more challenging to serve, results in all hospitals being divided into peer groups based on the proportion of low-income patients they serve.  The readmissions performance of hospitals is then compared only to other hospitals within each peer group.

As a result of this new approach, readmissions penalties against safety-net hospitals are expected to decline 25 percent in FY 2019 while the average penalty for hospitals serving the fewest low-income patients will rise.

NAUH was among the loudest and most persistent voices calling for reform of the program to better reflect the special challenges private safety-net hospitals face in working to prevent the readmission of their low-income Medicare payments to the hospital.

Kaiser Health News has published a detailed story describing the policy change and its implications for hospitals, which face penalties of up to three percent of their Medicare revenue for what is considered “excessive” readmissions of Medicare patients within 30 days of their discharge from the hospital.  Included in the article is a searchable database of every hospital in the country that lists the peer group for each hospital, its FY 2018 and FY 2019 readmissions penalties by percentage of Medicare revenue, and the change in readmissions penalty expected from FY 2018 to FY 2019.  Go here to see the article “Medicare Eases Readmission Penalties Against Safety-Net Hospital.”

Ways and Means Praises CMS for Red Tape Efforts, Seeks More

Leaders of the House Ways and Means Committee have written to Centers for Medicare & Medicaid Services administrator Seema Verma to praise her agency’s work in eliminating Medicare red tape – but also asking her to “…take further steps to improve patient care by alleviating administrative and regulatory burdens for Medicare providers.”

In three separate letters, committee chairman Kevin Brady (R-TX) and Health Subcommittee chairman Peter Roskam (R-IL) expressed their pleasure with CMS’s recent efforts but specified areas where they would like to see further action.

For hospitals, they wrote that they seek further red-tape cutting in the areas of Medicare conditions of participation, facility co-location, hospital quality star ratings, and meaningful measures.

For post-acute-care providers, they want CMS to address the long-term acute-care hospital 25 percent rule, to hold more inpatient rehabilitation facility open-door forums, and to address skilled nursing facility consolidated billing, documentation to satisfy home health eligibility, and hospice medical review audits.

And for physicians, they urged CMS to continue working to improve the Medicare physician fee schedule, the outpatient prospective payment system, and payments for durable medical equipment and other medical equipment and supplies.

Go here to see the Ways and Means letter addressing hospital issues, here to see the letter addressing post-acute care issues, and here to see the letter addressing physician issues.

Medicare Joint Replacement Program Produces Savings

The first reporting period for Medicare’s Comprehensive Care for Joint Replacement Model found that participating providers cut costs for episodes of care by more than $900, or 3.3 percent.

Most of the savings, the Centers for Medicare & Medicaid Services reports, were achieved by sending patients to less-expensive post-acute-care settings or by reducing patients’ length of stay in such facilities.

CMS also found that the program’s mandatory participants, located in 67 metropolitan statistical areas, achieved these savings without compromising quality of care as measured by post-discharge emergency room visits, hospital readmissions, and deaths.

Learn more about CJR’s early results in this report in Becker’s Hospital Review or go here to see the report CMS commissioned on the program’s first nine months in operation.

Congress Asks MedPAC to Look at Hospital Consolidation

The House Energy and Commerce Committee has asked the Medicare Payment Advisory Commission to examine the impact of hospital consolidation on patients and federal health care spending.

In a letter signed by Energy and Commerce Committee chairman Greg Walden (R-OR), Health Subcommittee chairman Michael Burgess (R-TX), and Oversight and Investigations Subcommittee chairman Gregg Harper (R-MS), the Energy and Commerce Committee states that

We request the Medicare Payment Advisory Commission (MedPAC) conduct research examining questions regarding the market trend of hospital consolidation and the degree to which such consolidation increases cost to the Medicare program and beneficiaries, including the costs for prescription drugs.

The eight-page letter outlines the different views the committee has heard on this subject during various hearings, questions whether certain federal policies encourage or facilitate hospital industry consolidation – and whether they should do so – and outlines some of the challenges the committee suspects may arise as a result of industry consolidation.

Go here to see the letter from the House Energy and Commerce Committee to MedPAC asking MedPAC to look into this issue and to respond with its findings within 30 days.

Medicare Announces FY 2019 Inpatient Payments

The Centers for Medicare & Medicaid Services has released its FY 2019 payment schedule for Medicare inpatient services.

Highlights of the FY 2019 inpatient prospective payment system regulation include:

  • A 1.75 percent increase in fee-for-service rates.
  • A $1.5 billion increase in Medicare disproportionate share hospital payments (Medicare DSH).
  • Major reductions of the quality measures hospitals must report for Medicare’s inpatient quality reporting and value-based purchasing programs.
  • A requirement that hospitals post their standard charges on the internet.

Learn about these and other aspects of Medicare’s FY 2019 inpatient prospective payment system regulation by seeing this Medicare fact sheet or go here to see the 2593-page (!) regulation itself.

New Reg Pushes Medicare Toward Site-Neutral Outpatient Payments

Medicare would make more payments for outpatient services on a site-neutral basis under a newly proposed regulation just released by the Centers for Medicare & Medicaid Services.

The 2019 Medicare outpatient prospective payment system regulation, published in proposal form, calls for:

  • paying physician fee schedule rates rather than hospital outpatient rates at excepted off-campus provider-based departments;
  • slashing payments for office visits;
  • extending this year’s 340B prescription drug discount payments, already cut nearly 30 percent this year, to additional providers; and
  • raising ambulatory surgical center rates and expanding the list of procedures that can be performed in such facilities so they can compete with hospitals for outpatient services.

The proposed regulation also calls for reducing quality reporting requirements and giving providers financial incentives to prescribe non-opioid pain medicine for surgery patients.

The regulation, which would affect provider payments beginning on January 1, 2019, was published in proposed form and will be finalized later in the year.  Stakeholders have until September 24 to submit comments to CMS.  For further information about what CMS has proposed, see this CMS fact sheet outlining the proposed regulation and the 761-page proposed regulation itself.

CMS Proposes Changes in Medicare Physician Payments

The Centers for Medicare & Medicaid Services has published a proposed regulation that it says

…proposed historic changes that would increase the amount of time that doctors and other clinicians can spend with their patients by reducing the burden of paperwork that clinicians face when billing Medicare. The proposed rules would fundamentally improve the nation’s healthcare system and help restore the doctor-patient relationship by empowering clinicians to use their electronic health records (EHRs) to document clinically meaningful information instead of information that is only for billing purposes.

Among the policy changes offered in the proposed 1743-page regulation governing Medicare physician payments are:

  • a 0.25 percent increase in physician fees;
  • changes in how physicians and other clinicians document and bill for their services;
  • new provisions governing Medicare payments for telehealth services, including those offered by phone;
  • reductions in the cost of new prescription drugs and reduced payments to physicians for administering drugs;
  • changes in the Medicare quality program;
  • the continuation of the current site-neutral payment policy for outpatient services; and
  • changes in the MACRA (Medicare Access and CHIP Reauthorization Act of 2015) program.

Stakeholders have until September 10 to submit formal comments about the CMS proposals.

Learn more about these and other changes presented in the proposed regulation by consulting this CMS news release, this CMS fact sheet, and the proposed regulation itself.

NAUH Comments on Proposed Changes in Medicare Payments (Part 3 of 3)

In a letter to the Centers for Medicare & Medicaid Services, the National Association of Urban Hospitals has offered extensive comments on CMS’s proposed regulation describing how it intends to pay hospitals for Medicare-covered services in FY 2019.  NAUH offered these comments in response to CMS’s request for stakeholder input.

In this space yesterday NAUH presented its comments on the Medicare Hospital Readmissions Reduction Program, quality reporting, multi-campus hospitals, and documentation required for Medicare cost reports.  On Wednesday NAUH presented its comments to CMS regarding how the agency proposes calculating Medicare disproportionate share (Medicare DSH) payments in the coming fiscal year.  Today, NAUH shares its views on aspects of the proposed regulation that address the Medicare hospital readmissions reduction program, Medicare’s quality reporting program, multi-campus hospitals, and documentation required when filing Medicare cost reports.

Today, NAUH shares its response to CMS’s request for comments on the Medicare area wage index system.

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Medicare Area Wage Index:   Response to Request for Comment

While acknowledging the challenges that the current Medicare area wage index poses at times, in general NAUH supports the current Medicare area wage index system and believes it superior to any alternative that has been proposed in recent years.  We believe wage adjustments based on the cost of labor in different parts of this country are absolutely essential for Medicare because those costs vary so greatly in different geographic areas.  The concerns periodically expressed by some that certain parts of the country are ill-served by the current wage index system are, in our view, based on sentiment and emotion rather than on fact; the data does not support their assertions, and when circumstances change, the current system gives those who feel ill-served by that system ample and fair opportunities to address what they perceive to be inappropriate treatment.

We are especially concerned about a proposal that appears to resurface every few years:  that the wage data upon which wage adjustments are made should come from the Bureau of Labor Statistics (BLS) rather than from actual, real-time hospital wage data.  NAUH believes this is a bad idea.  We do not see the value of using broad categories of data that fail to reflect real employment markets and conditions when actual hospital wage data that does reflect actual hospital wage costs is available and verifiable.

One of the most important factors in wage index calculations, for example, is wages paid to nurses.  BLS data, however, does not capture important differences within the nursing profession, inappropriately lumping nurses who work in different settings into a single category.  In so doing, BLS data ignores the sometimes considerable differences in skill and education levels required of nurses in different settings – hospitals, nursing homes, doctors’ offices, public health facilities, and others – and the considerable differences in wages required to recruit nurses to these different settings and then retain them.  Hospital nurses, for example, require a different, higher level of skill and education than nurses in other settings.  They also work in a more stressful environment and work less desirable hours, including evening and overnight shifts.  As a result, hospitals must offer nurses more money than nursing homes, doctors’ offices, and others.  Some states, moreover, have legal nurse staffing requirements that increase the demand for hospital nurses, which in turn increases how much money hospitals must pay to ensure that they can meet their nurse staffing requirements.  BLS data reflects none of these distinctions and therefore would offer a poor foundation upon which to make broad policy decisions that would have a major impact on hospitals and, no less important, on the communities hospitals serve.  In addition, reporting wage data to BLS is voluntary, and in any geographic areas where BLS concludes that it did not receive enough responses to calculate average wage costs, it infers such data.  NAUH disapproves of this approach and again believes it is better to use actual hospital wage data than incomplete and possibly even inferred data.

NAUH strongly encourages CMS to reject any shift to the use of BLS data in the calculation of Medicare wage adjustments and instead urges CMS to continue to base hospital wage adjustments on real hospital wage costs as reported by hospitals and as audited periodically by CMS.  In addition, if CMS wishes to pursue possible changes in the wage index system, NAUH urges it subject the process to fresh analysis – many of the reviews that call attention to the system’s challenges are outdated – and to convene a broad-based group of providers and other stakeholders to evaluate the challenges and explore potential improvements or alternatives.

NAUH Comments on Proposed Changes in Medicare Payments (Part 2 of 3)

In a letter to the Centers for Medicare & Medicaid Services, the National Association of Urban Hospitals has offered extensive comments on CMS’s proposed regulation describing how it intends to pay hospitals for Medicare-covered services in FY 2019.  NAUH offered these comments in response to CMS’s request for stakeholder input.

In this space yesterday NAUH presented its comments to CMS regarding how the agency proposes calculating Medicare disproportionate share (Medicare DSH) payments in the coming fiscal year.  Today, NAUH shares its views on aspects of the proposed regulation that address the Medicare hospital readmissions reduction program, Medicare’s quality reporting program, multi-campus hospitals, and documentation required when filing Medicare cost reports.

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The Medicare Hospital Readmissions Reduction Program

NAUH appreciates the changes CMS has introduced in the Medicare Hospital Readmissions Reduction Program.  Specifically, we support the change to organizing hospitals into peer groups and evaluating their performance in comparison to similar hospitals.

At the same time, however, we are concerned that this program may soon reach a point of diminishing returns where hospitals have done everything they might reasonably be expected to do to prevent avoidable readmissions but still find themselves penalized for their performance compared to that of their peers for circumstances that are simply beyond their control.  The introduction of this program appears to have been valuable, but it has raised the bar on avoidable readmissions to a level where, at some point in the near future, it may no longer be possible to improve performance more than very marginally, leaving a few hospitals that fall just slightly below the level of performance of their peers – yet performing at levels far superior to those prior to the readmissions reduction program’s introduction – subject to significant financial penalties.

NAUH also urges CMS to assess whether five peer groups is the appropriate number of groups or whether the objective of treating hospitals fairly might better be served by introducing more peer groups that do a better job of distinguishing between different types of hospitals.

In addition, a number of studies have raised legitimate questions about the true value of the readmissions reduction program.  NAUH encourages CMS to include the readmissions reduction program in a broader review of all of its quality improvement programs and to consider first, whether the readmissions reduction program is worth retaining, and second, whether these programs as a group have achieved their objectives and perhaps should give way to other approaches to achieving quality-related objectives.

NAUH would welcome an opportunity to work with CMS to address these questions.

Quality Reporting

NAUH wishes to thank CMS for proposing to reduce the paperwork burden on hospitals through changes in the quality reporting program.

NAUH also appreciates that CMS is taking steps to recognize the impact of social risk factors in quality measurement and wishes to address briefly accounting for those risk factors in Medicare’s quality program.  In the proposed rule, CMS advances two possible means of accounting for social risk factors:  calculating differences in outcome rates among patient groups within a hospital while accounting for their clinical risk factors, which would permit comparison of those differences across hospitals; and assessing outcome rates across hospitals for subgroups of patients, such as dually eligible patients, thereby facilitating comparisons among hospitals on their performance in caring for their patients with social risk factors.  As a first step, CMS proposes including stratified data on Pneumonia Readmission measure data for dually eligible patients in hospitals’ confidential feedback reports beginning in the fall of 2018 and using both methodologies identified above.

NAUH supports the use of social risk adjustment, including adjustment for sociodemographic status.  Research continues to suggest that sociodemographic factors beyond providers’ control – the availability of primary care and physical therapy, easy access to medications, appropriate food and other supportive services, and others – influence patient outcomes.  For example, a January 2016 report from the National Academy of Medicine found evidence that a wide variety of social risk factors may influence performance on certain health care outcome measures, such as readmissions, costs, and patient experience of care.

In addition, the Improving Medicare Post-Acute Care Transformation (IMPACT) Act required the Department of Health and Human Services’ Office of the Assistant Secretary for Planning and Evaluation to perform a study of risk adjustment for sociodemographic status based on quality and resource use measures and to incorporate its findings in future rule-making.  Its report found that clinicians, hospitals, and post-acute providers are more likely to score worse in CMS pay-for-performance programs when they care for large numbers of poor patients.

Together, these reports provide evidence of what urban safety-net hospitals and other providers have long known:  that patients’ sociodemographic and other social risk factors matter greatly when trying to assess the performance of health care providers.  NAUH urges CMS to incorporate sociodemographic adjustment into any quality or cost measures it uses to assess hospital performance.

Multi-Campus Hospitals

NAUH wishes to thank CMS for its proposed rule defining how multi-campus hospitals would be treated by Medicare for special purposes.  This is an important acknowledgement of the changing nature of the

hospital industry and we believe this proposed regulation, if implemented, would give hospitals a clearer understanding of the implications of combining with other hospitals as the consolidation of the industry continues.

Submitting Documentation as Part of a Complete Cost Report

In the proposed regulation, CMS calls for requiring hospitals to submit detailed documentation underlying various components of their Medicare cost reports:  bad debt, Medicaid days associated with their DSH adjustment, and charity care and uninsured discounts.  NAUH does not object to this new requirement.

We are, however, concerned about the timing of these requirements and urban safety-net hospitals’ future ability to revise their cost reports based on more recent data.  Currently, hospitals have six months to file their cost reports with their MACs and up to 12 months thereafter to revise them.  In some cases, however – retroactive determinations of Medicaid eligibility are an excellent example – the final disposition of some of the data elements to be required of hospitals may change well after even this extended deadline for filing and revising Medicare cost reports.  For this reason, NAUH asks CMS to explicitly confirm in the final regulation that hospitals will have ample opportunity to update and revise their Medicare cost reports as those reports move closer to final settlement – time even beyond the current parameters for filing and revising the reports.

Tomorrow:  NAUH’s response to CMS’s request for comments about the Medicare area wage index system.

Proposed Federal Reorganization Could Affect Health Care

Aspects of a proposed reorganization of the federal government could affect the agencies that administer key health care programs.

In its 132-page Delivering Government Solutions in the 21st Century:  Reform Plan and Reorganization Recommendations proposal, the White House calls for consolidating many social safety-net programs in a new Department of Health and Public Welfare.  This department would retain responsibility for Medicare and Medicaid but also would assume responsibility for some food aid programs, including food stamps (now the Supplemental Food Assistance Program, or SNAP).

In addition, the proposal would:

  • consolidate all health research programs in the National Institutes of Health, including the Agency for Healthcare Research and Quality, the National Institute for Occupational Safety and Health, and the National Institute on Disability, Independent Living, and Rehabilitation Research;
  • reduce the U.S. Public Health Service Commissioned Corps from 6500 to no more than 4000 officers; and
  • remove food safety responsibilities from the Food and Drug Administration, change that agency’s name to the Federal Drug Administration, and shift food safety responsibilities to the Department of Agriculture.

Also part of this Department of Health and Public Welfare would be a new Council on Public Assistance that would ostensibly become the executive branch’s welfare policy-making body.  Serving on this council would be the heads or representatives of the heads of the Department of Agriculture, Department of Housing and Urban Development, the new Department of Education and the Workforce, and the Office of Management and Budget, with the council to be headed by the secretary or secretary’s designee from the Department of Health and Public Welfare.

While some of the White House’s recommendations can be implemented via executive action, others require congressional action.

Find the White House’s brief summary of its recommendations here and find the full report here.