Hospital Government Payment Losses Could Reach $218 Billion by 2028

A recent study concluded that hospitals can expect to lose about $218 billion in federal Medicare and Medicaid payments between 2010, when the latest round of major cuts began, and 2028.

Among those cuts cited in the study, which was commissioned by the American Hospital Association and the Federation of American Hospitals, are:

  • $79 billion for DRG documentation and coding adjustments
  • $73 billion for Medicare sequestration
  • $26 billion for Medicaid disproportionate share payments (Medicaid DSH)
  • $11 billion in cuts associated with the American Taxpayer Relief Act of 2012

Other cuts came, or will be coming, through regulatory changes, the introduction of value-based payment programs, and other means.

Learn more about these cuts and their potential implications in this Healthcare Dive story.

 

MedPAC Issues 2018 Report to Congress

The non-partisan legislative branch agency that advises Congress and the administration on Medicare payment policies has submitted its mandatory annual report to Congress.

Among the findings included in the report by the Medicare Payment Advisory Commission are:

  • Medicare’s hospital readmissions reduction program has not resulted in increases in emergency room visits or hospital observation stays.
  • Many Medicare accountable care organizations, while maintaining or improving quality, are producing more modest savings than predicted.
  • MedPAC approves of Medicare’s proposals to redesign the case-mix classification system for skilled nursing facilities.
  • MedPAC supports changes Medicare has proposed for patient assessment and therapy requirements for skilled nursing facilities.

MedPAC’s recommendations include:

  • Authorizing outpatient-only hospitals in isolated rural communities to ensure access to emergency care.
  • Reducing payments to off-campus emergency departments in certain urban areas.
  • Rebalancing Medicare’s physician fee schedule to increase payments for ambulatory evaluation and management services while reducing payments for procedures, imaging, and tests.
  • Paying for sequential stays in a unified prospective payment system for post-acute care.
  • Establishing new ways to help patients, families, and hospitals identify higher-quality post-acute care providers for their patients.
  • Establishing new principles for measuring quality that address both population-based measures and quality incentives.
  • Encouraging the development of managed care plans that better meet the needs of the dually eligible (Medicare and Medicaid) population.
  • Eliminating Medicare payment increases for skilled nursing facilities in FY 2019 and FY 2020 because of the healthy financial condition of those facilities.
  • Urging Medicare to use a uniform set of population-based measures for different health care settings and different populations.
  • Moving forward with a unified post-acute-care payment system as quickly as possible.

Learn more about MedPAC’s thinking, research, conclusions, and recommendations by consulting the following materials:   the news release that accompanied MedPAC’s transmission of its report to Congress; a fact sheet that accompanied the report’s release; and the 407-page report itself.

Study Raises Questions About Progress Toward Reducing Readmissions

A new study suggests that the reduction in hospital readmissions of recent years may not be as meaningful a reflection of improved quality of care as some observers believe.

According to a new study published in the New England Journal of Medicine, at the same time that hospitals have reduced their readmissions of Medicare patients in response to penalties imposed through Medicare’s hospital readmissions reduction program, the rate of readmission of patients who are hospitalized for observation stays after visiting the emergency room has increased 35 percent.  This increase in readmissions for observation stay patients comes at a time, moreover, when hospitals are making far greater use of observation stays to serve emergency patients than they did in the past.

Learn more about these new findings and their potential implications in the study “Excluding Observation Stays From Readmission Rates – What Quality Measures are Missing,” which can be found here, or go here for a Fierce Healthcare summary.

 

Time to Raise the Bar on Preventable Hospital Readmissions?

A new report suggests that hospitals can have the greatest impact on reducing preventable readmissions within seven days of discharge and not through the 30-day mark at which they are currently judged by Medicare.

According to a study published in the Annals of Internal Medicine,

Early readmissions were more likely to be preventable and amenable to hospital-based interventions.  Late readmissions were less likely to be preventable and were more amenable to ambulatory and home-based interventions.

The study, conducted at 10 academic medical centers and involving more than 800 of their patients who had been readmitted to the hospital, concludes that readmissions within seven days may more accurately reflect the quality of care hospitals provide than the 30-day measure applied by Medicare’s hospital readmissions reduction program.

To learn more about the report, its findings, and their implications, go here, to the web site of the Annals of Internal Medicine, to see the study “Preventability of Early Versus Late Hospital Readmissions in a National Cohort of General Medicine Patients.”

CMS Proposes Regulatory Changes in Medicare Quality Programs

Last week the Centers for Medicare & Medicaid Services published a proposal detailing how it envisions paying for Medicare services in FY 2019 under its inpatient prospective payment system.

On Tuesday this space features a summary of the proposed changes in inpatient rates, Medicare disproportionate share payments (Medicare DSH) and how they would be calculated, and proposed changes in the Medicare area wage index system.  Yesterday we looked at proposed changes in regulations governing multi-campus hospitals, Medicare and Medicaid electronic health record incentive programs, and the hospital readmissions reduction program.

Today we describe proposed changes in various Medicare quality efforts.

Value-Based Purchasing Program

 CMS proposes removing ten measures from its value-based purchasing program, all of which are already included in other Medicare reporting requirements:  all seven health care-associated infection and patient safety measures and three condition-specific payment measures.  See the CMS fact sheet for a list of the specific measures and the rationale for their removal.

 Hospital Inpatient Quality Reporting Program

 CMS proposes removing certain measures from the hospital inpatient quality reporting program while retaining those same measures in one of its other value-based purchasing programs.  CMS is focusing on measures that provide opportunities to reduce both paperwork and reporting burden on providers and patient-centered outcome measures rather than process measures.  See the CMS fact sheet for specific information about a measure to be added, 18 to be removed, and 21 that will be extracted from the data hospitals report for other programs.

Electronic Clinical Quality Measures

For 2019, CMS proposes that hospitals report on only four self-selected measures (of the current 16 measures) only for a self-selected quarter of the calendar year.  It also proposes that the submission period for the EHR incentive program be the two months following the end of the calendar year.  Finally, it proposes eliminating eight of the 16 clinical quality measures starting with the 2020 reporting year.  See the CMS fact sheet for further information.

Price Transparency

A major theme of this year’s proposed rule is increasing the transparency of hospital charges.  Under current law, hospitals are required to establish and make public a list of their standard charges.  To encourage price transparency by improving public access to charge information, CMS proposes updating its guidelines to specifically require hospitals to make public a list of their standard charges on the Internet.

Request for Information Regarding Price Transparency

 CMS believes patients face challenges because of insufficient price transparency, including patients being surprised by out-of-network bills for physicians who provide services at in-network hospitals and patients being surprised by facility fees and physician fees for emergency room visits.  For this reason, it is seeking feedback from the public regarding how CMS should define what are standard charges; about what kind of pricing information the public would find useful; about whether hospitals should be required to disclose what Medicare pays them for individual services; and about how CMS should enforce whatever transparency standards it ultimately adopts.

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You also can learn more by reviewing the entire proposed 1883-page rule here or reading the CMS fact sheet here.

 

CMS Proposes Changes in Inpatient Rates, Medicare DSH, and Wage Index

Last week the Centers for Medicare & Medicaid Services published a proposal detailing how it envisions paying for Medicare services in FY 2019 under its inpatient prospective payment system.

Yesterday this space features a summary of the proposed regulation, with an emphasis on aspects of the rule of greatest importance to private safety-net hospitals.

Today, we address Medicare inpatient rates, Medicare disproportionate share payments (Medicare DSH) and the Medicare cost report’s S-10 worksheet, and the Medicare area wage index.

Inpatient Rates

CMS proposes increasing Medicare inpatient rates 1.75 percent in FY 2019.  This reflects the projected hospital market basket update of 2.8 percent reduced by a 0.8 percentage point productivity adjustment, increased by a 0.5 percentage point adjustment required by legislation, and reduced 0.75 percentage points as required by the Affordable Care Act.

Medicare DSH Uncompensated Care Payments and the S-10

CMS proposes distributing $8.25 billion in Medicare DSH uncompensated care payments in FY 2019, a $1.5 billion increase from FY 2018, citing as its reason for this increase both an increase in the CMS Office of the Actuary’s estimate of payments that would otherwise be made for Medicare DSH and an updated estimate of the change in the percentage of uninsured individuals since 2014 based on the latest available data.

CMS also proposes continuing its phase-in of the use of S-10 data in the calculation of Medicare DSH uncompensated care payments.  FY 2019 would be year two of this phase-in, and CMS proposes using S-10 data from FY 2014 and FY 2015 cost reports, in combination with insured low-income days data from FY 2013 cost reports, to determine the distribution of Medicare DSH uncompensated care payments.

CMS is engaged in limited review of some of the uncompensated care data hospitals report on their S-10 form.  According to the proposed rule, these efforts have focused on three types of problems:  unreasonably high cost-to-charge ratios, significant increases in charity care from FY 2014 to FY 2015, and hospitals that report uncompensated care that exceeds 50 percent of their operating costs.

 Medicare Area Wage Index

Every three years CMS updates the wage index to reflect more recent data it collects from the occupational mix survey.  FY 2019 is the first year of a new three-year period for using updated data, and this will result in greater changes in wage indexes than might otherwise be expected from year to year.

CMS proposes changing the deadline for when a hospital that reclassifies from urban to rural will have that reclassification considered in the development of the wage index for a fiscal year.  This proposal would change the threshold from being based on the application’s date of submission to the application’s date of approval.

CMS also proposes changes that would address certain situations arising from lags between when wage index data is reported and when that data is evaluated for reclassification purposes.  These changes would address lag issues for new remote locations of hospitals located in counties participating in group reclassifications and for single-hospital MSAs where new hospitals have opened but that have no data in the wage index files for that MSA.

FY 2019 will mark the first year in which the imputed rural floor (which exists in states where there are no rural areas) will be eliminated.  CMS announced this in last year’s rule.  The only states to which the imputed rural floor applied were Delaware, New Jersey, and Rhode Island and this change will actually only affect hospitals in Rhode Island.

Wage Index Invitation to Comment

The proposed rule describes past efforts to revise the wage index, including past proposals from MedPAC and others.  It invites interested parties to submit comments on regulatory and policy improvements related to the wage index.

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Tomorrow we will look at multi-campus hospitals, the Medicare and Medicaid electronic health record (EHR) incentive programs, and the Medicare hospital readmissions reduction program.  On Thursday we will examine the Medicare value-based purchasing program, the hospital inpatient quality reporting program, electronic clinical quality measures, and price transparency.

You also can learn more by reviewing the entire proposed 1883-page rule here or reading the CMS fact sheet here.

 

MedPAC Meets

The Medicare Payment Advisory Commission met last week in Washington, D.C. to address a number of Medicare reimbursement-related issues.

Among the subjects on MedPAC’s agenda were:

  • using payments to ensure appropriate access to and use of hospital emergency department services
  • uniform outcome measures for post-acute care
  • applying MedPAC’s principles for measuring quality: hospital quality incentives
  • Medicare coverage policy and use of low-value care
  • long-term issues confronting Medicare accountable care organizations
  • managed care plans for dual-eligible beneficiaries

While MedPAC’s policy and payment recommendations are not binding on Congress or the administration, its views are respected and influential and often become the basis for new public policy.

Go here to see the policy briefs and presentations offered to help guide MedPAC commissioners’ discussions about these and other issues.

Eat! You’ll Feel Better

And maybe need to spend less on health care.

That is the lesson learned from a program in Massachusetts that provided home delivery of food to dually eligible Medicare/Medicaid recipients who were struggling with their meals.

In a limited experiment, selected individuals received home delivery of food:  some received general meal deliveries while others received food tailored to their individual medical conditions.  The purpose:  address a major social determinant of health in this difficult-to-serve population.

The result, according to a report published in the journal Health Affairs, was that

Participants in the medically tailored meal program also had fewer inpatient admissions and lower medical spending. Participation in the nontailored food program was not associated with fewer inpatient admissions but was associated with lower medical spending. These findings suggest the potential for meal delivery programs to reduce the use of costly health care and decrease spending for vulnerable patients.

This type of approach might be especially beneficial for private safety-net hospitals because they care for so many patients who participate in both Medicare and Medicaid.

Learn more about the program and its results in the Health Affairs article “Meal Delivery Programs Reduce the Use of Costly Health Care in Dually Eligible Medicare and Medicaid Beneficiaries,” which can be found here.

Safety-Net Hospitals Improve More on Readmissions But Still More Likely to be Penalized

Hospitals that serve large numbers of minority patients are reducing their Medicare readmissions rates more than other hospitals but are still more likely to be penalized under Medicare readmissions reduction program.

This is one of the findings in a new study published in the journal Health Affairs.

According to the study, hospitals that serve larger numbers of minority patients – typically, safety-net hospitals – are more likely to be penalized for readmissions than other hospitals because even though they are reducing their readmissions rates faster than other hospitals, their performance is compared, unfavorably, to hospitals that had fewer Medicare readmissions prior to the launch of the readmissions reduction program.

This situation may change beginning in FY 2019 when a new system of evaluating hospital performance will be introduced.  Under this new system, hospitals will be compared only to hospitals that are similar in patient composition and not to all other hospitals.  NAUH was one of the most forceful and persistent advocates of this change in the program.

But until then, private safety-net hospitals remain more likely to be penalized by the readmissions reduction program than other others.

Learn more about how the composition of hospitals’ patients affects their likelihood of facing penalties under the readmissions reduction program by reading the report “Medicare Program Associated With Narrowing Hospital Readmissions Disparities Between Black and White Patients,” which can be found here, on the Health Affairs web site.

Senate Committee Looks at 340B Program

The Senate Health, Education, Labor, and Pensions Committee (HELP) held a hearing last week on the 340B prescription drug discount program.

The hearing was prompted by complaints from pharmaceutical companies about the discounts they are required to provide to eligible providers and by concern that hospitals are insufficiently accountable for how they use the savings they derive from those discounts to serve their low-income patients.  In addition, the Centers for Medicare & Medicaid Services recently reduced its Medicare payments to participating hospitals.

During the hearing, Senate Republicans expressed support for the program but spoke of the need for greater transparency in the use of the savings the 340B program generates for hospitals and a clearer sense of how those savings benefit low-income payments.  Committee Democrats expressed similar concern but with less urgency.

Hospital industry representatives expressed concern that any new requirements could weaken the program and rejected the idea that savings are misused.  Committee members pushed back against these contentions.

Most private safety-net hospitals participate in the 340B program and it is a vital tool in their efforts to serve their low-income communities.

The Senate HELP Committee intends to hold additional hearings about the 340B program.

Learn more about the 340B hearing and the concerns that led to in this Healthcare Dive article.