Safety-Net Hospitals, Others Benefit From Changes in Medicare Readmissions Program

Safety-net hospitals are among the leading beneficiaries of changes implemented this year in Medicare’s  hospital readmissions reduction program.

According to a new study, safety-net, academic, and rural hospitals have enjoyed improved performance under the program since Medicare began organizing hospitals into peer groups based on the proportion of low-income patients they serve rather than simply comparing individual hospital performance to that of all other hospitals.

While the current fiscal year is still under way, it appears that safety-net hospitals will enjoy a collective decline of $22 million in Medicare readmissions penalties while 44.1 percent of teaching hospitals and 43.7 percent of rural hospitals will face smaller penalties than last year.

NASH was one of the leading and most outspoken proponents of leveling the playing field in the readmissions reduction program, encouraging policy-makers to reform the program so it would compare hospital readmission rates among similar hospitals instead of to those of all hospitals.  NASH’s multi-year effort proved successful and private safety-net hospitals are now benefiting from that success.

Learn more about the readmissions reduction program and how changes in that program have significantly altered its outcomes in the JAMA Internal Medicine study “Association of Stratification by Dual Enrollment Status With Financial Penalties in the Hospital Readmissions Reduction Program.”

CMS Posts Proposed FY 2020 Inpatient Regulation

Medicare would change its wage index system, raise inpatient fees, increase funding for Medicare disproportionate share hospital payments (Medicare DSH), enhance payments for new technologies, and make minor modifications in its hospital readmissions reduction, value-based purchasing, and hospital-acquired condition program if a proposed regulation published this week is ultimately adopted.

The Centers for Medicare & Medicaid Services has published its proposed FY 2020 Medicare inpatient prospective payment system regulation:  its plan for paying acute-care hospitals for Medicare-covered inpatient services in FY 2020.  The 1800-page regulation calls for major changes in Medicare’s wage index system – changes CMS says would “…address the disparities between high and low wage index hospitals…”  It would do so by increasing the wage indexes of many rural hospitals, regardless of their actual wage costs, and pay for those increases by reducing the wage indexes of high-index hospitals, again regardless of their actual wage costs.

The proposed regulation also would raise inpatient payments to hospitals 3.2 percent in the coming year.  In addition, it would add $216 million to its pool of money for Medicare DSH uncompensated care payments – an increase necessitated by this year’s increase in the number of uninsured Americans – while modifying the methodology for calculating those payments.

Learn more about what CMS proposes for Medicare inpatient payments in the coming year by reviewing the proposed regulation itself or reading the fact sheet CMS published to outline the regulation’s highlights.

Stakeholder comments are invited and due to CMS by June 24; NASH expects to take advantage of this opportunity to convey its concerns about selected aspects of the proposed regulation.

MACPAC Meets

The Medicaid and CHIP Payment and Access Commission met for two days last week in Washington, D.C.

The following is MACPAC’s own summary of the sessions.

The Commission wrapped up its work on the June 2019 Report to Congress on Medicaid and CHIP at the April meeting, with sessions reviewing four of the report’s five draft chapters on Thursday morning, and votes on potential recommendations later in the afternoon.

First on Thursday’s agenda was a draft June chapter on Medicaid prescription drug policy, which contained draft recommendations to provide states with a grace period to determine Medicaid drug coverage and raise the cap on rebates. The Commission then revisited hospital payment policy, with a draft chapter and recommendation on how to treat third-party payment in the definition of Medicaid shortfall when determining disproportionate share hospital payments. Next, commissioners considered two recommendations proposed as part of a June chapter on improving the effectiveness of Medicaid program integrity. The final morning session addressed the Commission’s proposed recommendation on therapeutic foster care.

The Commission returned from lunch for two presentations discussing preliminary findings of forthcoming congressionally mandated reports. The first afternoon session presented initial findings from a MACPAC review of state Medicaid utilization management policies related to medication-assisted treatment, to be issued in October. The session immediately following presented preliminary findings for a January 2020 study on Medicaid standards for institutions for mental diseases. Both reports are required as part of the SUPPORT for Patients and Communities Act (P.L. 115-271). Votes on June 2019 recommendations closed out the day.

Friday’s sessions opened with a review of the fifth draft chapter slated for June, on Medicaid in Puerto Rico. The second session of the morning reviewed a proposed rule issued by the Centers for Medicare & Medicaid Services in March to promote interoperability in federal health care programs. The April meeting closed with a review of evaluations of integrated care for dually eligible beneficiaries.

Supporting the discussion were the following presentations:

  1. Review of Draft Chapter for June Report and Recommendations on Prescription Drug Policy: Grace Period and Cap on Rebates
  2. Review of Draft Chapter for June Report and Proposed Medicaid Shortfall Recommendation
  3. Review of Draft Chapter on Improving the Effectiveness of Medicaid Program Integrity and Recommendations
  4. Review of Recommendation for June Report Chapter on Therapeutic Foster Care
  5. Preliminary Findings from Congressionally Mandated Study on Medication-Assisted Treatment Utilization Management Policies
  6. Preliminary Findings on Congressionally Mandated Study on Institutions for Mental Diseases
  7. Review of Draft June Report Chapter on Medicaid in Puerto Rico
  8. Review of Proposed Rule to Promote Interoperability in Federal Health Care Programs
  9. Evaluating Integrated Care: Review of Results from Literature

Because NASH members and private safety-net hospitals serve so many Medicaid patients, MACPAC’s deliberations are especially relevant to them because its recommendations often find their way into future Medicaid and CHIP policies.

MACPAC is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department  of Health and Human Services, and the states on a wide variety of issues affecting Medicaid and the State Children’s Health Insurance Program.  Find its web site here.

 

Delay Medicaid DSH Cuts, Pelosi Says

Medicaid DSH cuts should be delayed, House Speaker Nancy Pelosi (D-CA) told a gathering of hospital officials.

According to Speaker Pelosi,

DSH cuts threaten to erode the health of community hospitals, safety-net hospitals and rural hospitals, [affecting] the health of not only the families that rely on Medicaid, but any person who relies on these hospitals for care.

NASH has long urged Congress to delay or even eliminate Affordable Care Act-mandated cuts of Medicaid disproportionate share payments, doing so twice in the past week: first in a letter to Senate Finance Committee chairman Charles Grassley (R-IA) and then in a message to all House members. NASH believes this cut would be especially harmful for the nation’s private safety-net hospitals.

Learn more about Speaker Pelosi’s remarks in the Becker’s Hospital Review article “House speaker urges Congress to ease Medicaid payment cuts to hospitals serving low-income patients.”

NASH Asks House to Support Delay of Medicaid DSH Cut

Working to prevent the scheduled October 2019 reduction of Medicaid DSH allocations to the states, NASH has reached out to the House of Representatives for help.

In a message delivered to all House members, NASH asked those members to sign onto a bipartisan letter being circulated by two of their colleagues, Representatives Eliot Engel (D-CA) and Pete Olson (R-TX), that asks House Speaker Nancy Pelosi (D-CA) and minority leader Kevin McCarthy (R-CA) to advance legislation to delay an Affordable Care Act-mandated reduction of Medicaid disproportionate share allocations to the states.  Congress has already delayed this cut three times.

In its letter, NASH explains that

If implemented, this cut would be harmful for private safety-net hospitals and the communities they serve throughout the country.

See the Engel-Olson letter here and see NASH’s message to House members here.

NASH Asks Grassley, Senate Finance Committee to Delay Medicaid DSH Cut

Delay or eliminate the FY 2020 Medicaid disproportionate share payment cut, NASH has asked Senator Charles Grassley in a recent letter.

The cut, mandated by the Affordable Care Act but delayed three times by Congress, was envisioned as an appropriate response to what was expected to be a significant decrease in the number of uninsured Americans as a result of the 2010 health reform law.  In his news release, Senator Grassley, chairman of the Senate Finance Committee, notes that Congress has delayed implementing this Medicaid DSH cut three times and needs to address the issue definitively.

In its letter, NASH maintains that the Affordable Care Act has not reduced the number of uninsured Americans as much as anticipated, leaving private safety-net hospitals and others still to provide significant amounts of uncompensated care to their low-income and uninsured patients and therefore still in need of their full Medicaid DSH payments.

NASH also argues that uncertainty in the health care arena today – legislative and judicial challenges to the Affordable Care Act, states changing the eligibility criteria and benefits of their Medicaid programs, the instability of health insurance marketplaces, and more – makes this an inappropriate time to reduce payments to safety-net hospitals, possibly jeopardizing access to care in low-income areas as a result.

Learn more by reading Senator Grassley’s news release and NASH’s letter to him.

Pressure Off 340B?

Two key House subcommittees will not hold hearings on the controversial 340B prescription drug discount program in the near future.

The chairs of the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee and its Health Committee have both suggested that House Democrats understand the importance and value of the 340B program and see other health care issues as greater priorities.

This marks a serious departure from the last session of Congress, which saw a number of hearings on the 340B program and doubts cast about the program’s objectives and future.

Most private safety-net hospitals participate in the 340B program and consider it a vital resource in their efforts to serve their communities.  NASH has long advocated for the protection of the program, including in this 2018 letter to congressional leaders.

Learn more from the Lexology article “340B Program Gets Relief from Congressional Scrutiny.”

 

Medicaid Transportation Services in Jeopardy?

The White House has proposed removing non-emergency transportation from the list of mandatory Medicaid benefits.

The proposed FY 2020 budget released last week explained that

Statute allows, but does not require, States to provide non-emergency medical transportation (NEMT).  Instead, these services were made mandatory Medicaid benefits by regulation.  Further, a Government Accountability Office study found Medicaid NEMT spending totaled $1.5 billion in 2013, and NEMT programs face multiple challenges, including difficulties in obtaining costs and maintaining program integrity.  To address these issues, this proposal would update regulations to clarify the NEMT benefit is strictly optional.

Medical transportation has long been viewed as vital means for helping Medicaid patients keep doctors’ appointments and recover from their illnesses and injuries and for overcoming some social determinants of health.  Loss of this tool would be harmful for private safety-net hospitals and the patients and communities they serve.  NASH will closely monitor the progress of this proposal.

MACPAC Makes DSH, UPL Recommendations

Changes could come in Medicaid DSH and UPL payments if new MACPAC recommendations are adopted.

Last week the Medicaid and CHIP Payment and Access Commission released its annual report to Congress, with most of the report focusing on its analysis and recommendations for policy updates involving Medicaid disproportionate share hospital payments (Medicaid DSH) and Medicaid upper payment limit payments (UPL payments).

With Affordable Care Act-mandated cuts in Medicaid DSH payments scheduled to start in FY 2020 – this coming October – MACPAC recommended that these cuts be reduced and phased in over a longer period of time “…to give states and hospitals more time to respond to the cuts…”

MACPAC also recommended that Congress and the administration revise the current methodology for distributing Medicaid DSH money to the states to “…provide a stronger link between the distribution of those allotments and measures of hospital uncompensated care…”

The commission also addressed UPL payments, expressing concern about “…the discrepancy between reporting by states to show that they are complying with the UPL and the spending data they report to claim federal matching funds” and recommending “…instituting better data and process controls to ensure that state reporting on compliance with UPL lines up with those amounts they are claiming, and existing limits are enforced.

Medicaid DSH and UPL payments are especially important to NASH and private safety-net hospitals because of the significant number of low-income, Medicaid-covered, and uninsured patients they serve.

Learn more from MACPAC’s news release summarizing its recommendations and the entire MACPAC annual report.

More Potential Budget Obstacles for Private Safety-Net Hospitals

Part two of the Trump administration’s proposed FY 2020 budget brought more potential bad news for private safety-net hospitals.

 

Last week’s “lean budget” released by the White House included a number of challenges for private safety-net hospitals and this week’s release, intended to fill in some of the blanks that last week’s document left, brought more of the same.

Proposed Medicare challenges include:

  • a call for establishing a new process for calculating Medicare disproportionate share (Medicare DSH) uncompensated care payments
  • slashing Medicare bad debt reimbursement from 65 percent to 25 percent
  • continued movement toward site-neutral payments for outpatient services provided at hospital outpatient facilities

Newly proposed Medicaid challenges include:

  • extending Medicaid disproportionate share (Medicaid DSH) cuts beyond the currently planned six years
  • redesigning the formula for allocating Medicaid DSH funds to the states
  • authorizing states to verify beneficiaries’ Medicaid eligibility more than once a year
  • permitting states to apply means tests to Medicaid eligibility

The latest FY 2020 budget proposal also calls for:

  • consolidating Medicare, Medicaid, and children’s hospital medical education payments into single new capped medical education grant program
  • reduced 340B prescription drug discount program payments for some hospitals
  • reducing the grace period for payment of premiums for health insurance purchased on an insurance exchange
  • income-based increases in premiums for low-cost insurance purchased on those exchanges

All of these changes, if implemented, would pose problems for NASH members and most private safety-net hospitals.

Learn more from this week’s White House budget document.