Court Rejects 340B Cuts

A federal court has ruled that the Centers for Medicare & Medicaid Services overstepped its authority in reducing Medicare payments for prescription drugs covered by the section 340B prescription drug discount program.

While the court conceded that CMS has the authority to address 340B payments, it found that CMS’s drastic payment cuts, introduced in FY 2018, “…fundamentally altered the statutory scheme established by Congress…” for determining 340B payment rates.

The court suggested that CMS either change its methodology for determining 340B payments to justify the specific cuts it proposes or raise its objections with Congress, which created the program and has the authority to change it.

According to documents submitted to the court by the parties that filed the suit, eligible hospitals have seen their 340B payments reduced $1.6 billion since the cuts began in FY 2018.  The court asked the federal government and those who filed the suit to suggest remedies for compensating participating hospitals for their losses.

The ruling has major implications for the country’s private safety-net hospitals, most of which participate in the 340B program.

Learn more about the 340B litigation, the court’s ruling, and its impact in the New York Times story “Court Rejects Trump’s Cuts in Payments for Prescription Drugs.”

Medicaid MCOs Skimping on Care?

Medicaid MCOs may be skimping on care, according to a recent Kaiser Health News report.

According to Kaiser, for-profit companies that sub-contract with Medicaid managed care organizations to review requests for services often deny care to Medicaid patients to save money for the MCOs that employ them and to benefit themselves financially.

The Kaiser article presents examples of companies that have been identified engaging in such practices, explains how they go about their work, and outlines the dangers to Medicaid recipients posed by such practices.

Because they serve so many more Medicaid patients than the typical hospital, private safety-net hospitals, their patients, and the communities they serve can be greatly affected by such practices.

Learn more in the Kaiser Health News article “Coverage Denied: Medicaid Patients Suffer As Layers Of Private Companies Profit.”

Feds Urge States to Do More for Dually Eligible

In a formal guidance letter to state Medicaid directors, the Centers for Medicare & Medicaid Services has outlined ten ways that states can better serve individuals who are enrolled in both Medicare and Medicaid.

Noting that such dually eligible individuals represent 20 percent of Medicare enrollees but 34 percent of Medicare spending while also constituting 15 percent of Medicaid beneficiaries but 33 percent of Medicaid spending, the letter from CMS administrator Seema Verma to state Medicaid directors explains that

This letter describes ten opportunities – none of which require complex demonstrations or Medicare waivers – to better serve individuals dually eligible for Medicare and Medicaid, including through new developments in managed care, using Medicare data to inform care coordination and program integrity initiatives, and reducing administrative burden for dually  eligible individuals and the providers who serve them. A number of these opportunities are newly available to states through Medicare rulemaking or other CMS burden reduction efforts. We are happy to engage with you and your staff on one, many, or all of the items described in this letter. The CMS Medicare-Medicaid Coordination Office (MMCO) works across CMS and with states to better serve dually eligible individuals, including through efforts to better align the Medicare and Medicaid programs and demonstrations to test new approaches to integrated service delivery and financing.

Those ten ways are:

  • state contracting with dual eligible special needs plans (D-SNPs)
  • default enrollment into a D-SNP
  • passive enrollment to preserve continuity of integrated care
  • integrating care through the Program of All-inclusive Care (PACE)
  • reducing the administrative burden in accessing Medicare data for use in care coordination
  • program integrity opportunities
  • Medicare Modernization Act of 2003 file timing
  • state buy-in file data exchange
  • improving Medicare Part A buy-in
  • opportunities to simplify eligible and enrollment

Private safety-net hospitals serve especially large numbers of dually eligible, Medicare-Medicaid patients and will be interested to see whether CMS’s recommendations translate into action at the state level.

To see the entire letter, including additional information about these ten opportunities, go here.

Bill Would Overhaul Medicaid DSH

A new Senate proposal would change how the federal government allocates Medicaid disproportionate share money (Medicaid DSH) to the states.

The State Accountability, Flexibility, and Equity (SAFE) for Hospitals Act, introduced by Senator Marco Rubio (R-FL), seeks to

…create equity for all states by updating a metric used to determine how much each state is allotted, which has not been reformed since the early 1990s.

A news release issued by Senator Rubio explains that the bill

  • Gradually changes the DSH allocation formula so states’ allocations are based on the number of low-income earners living in the state, as a percentage, of the total U.S. population earning less than 100% of the Federal Poverty Level (FPL).
  • Prioritizes DSH funding to hospitals providing the most care to vulnerable patients, while providing states with the necessary flexibility to address the unique needs of hospitals in each state.
  • Expands the definition of uncompensated care to include costs incurred by hospitals to provide certain outpatient physician and clinical services, which is a change recommended by MACPAC.
  • Allows states to reserve some of their DSH funding allocations to be used in future years in order to give hospitals more certainty or consistency in the amount of DSH funding they can expect when planning for the future.

The news release also explains that one of the purposes of the bill is to benefit Florida.

NAUH will monitor the bill’s progress closely, evaluate its potential impact on private safety-net hospitals, and respond appropriately, if needed.

Learn more about the new Medicaid DSH bill by reading the news release and this one-page summary of the bill.

MACPAC Looks at Medicaid DSH

Last week the Medicaid and CHIP Payment and Access Commission met in Washington, D.C. and one of the subjects on its agenda was Medicaid DSH.

The Affordable Care Act mandated major reductions of Medicaid disproportionate share (Medicaid DSH) allotments to states and those reductions have been delayed by Congress several times but are now scheduled to begin in FY 2020.

At the MACPAC meeting the commission’s staff presented three proposed recommendations that address Medicaid DSH allotments; these recommendations were based on a consensus reached by MACPAC commissioners at their October meeting.  Those recommendations are:

  1. Phase in Medicaid DSH reductions more gradually over a longer period of time.
  2. Apply reductions to unspent DSH funds first.
  3. Distribute reductions in a way that gradually improves the relationship between DSH allotments and the number of non-elderly, low-income individuals in a state.

Current regulations call for Medicaid DSH cuts to begin in FY 2020 and for DSH payments to decrease $4 billion a year in FY 2020, rising to $8 billion the following year.  It appears MACPAC may suggest slowing the pace of these cuts by starting with $2 billion in cuts in FY 2020 and then raising that amount $2 billion a year through 2023, when they would reach $8 billion a year.  MACPAC does not appear to prepared to suggest another delay in beginning the Medicaid DSH cuts.

As the third recommendation suggests, MACPAC is considering recommending a change in how DSH cuts are calculated on a state-by-state basis.  In particular, MACPAC appears to be focusing on how better to target cuts so that Medicaid DSH money continues to reach the hospitals that most need this money.  As a Medicaid expansion state, PEACH needs to pay particular attention to any such change in the methodology for determining how DSH cuts are allocated among the states.

MACPAC is expected to vote on these recommendations during its January 24-25 meetings.

All private safety-net hospitals participate in the Medicaid DSH program and rely heavily on these funds to serve the low-income communities in which they are located.  NAUH will monitor MACPAC’s upcoming deliberations, evaluate the potential impact of any MACPAC recommendations on NAUH members, and develop and implement an appropriate legislative strategy based on that analysis, if needed.

For a closer look at the draft MACPAC recommendations and the rationale underlying each, go here to see the presentations that guided last week’s MACPAC discussion about Medicaid DSH.

Ambulances Respond Slower to Low-Income Communities

People living in low-income communities wait about four minutes longer for ambulances to respond to their call for help when they are having a heart attack, a new study has found.

In communities with annual median incomes between $57,000 and $113,000, the study found that ambulances arrive in an average of 37.5 minutes – faster than in communities where the annual median income is between $20,250 and $42,642, where the typical wait time is 43 minutes.

Neither result is anywhere near industry benchmarks of 4, 8, and 15 minutes for delivering specific services in response to heart attack symptoms.

Among the possible reasons for the difference in response times, the study’s authors suggest, are hospital closures in and around low-income areas, EMS protocols that call for emergency response from facilities that specialize in cardiac care that may be farther from low-income communities, and a reduced number of private ambulance services serving lower-income areas.

Such findings have important implications for the communities served by private safety-net hospitals.

Learn more about the study, its methodology, and its findings in the report “A US National Study of the Association Between Income and Ambulance Response Time in Cardiac Arrest,” which can be found here, on the JAMA Open Network web site.

CMS Proposes New Medicaid Managed Care Regulation

Just two years after a major overhaul of Medicaid managed care regulations, the Centers for Medicare & Medicaid Services is again proposing changes in how the federal government regulates the delivery of managed care services to Medicaid beneficiaries.

Under the newly proposed regulation, states would:

  • be free to implement more changes in their managed care programs without seeking federal permission;
  • have slightly more flexibility in how supplemental payments are made to hospitals through managed care plans and implement some such changes without federal approval;
  • be permitted to redefine what constitutes an adequate provider network for managed care plans; and
  • not be required to publicize beneficiary grievance and appeals processes as prominently as they currently do.

Overall, the proposed regulation appears to help managed care insurers a great deal, states a little, and hospitals barely at all.  It also could have serious implications for private safety-net hospitals, most of which are located in states that employ managed care in their Medicaid programs.

Stakeholders have until January 14 to submit formal comments about the proposal to CMS.

To learn more about the proposed Medicaid managed care regulation, go here to see CMS’s news release presenting the regulation, go here to see a more detailed CMS fact sheet, and go here to see the proposed regulation itself.

MACPAC: Let’s “hit the pause button” on Medicaid Work Requirements

The non-partisan legislative branch agency that advises Congress and the administration on Medicaid issues will ask the administration to delay approving any more state Medicaid work requirements.

That was the decision reached by the Medicaid and CHIP Payment and Access Commission when it met last week.

MACPAC warned that the work requirement currently being implemented in Arkansas, the first state to introduce such a requirement, is flawed and needs further work before moving forward.  The agency also believes the federal government should increase its oversight of new Medicaid work requirements before additional states begin implementing similar, already-approved Medicaid work requirements.

MACPAC plans to convey its concerns in a letter to Department of Health and Human Services Secretary Alex Azar.

Medicaid work requirements pose a potential challenge for private safety-net hospitals because they could leave meaningful numbers of low-income residents of the communities those hospitals serve without health insurance.

Learn more about MACPAC’s objections to the manner in which Medicaid work requirements are being introduced in this Bloomberg Law article.

 

House Members Protest Site-Neutral Payment Proposal

138 members of the House of Representatives have written to Centers for Medicare & Medicaid Services administrator Seema Verma to protest CMS’s proposal to extend Medicare outpatient site-neutral payment policies to off-campus, provider-based outpatient departments specifically exempted from such policies by Congress under the Bipartisan Budget Act of 2015.

In questioning CMS’s rationale for the proposed policy, the House members wrote that

It is unclear how CMS has deemed all of the OPD [outpatient department] services at the grandfathered off-campus HOPDs [hospital outpatient departments] as cause of an unnecessary increase in volume of OPD services, and we ask you to provide clarity on this when making these payment changes.

The House members also wrote that

The agency has also proposed cutting payment to 40 percent of the current HOPD rate for grandfathered off-campus HOPDs that begin to furnish a new service from a clinical facility not offered prior to November 1, 2015 which could unfairly penalize grandfathered off-campus HOPDs that expand or diversify the critical services they offer to meet the changing needs of their patients.

In a formal response to the proposed regulation, NAUH expressed much the same sentiment, maintaining that the regulation, if adopted, could detract from the ability of private safety-net hospitals to serve their communities. See that letter here.

Go here to see the House letter.

“Public Charge” Proposal Raises Potential Issues for Safety-Net Hospitals

A proposal by the Department of Homeland Security could make it more difficult for some immigrants to stay in the U.S. permanently by scrutinizing more closely whether they might become a “public charge” if they remain in the country and rejecting those who appear likely to do so.

By “public charge” the draft Homeland Security regulation refers to people who might depend or come to depend heavily on government assistance if they remain in the country.

If implemented, such a regulation might discourage immigrants from enrolling in government health care programs, which could endanger their health and make it more difficult for urban safety-net hospitals to serve their communities, many of which have large numbers of immigrants.  The regulation also might encourage some people to drop out of government programs that provide services they need.

NASH is concerned about the potential impact of this regulation on private safety-net hospitals and intends to submit formal comments about the proposal.  Comments are due by mid-December.

To learn more about the proposed regulation, see this Washington Post article or go here to see proposed regulation itself.