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Senate Finance Committee Reports on Supplemental Medicaid Payments

The majority members of the Senate Finance Committee have published a report on supplemental Medicaid payments.

According to the new document,

This report seeks to increase educational understanding of Medicaid supplemental payments, as well as outline the reporting mechanisms for these payments to ensure adequate stewardship of taxpayer dollars. 

The report consists of descriptions of the different types of supplemental Medicaid payments that states make to some providers, including:

  • Medicaid disproportionate share payments (Medicaid DSH)
  • non-DSH payments
  • upper-payment limit payments (UPL payments)
  • demonstration supplemental payments
  • medical education payments

It also describes the magnitude of these payments, noting that supplemental Medicaid payments accounted for $50 billion of the $600 billion spent on Medicaid by the federal and state governments in 2016, the most recent year for which comprehensive data is available.  In addition, it outlines how those payments are distributed while also considering how these payments affect the overall adequacy of Medicaid payments to providers; this varies from state to state.

Finally, the report reviews how the states finance their Medicaid programs, including through provider taxes, intergovernmental transfers, and certified public expenditures, and how states report their supplemental Medicaid payments to the federal government.

All private safety-net hospitals receive supplemental payments from their state Medicaid programs and consider those payments essential resources supporting their ability to serve the residents of the low-income communities in which they are generally located.

To learn more, see the report “Greater Transparency of Supplemental Payments Needed,” which was prepared by the majority staff of the Senate Finance Committee.

CBO Targets Health Care in Options for Reducing Deficit

Every year the Congressional Budget Office publishes a menu of options for reducing federal spending and the federal budget deficit.  As in the past, this year’s compendium includes a number of options to reduce federal health care spending and raises federal revenue through health care initiatives.

The cost-cutting options include:

  • establish caps on federal spending for Medicaid
  • limit states’ taxes on health care providers
  • reduce federal Medicaid matching rates
  • change the cost-sharing rules for Medicare and restrict Medigap insurance
  • raise the age of eligibility for Medicare to 67
  • reduce Medicare’s coverage of bad debt
  • consolidate and reduce federal payments for graduate medical education at teaching hospitals
  • use an alternative measure of inflation to index social security and other mandatory programs

Options to raise additional revenue include:

  • increase premiums for Parts B and D of Medicare
  • reduce tax subsidies for employment-based health insurance
  • increase the payroll tax rate for Medicare hospital insurance

Many of these proposals, if implemented, would be damaging for private safety-net hospitals.

Learn more about the CBO’s recommendations, how they might be implemented, and their potential implications in the CBO report Options for Reducing the Deficit: 2019 to 2028.

 

NAUH Urges Senators to Vote “No” on Better Care Reconciliation Act

Citing provisions that would leave an additional 22 million people uninsured by 2026 and reduce federal investment in Medicaid-covered health care approximately $772 billion over the next decade, the National Association of Urban Hospitals has asked members of the Senate to vote “no” on the Better Care Reconciliation Act.

In a message to senators, NAUH noted that the bill fails to restore Medicare and Medicaid payment cuts that were used to finance the Affordable Care Act’s Medicaid expansion and that it would limit states’ ability to use provider taxes to finance their Medicaid programs.

NAUH also observed that the manner in which the bill would limit future growth in federal Medicaid spending could force states to reduce Medicaid eligibility, benefits, and payments to providers.

See NAUH’s message to senators about the Better Care Reconciliation Act here.

OIG Reveals 2016 Plans

The U.S. Department of Health and Human Services’ Office of the Inspector General (OIG) has published its work plan for the 2016 fiscal year.

In 2016, the OIG will continue to examine all aspects of HHS endeavor, including Medicare, Medicaid, hospital services, public health activities, and more. In the coming year it will continue a number of hospital-focused projects while also focusing more on health care delivery, health care reform, alternative payment methodologies, and value-based purchasing initiatives.

hhsOIGAmong the OIG’s planned Medicare projects in 2016 – some of them continued from the past and some of them new, quoted directly from the work plan – are:

  • Hospitals’ use of outpatient and inpatient stays under Medicare’s two-midnight rule. We will determine how hospitals’ use of outpatient and inpatient stays changed under Medicare’s two-midnight rule, as well as how Medicare and beneficiary payments for these stays changed, by comparing claims for hospital stays in the year prior to the effective date of the two-midnight rule to stays in the year following the effective date of that rule. We will also determine the extent to which the use of outpatient and inpatient stays varied among hospitals.
  • Analysis of salaries included in hospital cost reports. We will review data from Medicare cost reports and hospitals to identify salary amounts included in operating costs reported to and reimbursed by Medicare. Employee compensation may be included in allowable provider costs only to the extent that it represents reasonable remuneration for managerial, administrative, professional, and other services related to the operation of the facility and furnished in connection with patient care.
  • Medicare oversight of provider-based status. We will determine the number of provider-based facilities that hospitals own and the extent to which CMS has methods to oversee provider-based billing. We will also determine the extent to which provider-based facilities meet requirements described in 42 CFR Sec. 413.65 and CMS Transmittal A-03-030, and whether there were any challenges associated with the provider-based attestation review process. Provider-based status allows facilities owned and operated by hospitals to bill as hospital outpatient departments. Provider-based status can result in higher Medicare payments for services furnished at provider-based facilities and may increase beneficiaries’ coinsurance liabilities. The Medicare Payment Advisory Commission (MedPAC) has expressed concerns about the financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services.
  • Comparison of provider-based and freestanding clinics. We will review and compare Medicare payments for physician office visits in provider-based clinics and freestanding clinics to determine the difference in payments made to the clinics for similar procedures and assess the potential impact on Medicare of hospitals’ claiming provider-based status for such facilities. Provider-based facilities often receive higher payments for some services than do freestanding clinics.
  • Review of hospital wage data used to calculate Medicare payments. We will review hospital controls over the reporting of wage data used to calculate wage indexes for Medicare payments. Prior OIG wage index work identified hundreds of millions of dollars in incorrectly reported wage data and resulted in policy changes by CMS with regard to how hospitals reported deferred compensation costs.
  • Inpatient rehabilitation facilities—adverse events in postacute care for Medicare beneficiaries. We will estimate the national incidence of adverse and temporary harm events for Medicare beneficiaries receiving postacute care in inpatient rehabilitation facilities (IRFs). We will also identify factors contributing to these events, determine the extent to which the events were preventable, and estimate the associated costs to Medicare.
  • CMS validation of hospital-submitted quality reporting data. We will determine the extent to which CMS validated hospital inpatient quality reporting data.
  • Ambulatory surgical centers—payment system. We will review the appropriateness of Medicare’s methodology for setting ambulatory surgical center (ASC) payment rates under the revised payment system. We will also determine whether a payment disparity exists between the ASC and hospital outpatient department payment rates for similar surgical procedures provided in both settings.
  • Use of electronic health records to support care coordination through ACOs. We will review the extent to which providers participating in ACOs in the Medicare Shared Savings Program use electronic health records (EHRs) to exchange health information to achieve their care coordination goals. We will also assess providers’ use of EHRs to identify best practices and possible challenges to the exchange and use of health data, such as degree of interoperability, financial barriers, or information blocking.
  • Accountable Care Organizations: Strategies and Promising Practices. We will review ACOs that participate in the Medicare Shared Savings Program (established by section 3022 of the Affordable Care Act). We will describe their performance on the quality measures and cost savings over the first three years of the program and describe the characteristics of those ACOs that performed well on measures and achieved savings. In addition, we will identify ACOs’ strategies for and challenges to achieving quality and cost savings.

Among the Medicaid projects the OIG will undertake, again presented in language taken directly from its work plan, are:

  • Transportation services—compliance with Federal and State requirements. We will determine the appropriateness of Medicaid payments by States to providers for transportation services.
  • Health-care-acquired conditions—prohibition on Federal reimbursements. We will determine whether selected States made Medicaid payments for hospital care associated with health-care-acquired conditions and provider-preventable conditions and quantify the amount of Medicaid payments for such conditions.
  • State use of provider taxes to generate Federal funding. We will review State health-care-related taxes imposed on various Medicaid providers to determine whether the taxes comply with applicable Federal requirements. Our work will focus on the mechanism States use to raise revenue through provider taxes and determine the amount of Federal funding generated.
  • State compliance with Federal Certified Public Expenditures regulations. We will determine whether States are complying with Federal regulations for claiming Certified Public Expenditures (CPEs), which are normally generated by local governments as part of their contribution to the coverage of Medicaid services.
  • Reviews of State Medicaid Fraud Control Units. We will continue to conduct in-depth onsite reviews of the management, operations, and performance of a sample of MFCUs. We will identify effective practices and areas for improvement in MFCU management and operations.
  • Medicaid managed care reimbursement. We will review States’ managed care plan reimbursements to determine whether MCOs are appropriately and correctly reimbursed for services provided.
  • Medicaid managed care entities’ identification of fraud and abuse. We will determine whether Medicaid MCOs identified and addressed incidents of potential fraud and abuse. We will also describe how States oversee MCOs’ efforts to identify and address fraud and abuse.
  • HRSA—duplicate discounts for 340B-purchased drugs. We will assess the risk of duplicate discounts for 340B-purchased drugs paid through Medicaid MCOs and describe States’ efforts to prevent them.

To learn more about the OIG’s plans in 2016, go here to see the document Work Plan Fiscal Year 2016.

States Turning More to Providers to Fund Medicaid

States are relying more on provider taxes and other sources to raise their share of Medicaid funding, a new study by the U.S. Government Accountability Office (GAO) has found.

According to the GAO, state use of such funding rose 21 percent from 2008 to 2012.  Most of the money came from health care provider taxes, provider donations, intergovernmental transfers, and Medicaid certified public expenditures.

gaoWhile the study examined the issue nation-wide it focused on Medicaid financing in three states:  California, Illinois, and New York.

To learn more about how states are financing their share of their Medicaid programs and why this is of interest to policy-makers, see the recently released GAO report States’ Increased Reliance on Funds from Health Care Providers and Local Governments Warrants Improved CMS Data Collection and a newly published companion to the report titled Questionnaire Data on States’ Methods for Financing Medicaid Payments from 2008 through 2012.

GAO Questions State Medicaid Financing

States are now financing more than a quarter of their share of Medicaid expenditures with money from sources other than state general funds, according to a new study by the Government Accountability Office (GAO).

According to the GAO, 26 percent of state share of Medicaid funding comes from taxes on health care providers, transfers from local governments and local government providers, and other sources.  Such funding, the GAO noted, shifts additional Medicaid costs to the federal government.

gaoExacerbating this problem, the GAO reports, is that the Centers for Medicare & Medicaid Services (CMS), which oversees Medicaid, does not assure that it receives complete and accurate data on funding sources from the states, leaving CMS without a complete understanding of how states are financing their Medicaid expenditures.  In the report, the GAO recommends a stronger CMS effort to gather such data – a recommendation that CMS did not accept.

Learn more about the GAO study “States Increased Reliance on Funds From Health Care Providers and Local Governments Warrants Improved CMS Data Collection” by finding the complete report and a summary here, on the GAO web site.