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NASH Comments on Proposed Medicare Regulation (Part 2 of 3)

The National Alliance of Safety-Net Hospitals has submitted formal comments to the Centers for Medicare & Medicaid Services in response to the latter’s proposed hospital payment plan for FY 2020.

Responding to the proposed inpatient prospective payment system published by CMS in April, NASH primarily addressed a CMS proposal to change how it calculates Medicare disproportionate share (Medicare DSH) uncompensated care payments and proposed changes in the Medicare area wage index system.

Yesterday, the NASH blog presented the alliance’s written comments about proposed changes in Medicare DSH uncompensated care payments.  Today, it presents a detailed alternative proposal to CMS’s April 2019 recommendation for calculating those payments.  On Thursday the blog presents NASH’s response to proposed changes in the Medicare area wage index system.  The complete NASH response to the proposed CMS regulation can be found here.

Calculation of Medicare DSH Uncompensated Care Payments for FY 2020

Factor 3 represents a hospital’s share (as estimated by the Secretary) of the total uncompensated care provided by all hospitals eligible to receive DSH payments.  CMS has, in recent years, calculated UCC DSH payments using an average of three factor 3 calculations subject to a budget neutrality adjustment that modifies the average factor 3 for each hospital to spend the appropriate amount of money (i.e., factor 1 times factor 2) for the fiscal year.

For the reasons stated in the accompanying comment letter, NASH recommends that for FY 2020, CMS implement year one of a three-year transition to using a three-year average of audited post-transmittal 11 data.  The schedule for this transition would be as follows:

  • Year one (FY 2020) would consist of a blend of 2/3 of a hospital’s 2019 UCC DSH payment with 1/3 of the hospital’s UCC DSH payment based on unaudited 2017 S-10 data. During FY 2020, CMS could engage in audits of the 2017 data.
  • Year two (FY 2021) would consist of a blend of 1/3 of a hospital’s 2019 UCC DSH payment with 2/3 of the hospital’s UCC DSH payment based on the average factor 3 derived from the hospital’s audited 2017 data and unaudited 2018 data. During FY 2021, CMS could engage in audits of the 2018 data.
  • Year three (FY 2022) would consist of an equally weighted blend of the hospital’s audited 2017 and 2018 data and unaudited 2019 data.

Each year thereafter, CMS could continue to engage in audits while rolling forward the three-year average, adding a new year of data to the calculation and dropping the oldest year of data.  The result balances timeliness and accuracy while also maintaining year-over-year stability.

Specifically, for FY 2020, a hospital’s final factor 3 would be calculated by:

  • Calculating for each hospital a preliminary 2017 factor 3 by dividing the hospital’s reported line 30 uncompensated care (subject to any adjustments or trims) by the total reported line 30 uncompensated care (subject to any adjustments or trims) reported by all hospitals expected to receive DSH in FY 2020 on their 2017 cost reports.
  • Calculating for each hospital a blended FY 2020 factor 3 by summing the hospital’s preliminary 2017 factor 3 plus its FY 2019 final factor 3 plus its FY 2019 final factor 3 and dividing by 3 if the hospital received a payment in 2019 and 1 if the hospital received no payment in 2019.
  • Deriving a standardization factor by calculating the average factor 3 for all hospitals projected to receive DSH and dividing the result by 1.0.
  • Calculating each hospital’s final FY 2020 factor 3 by multiplying its blended FY 2020 factor 3 by the standardization factor.

Puerto Rico hospitals, Indian Health Service and Tribal hospitals would continue receive a factor 3 based on low-income insured days from FY 2013.

For 2021, each hospital’s factor three would be based on the three-year average of its 2019 final factor 3, its 2017 factor 3 and its 2018 factor 3.

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Tomorrow, see NASH’s comments on CMS’s proposal for changes in the Medicare geographic wage classification system.

See NASH’s entire response to the proposed Medicare regulation here.

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.

NASH Registers Concerns Over Uncompensated Care Audits

The process the federal government is employing to audit the uncompensated care costs that hospitals report to Medicare is plagued with problems, the National Alliance of Safety-Net Hospitals has written in a letter to the Centers for Medicare & Medicaid Services.

Those problems could result in reduced Medicare disproportionate share hospital payments (Medicare DSH) to private safety-net hospitals in the future, NASH warned in the letter.

According to NASH, problems with the audits of hospitals’ Medicare cost report S-10 worksheets, where they report their uncompensated care, include inconsistencies in the methods auditors are using and the data they demand and unreasonable deadlines for submitting requested supplemental data.

To address these problems, NASH asked CMS to standardize the auditing process and to convey decisions about auditing standards, methodologies, and time frames to hospitals.

In light of these problems, NASH also asked CMS not to use audited data to calculate Medicare DSH uncompensated care payments for FY 2020.

The S-10 audits are so important to private safety-net hospitals because the uncompensated care reported on the S-10 is used in the calculation of participating hospitals’ Medicare DSH uncompensated care payments.  When auditors reduce eligible hospitals’ uncompensated care data, that will result in future reductions of the Medicare DSH payments hospitals receive.  Those Medicare DSH payments play a vital role in helping to underwrite the cost of the care private safety-net hospitals provide to uninsured patients, so any undeserved reduction in those payments could hurt those hospitals and result in reduced access to care in the communities they serve.

Learn more by reading NASH’s letter to CMS about current challenges with uncompensated care audits.

NASH Unveils 2019 Agenda

The National Alliance of Safety-Net Hospitals has unveiled its public policy advocacy agenda for 2019.

That agenda explains that NASH will:

  • Address Medicare issues such as continuing threats to private safety-net hospitals’ Medicare DSH payments, audits of the Medicare cost report’s S-10 form, graduate medical education payments, potential cuts in bad debt, 340B, the participation of private safety-net hospitals in value-based purchasing and alternative payment model programs, and the expected national conversation about “Medicare for all.”
  • Address Medicaid issues such as the adequacy of Medicaid DSH payments, possible reductions in Medicaid eligibility and benefits, the implications of a new proposal to define whether new immigrants and their families pose a threat of becoming “public charges,” the possible introduction of Medicaid block grants, and possible new restrictions on how states may finance their Medicaid programs.
  • Work to protect private safety-net hospitals from federal spending cuts.
  • Reintroduce itself to Congress and the administration.
  • Seek to enhance its ability to help shape government health care policy in Washington by recruiting more members.

For NASH’s complete 2019 advocacy agenda click here

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.

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.

Helping Safety-Net Hospitals Help Their Patients

A new report published on the Health Affairs Blog describes the continuing challenges safety-net hospitals face and offers suggestions for helping them meet those challenges.

The challenges, according to the report, are the virtual elimination of the Affordable Care Act’s individual health insurance mandate; the continued decline in the amount of Medicare disproportionate share hospital money (Medicare DSH) provided to safety-net hospitals; and hospital closures that shift more of the burden for caring for uninsured patients onto a smaller pool of safety-net hospitals.  The result is under-served patients and new financial risks for the hospitals that remain after some safety-net hospitals close because of the large amounts of uncompensated care those hospitals continue to provide.

To address these challenges, the report offers three potential solutions:

  • Congress should revisit the Medicare DSH cuts.
  • States should target their DSH money to the hospitals providing the most uncompensated care.
  • Non-profit non-safety-net hospitals that stabilize uninsured emergency patients and then direct them to safety-net hospitals should be required to play a longer-term role in the care of such patients as part of their required community benefit or risk losing their tax-exempt status.

Learn more about the challenges safety-net hospitals continue to face and some of the possible solutions to those problems by going here, to the Health Affairs Blog, to see the report “Safety-Net Health Systems at Risk:  Who Bears The Burden Of Uncompensated Care?”

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.

 

CMS Publishes Proposed FY 2019 Inpatient PPS Regulation

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.

The following are the proposed rule’s highlights:

  • A 1.75 percent proposed increase of inpatient rates.
  • A $1.5 billion increase in the Medicare DSH uncompensated care payment pool during year two of the three-year phase-in of the use of S-10 uncompensated care data to calculate those payments.
  • The renaming of CMS’s “meaningful use” program to “promoting interoperability,” accompanied by major cuts in the number of measures hospitals must report as part of Medicare’s various quality programs.
  • A greater emphasis on the exchange of health care data among providers.
  • Several changes involving the Medicare area wage index system.
  •  Several requests for information:  one on promoting the exchange of data among hospitals, one on how to foster greater transparency of hospital prices, and one seeking recommendations for regulatory and policy changes to the Medicare wage index.

In the next three days this site will present more details about aspects of the proposed regulation that are of greatest interest to private safety-net hospitals.  The following is a list of what will be covered:

  • Tuesday – inpatient rates, Medicare disproportionate share (Medicare DSH) and the Medicare cost report’s S-10 worksheet, and the Medicare area wage index
  • Wednesday – multi-campus hospitals, the Medicare and Meidcaid electronic health record (EHR) incentive programs, and the Medicare hospital readmissions reduction program
  • Thursday – 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 proposed 1883-page rule here or reading the CMS fact sheet here.

NAUH Asks House to Block S-10 Data in Medicare DSH Calculation

In response to a request from the House Ways and Means Committee’s Health Subcommittee for suggestions from stakeholders on ways to improve the delivery of Medicare services and eliminate statutory and regulatory obstacles to more effective care delivery, NAUH has asked the committee to require the Centers for Medicare & Medicaid Services to continue using the low-income days proxy for 2013 in the calculation of Medicare disproportionate share payments (Medicare DSH) and not use S-10 uncompensated care data in that calculation until the S-10 form’s instructions have been improved and until the quality of the data hospitals report on an improved S-10 can be verified through audits.

After years of considering such an approach, Medicare adopted the use of the S-10 in the calculation of Medicare DSH payments in its final FY 2017 inpatient prospective payment system regulation, which was published earlier this month.

NAUH has long opposed the use of S-10 data for this purpose, maintaining that it is inaccurate, lacks uniformity, is subject to manipulation, and is not verified through auditing.  All private safety-net hospitals qualify for Medicare DSH payments and those payments help ensure access to care for the many low-income residents of the communities these hospitals serve.

See NAUH’s message to the House Ways and Means Committee here.