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Hospital Groups Join NASH in Calling for Delay of Medicaid DSH Cuts

Seven hospital trade groups have written to congressional leaders asking them to delay Affordable Care Act-mandated cuts in Medicaid disproportionate share hospital payments (Medicaid DSH) that are scheduled to take effect in October of this year.

Their letter echoes a long-time advocacy priority of the National Alliance of Safety-Net Hospitals.

In their letter the groups, led by the American Hospital Association and the Association of American Medical Colleges, write of the underlying rationale for the Affordable Care Act mandate for Medicaid DSH cuts that

…the coverage rates envisioned under the ACA have not been fully realized, and tens of millions of Americans remain uninsured. In addition, Medicaid underpayment continues to pose ongoing financial challenges for hospitals treating our nation’s most vulnerable citizens.

NASH has long advocated such delaying Medicaid DSH cuts, most recently in comments to Congress in response to the proposed State Accountability, Flexibility, and Equity for Hospitals Act.

Delaying Medicaid DSH cuts also is identified as an advocacy priority of private safety-net hospitals in NASH’s 2019 policy and advocacy agenda.

End Run Around Congress for Medicaid Block Grants?

The Trump administration reportedly is considering introducing Medicaid block grants through regulations rather than legislation, according to published reports.

Those reports explain that the administration may seek to offer states an opportunity to apply to the federal government to use Medicaid block grants by obtaining section 1115 Medicaid waivers, a commonly used tool for states seeking exemptions from federal legislative or regulatory requirements.

As reported by the online publication The Hill,

…the Trump administration is now considering issuing guidance to states encouraging them to apply for caps on federal Medicaid spending in exchange for additional flexibility on how they run the program, according to people familiar with the discussions.

Proposals to implement Medicaid block grants have arisen periodically over the past decade but have never gotten beyond the discussion stage because of how difficult it would probably be to gain congressional approval for such a program.  This latest proposal would seek to circumvent that problem by making Medicaid block grants optional for states and permitting those states interested in using them to apply for a Medicaid waiver from Centers for Medicaid & Medicaid Services to do so.

It is not clear whether such an approach would be legal.

NASH has long been skeptical about Medicaid block grants, concerned that the manner in which such block grants are implemented could impose artificial limits on state Medicaid spending that could be especially harmful during economic downturns when Medicaid enrollment typically rises and the demand for Medicaid-covered services falls especially heavily on private safety-net hospitals.  NASH’s advocacy agenda for 2019 addresses this very issue, explaining that

Block grants, whether based on individual states’ Medicaid enrollment or on their past Medicaid spending, could impose unreasonable limits on Medicaid spending that could potentially leave private safety-net hospitals unreimbursed for care they provide to legitimately eligible individuals. NASH will work to ensure that any new approach that involves Medicaid block grants continues to give states the ability to pay safety-net hospitals adequately for the essential services they provide to the low-income residents of the communities in which those hospitals are located.

Learn more about this latest proposal in The Hill article “Trump officials consider allowing Medicaid block grants for states.”

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.

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.

 

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.

Proposed “Public Charge” Regulation Could Hit Medicaid, Hospitals

If a regulation proposed by the Department of Homeland Security to redefine what constitutes a “public charge” is adopted, millions of people currently enrolled in the Medicaid and Children’s Health Insurance Program might choose to disenroll from those programs rather than risk losing their opportunity to obtain legal permanent resident status in the U.S.

The proposed regulation seeks to filter out of possible residency status individuals who might become public charges, or dependent on government programs, over time.

A new analysis published by the Kaiser Family Foundation concluded that

Under the proposed rule, individuals with lower incomes, a health condition, less education, and/or who are enrolled or likely to enroll in certain health, nutrition, and housing programs would face increased barriers to obtaining LPR [legal permanent residency] status.

The study notes that

Nearly all (94%) noncitizens who originally entered the U.S. without LPR status have at least one characteristic that DHS could potentially weigh negatively in a public charge determination.

To avoid losing eligibility for legal permanent residency status, the analysis suggests,

 The proposed rule would likely lead to disenrollment from Medicaid and other programs among noncitizens who intend to seek LPR status as well as among a broader group of individuals in immigrant families, including their primarily U.S. born children.

How many people might disenroll from Medicaid, CHIP, and other programs is difficult to project but the study notes that

If the proposed rule leads to Medicaid disenrollment rates ranging from 15% to 35% among Medicaid and CHIP enrollees living in a household with a noncitizen, between 2.1 to 4.9 million Medicaid/CHIP enrollees would disenroll.

And

Reduced participation in Medicaid and other programs would negatively affect the health and financial stability of immigrant families and the growth and healthy development of their children, who are predominantly U.S.-born.

This, in turn, could lead to financial challenges for health care providers serving communities with large numbers of low-income patients, many of whom could be individuals who do not have permanent residency status.  Some could seek to disenroll from Medicaid, or not to enroll if they qualify, leaving them uninsured if and when they need and seek medical care.  This could prove especially challenging for private safety-net hospitals, which serve communities with large numbers of low-income patients and often serve communities with large numbers of immigrant residents as well.

Learn more about the proposed regulation and its implications for those it might affect and their health status in the Kaiser Family Foundation report “Estimated Impacts of the Proposed Public Charge Rule on Immigrants and Medicaid,” which can be found here.