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New Approach to Readmissions Program Takes Effect

Medicare’s hospital readmissions reduction program is moving in a new direction beginning in FY 2019 after Congress directed the Centers of Medicare & Medicaid Services to compare hospitals’ performance on readmissions to similar hospitals instead of to all hospitals.

The policy change, driven by a belief that safety-net hospitals were harmed by the program and excessive penalties because their patients are more challenging to serve, results in all hospitals being divided into peer groups based on the proportion of low-income patients they serve.  The readmissions performance of hospitals is then compared only to other hospitals within each peer group.

As a result of this new approach, readmissions penalties against safety-net hospitals are expected to decline 25 percent in FY 2019 while the average penalty for hospitals serving the fewest low-income patients will rise.

NAUH was one of the leading proponents of this major change in how the readmissions reduction program treats hospitals.

Kaiser Health News has published a detailed story describing the policy change and its implications for hospitals, which face penalties of up to three percent of their Medicare revenue for what is considered “excessive” readmissions of Medicare patients within 30 days of their discharge from the hospital.  Included in the article is a searchable database of every hospital in the country that lists the peer group for each hospital, its FY 2018 and FY 2019 readmissions penalties by percentage of Medicare revenue, and the change in readmissions penalty expected from FY 2018 to FY 2019.  Go here to see the article “Medicare Eases Readmission Penalties Against Safety-Net Hospital.”

MACPAC Meets

The Medicaid and CHIP Payment and Access Commission met recently in Washington, D.C. to review a number of Medicaid- and CHIP-related issues.

MACPAC members heard presentations on and discussed the following issues:

Find outlines of these subjects and additional materials by clicking the links above and go here for a transcript of the two days of public meetings.

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 array of issues affecting Medicaid and the State Children’s Health Insurance Program.  While its recommendations are binding on neither the administration nor Congress, MACPAC’s work is highly influential and often finds its way into future Medicaid and CHIP policy.  Because private safety-net hospitals serve so many Medicaid and CHIP patients, they have an especially major stake in MACPAC deliberations and recommendations.

 

Do “Narrow Networks” Jeopardize Care?

They may if they serve Medicaid patients.

Or so suggests a new Health Affairs report.

As growing numbers of Medicaid managed care plans reduce their provider networks as a means of managing costs, provider turnover appears to be growing.  According to the report, narrow networks tracked during a five-year period experienced a 20 percentage point greater rate of physician turnover than non-narrow plans.

Such turnover is thought to be a potential problem for Medicaid patients who are socially or clinically vulnerable and present complex medical needs.  The loss of a physician can disrupt and complicate the care of such patients – and disrupt it in ways that may not necessarily be detected by current quality measures.

This could pose a problem for the communities served by private safety-net hospitals, which generally have large numbers of Medicaid patients who are enrolled in managed care plans.

Learn more about the challenges poses by narrow networks operated by Medicaid managed care plans in the study “Network Optimization And The Continuity Of Physicians In Medicaid Managed Care,” found here, on the Health Affairs web site, or go here to see a Healthcare Dive summary of the study.

S&P: 340B Cuts Will Hurt

Payment cuts in the 340B prescription drug program will most likely hurt hospital financial performance, and among those most likely to be hurt are DSH hospitals, small hospitals, and rural hospitals.

These are among the conclusions in a report recently issued by S&P Global Ratings.

The report concludes that

…the impact of the cuts to the 340B Drug Pricing Program on not-for-profit hospitals that rely on 340B drug savings will likely weaken their operating performance at a time of already tightening margins.

Effective the beginning of 2018, the Centers for Medicare & Medicaid Services cut the 340B program 16 percent, or $1.6 billion, reducing the reimbursement 340B-eligible hospitals receive for dispensing prescription drugs on an outpatient basis to eligible patients.

The hospitals most affected, according to S&P, are those that

…depend more on the margin they receive from 340B medications to sustain their bottom line and overall financial profiles.  In these cases, cuts to the program are likely to further stress already-constrained operating performance, adding to financial pressure and possible negative rating actions.

Most private safety-net hospitals participate in the 340B program and will be affected by the recent cut.  NAUH conveyed to CMS its opposition to the cut when it was proposed last fall and earlier this year asked Congress to intervene and reverse it.

Learn more about the possible financial impact on hospitals of recent 340B payment cuts in this S&P Global report.

 

The 340B Issue Explained

The section 340B prescription drug discount program has grown increasingly controversial in recent years.

The program, established in the 1990s to help hospitals with the cost of the prescription drugs they provide to low-income patients on an outpatient basis, has grown considerably since its inception.  Pharmaceutical companies argue that it is too large, that it contributes to the growing cost of prescription drugs, and that hospitals are not using the savings they reap from the program to serve more low-income patients, as was envisioned when Congress created the program.

Eligible providers, on the other hand, note that much of the program’s growth was mandated by Congress and that 340B continues to serve its original purpose of helping hospitals serve low-income outpatients while using the savings the program generates to provide even further assistance to low-income patients.

Recent federal efforts to address some of these issues have satisfied neither side.

Most private safety-net hospitals participate in the 340B program and consider it to be a vital tool in helping them serve their communities.

The Vox news web site has published an article that describes the program and outlines both sides of the argument.  Find it here.

CMS Rejects Bid to Impose Lifetime Limit on Medicaid Services

The Centers for Medicare & Medicaid Services has denied a request from the state of Kansas to impose a lifetime limit on the Medicaid benefits individuals may receive.

In a move that the agency appeared to signal last week and that appears to have national implications, CMS administrator Seema Verma explained that

 We have determined that we will not approve Kansas’ recent request to place a lifetime limit on Medicaid benefits for some beneficiaries…We seek to create a pathway out of poverty, but we also understand that people’s circumstances change, and we must ensure that our programs are sustainable and available to them when they need and qualify for them.

Medicaid advocates feared that benefit limits would follow in the footsteps of the recent efforts of some states to impose work requirements on many Medicaid participants – efforts that, in some cases, have proven successful.

Such a decision, if it becomes policy, would be beneficial for private safety-net hospitals.  These hospitals serve more Medicaid patients than the typical hospital and would therefore be more likely to encounter patients whose eligibility would be jeopardized by a limit on lifetime Medicaid benefits.

Learn more about Medicaid lifetime benefit limits and the CMS decision in this article in the online publication The Hill.

Short-Term Plans May Short-Change Purchasers

The short-term health insurance plans that the administration proposes making more available to consumers as an alternative to comprehensive health insurance that meets Affordable Care Act coverage requirements may leave consumers with greater out-of-pocket costs and less coverage for some critical services.

According to a Kaiser Family Foundation review of available short-term, limited duration plans in 10 markets across the country, those plans:

  • often do not cover mental health and substance abuse services and outpatient prescription drugs
  • may turn down individuals or charge them higher premiums based on age, gender, or health status, including pre-existing conditions
  • require greater cost-sharing by their purchasers
  • do not cover maternity services at all

Such plans are not required to comply with the Affordable Care Act’s essential health benefits requirement.

Such plans may pose a particular risk to private safety-net hospitals because residents of the low-income communities they serve may be especially inclined to purchase such less-expensive health insurance.  When that insurance fails to cover some of the cost of caring for such patients, urban safety-net hospitals may be left with unreimbursed expenses for costs those patients are unable or unwilling to pay.

For a closer look at short-term health insurance plans, how they operate, and what they do and do not cover, see the report “Understanding Short-Term Limited Duration Health Insurance, which can be found here, on the web site of the Kaiser Family Foundation.

Court Rebuffs CMS on Medicaid DSH

A federal court has rejected the manner in which the Centers for Medicare & Medicaid Services collects certain Medicaid data from states in a ruling that has potential implications for eligible hospitals’ Medicaid disproportionate share hospital payments (Medicaid DSH).

In a case that challenged how CMS told hospitals to report third-party payments for Medicaid patients, the court ruled against CMS in two different ways:  first, it found that CMS had not interpreted a 2003 law in a manner consistent with congressional intent; and second, it ruled that CMS could not clarify its interpretation through a published FAQ rather than through regulations.

As a result of the ruling, some hospitals may get extra room under their hospital-specific Medicaid DSH limit.  For hospitals at, near, or above those caps, this could make it possible for them to receive additional Medicaid DSH payments from their state government.

This ruling could have positive implications for private safety-net hospitals that care for especially large numbers of Medicaid patients.

Learn more about the court ruling and its Medicaid DSH implications for hospitals in this RevCycle Intelligence article.

Senate Committee Looks at 340B Program

The Senate Health, Education, Labor, and Pensions Committee (HELP) held a hearing last week on the 340B prescription drug discount program.

The hearing was prompted by complaints from pharmaceutical companies about the discounts they are required to provide to eligible providers and by concern that hospitals are insufficiently accountable for how they use the savings they derive from those discounts to serve their low-income patients.  In addition, the Centers for Medicare & Medicaid Services recently reduced its Medicare payments to participating hospitals.

During the hearing, Senate Republicans expressed support for the program but spoke of the need for greater transparency in the use of the savings the 340B program generates for hospitals and a clearer sense of how those savings benefit low-income payments.  Committee Democrats expressed similar concern but with less urgency.

Hospital industry representatives expressed concern that any new requirements could weaken the program and rejected the idea that savings are misused.  Committee members pushed back against these contentions.

Most private safety-net hospitals participate in the 340B program and it is a vital tool in their efforts to serve their low-income communities.

The Senate HELP Committee intends to hold additional hearings about the 340B program.

Learn more about the 340B hearing and the concerns that led to in this Healthcare Dive article.

MACPAC Issues Annual Report, Recommendations to Congress

The Medicaid and CHIP Payment and Access Commission has published its annual report and recommendations to Congress.

MACPAC’s report addresses three primary areas:  Medicaid managed care, telehealth, and Medicaid disproportionate share payments (Medicaid DSH).

With 80 percent of Medicaid beneficiaries now enrolled in managed care plans, MACPAC offers three major recommendations for improving Medicaid managed care efforts:

  • permit states to require all of their Medicaid beneficiaries to enroll in a managed care plan
  • extend Medicaid managed care section 1915(b) waivers from two to five years
  • permit states to obtain waivers to waive freedom of choice and selective contracting restrictions

MACPAC notes the growing use of telehealth by state Medicaid programs and encourages states to continue this expansion while learning more from the efforts of one another to use telehealth effectively.

Finally, MACPAC notes that it

…continues to find little meaningful relationship across the country between DSH allotments and number of uninsured individuals, hospitals’ uncompensated care costs, and the number of hospitals providing essential community services that have high levels of uncompensated care. Total hospital charity care and bad debt continue to fall, especially in states that expanded Medicaid coverage, but Medicaid shortfall showed an uptick as a result of increased Medicaid enrollment. Now that Congress has delayed DSH allotment reductions for two years, the Commission will explore opportunities to improve the targeting of DSH payments in future reports.

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 array of issues affecting Medicaid and the CHIP program.

Medicaid DSH is very important to the nation’s private safety-net hospitals so NAUH will carefully monitor the response to MACPAC’s Medicaid DSH recommendations.

Learn more about MACPAC’s recommendations to Congress in its Report to Congress on Medicaid and CHIP, which can be found here.