Congress Urged to Stop Pending Medicare Payment Cuts

— At stake: scheduled payment reductions totalling $54 billion

Healthcare groups are applauding efforts being made in Congress to stop two different cuts to the Medicare budget — both of which are due to “sequestration” requirements — before it’s too late.

One cut, part of the normal budget process, is a 2% — or $18 billion — cut in the projected Medicare budget under a process known as “sequestration.Sequestration allows for prespecified cuts in projected agency budget increases if Congress can’t agree on their own cuts. Medicare’s budget had been slated for a 2% sequester cut in fiscal year 2020; however, due to the pandemic and the accompanying increased healthcare needs, Congress passed a moratorium on the 2% cut. That moratorium is set to expire on April 1.

Another projected cut — this one for 4%, or $36 billion — will be triggered by the COVID relief bill, formally known as the American Rescue Plan Act. That legislation, which President Biden signed into law last Thursday, must conform to the PAYGO (pay-as-you-go) Act, which requires that any legislation that has a cost to it that is not otherwise offset must be offset by sequestration-style budget cuts to mandatory programs, including Medicare.

There are now several bills in Congress to address these pending cuts. H.R. 1868, co-sponsored by House Budget Committee chairman John Yarmuth (D-Ky.), House Ways & Means Committee chairman Richard Neal (D-Mass.), and House Energy & Commerce Committee chairman Frank Pallone Jr. (D-N.J.), among others, would get rid of the PAYGO Act requirement and extend the 2% Medicare sequester moratorium through the end of 2021.

Another bill, H.R. 315, introduced in January by Reps. Bradley Schneider (D-Ill.) and David McKinley (R-W.Va.), would extend the 2% sequester moratorium until the end of the public health emergency has been declared. In the Senate, S. 748, introduced Monday by senators Susan Collins (R-Maine) and Jeanne Shaheen (D-N.H.) would do the same.

“For many providers, the looming Medicare payment cuts would pose a further threat to their ability to stay afloat and serve communities during a time when they are most needed,” Shaheen said in a press release. “Congress should be doing everything in its power to prevent these cuts from taking effect during these challenging times, which is why I’m introducing this bipartisan legislation with Senator Collins. I urge the Senate to act at once to protect our health care providers and ensure they can continue their work on the frontlines of COVID-19.”

Not surprisingly, provider groups were happy about the actions in Congress. “MGMA [Medical Group Management Association] supports recent bipartisan, bicameral efforts to extend the 2% Medicare sequester moratorium for the duration of the COVID-19 public health emergency,” said Anders Gilberg, senior vice president for government affairs at MGMA, in a statement. “Without congressional action, the country’s medical groups will face a combined 6% sequester cut — a payment cut that is unsustainable given the financial hardships due to COVID-19 and keeping up with the cost of inflation.”

Leonard Marquez, senior director of government relations and legislative advocacy at the Association of American Medical Colleges, said in a statement that it was “critical” that Congress extend the 2% sequester moratorium “to help ensure hospitals, faculty physicians, and all providers have the necessary financial resources to continue providing quality care to COVID-19 and all patients ... While we are making progress against COVID-19, cutting provider payments in the middle of a pandemic could jeopardize the nation’s recovery.”

The American Medical Association (AMA) also urged Congress to prevent both the 2% and the 4% Medicare cuts. “We strongly oppose these arbitrary across-the-board Medicare cuts, and the predictably devastating impact they would have on many already distressed physician practices,” AMA executive vice president and CEO James Madara, MD, said in a letter sent to congressional leaders at the beginning of March.

In the letter, Madara noted that an AMA report, “Changes in Medicare Physician Spending During the COVID-19 Pandemic,” analyzed Medicare physician claims data and found spending dropped as much as 57% below expected pre-pandemic levels in April 2020.

“And, while Medicare spending on physician services partially recovered from the April low, it was still 12% less than expected by the end of June 2020,” he continued. “During the first half of 2020, the cumulative estimated reduction in Medicare physician spending associated with the pandemic was $9.4 billion (19%). Results from an earlier AMA-commissioned survey of 3,500 practicing physicians conducted from mid-July through August 2020 found that 81% of respondents were still experiencing lower revenue than before the pandemic.”

Not everyone is a fan of extending the 2% cut moratorium, however. “Bad idea,” said James Capretta, resident fellow at the American Enterprise Institute, a right-leaning think tank, at an event Tuesday on Medicare solvency sponsored by the Bipartisan Policy Center. “There’s plenty of give in the revenue streams of these systems that creating a precedent where we’re going to go back to the pre-sequester level — it’s better to move forward and if there are struggling systems out there, deal with it on an ad hoc basis rather than just across the board paying out a lot more money, which I don’t think is necessary.” He added, however, that he agreed with the bill to get rid of the 4% cut. “The bigger cut associated with PAYGO enforcement I think would be too much.”

Providers win Medicare loan extension, DSH relief but lose other asks in stop-gap spending law

https://www.healthcaredive.com/news/providers-win-medicare-loan-dsh-relief-stop-gap-continuing-resolution/586212/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202020-10-01%20Healthcare%20Dive%20%5Bissue:29992%5D&utm_term=Healthcare%20Dive

Dive Brief:

  • A stop-gap funding bill the president signed into law Thursday will keep the government open until mid-December and includes some provisions that could help providers’ bottom lines. The bill includes relief on advanced and accelerated Medicare loans and a delay of Medicaid payment cuts for disproportionate share hospitals.
  • The legislation extending government funding at current levels was passed by the House earlier this month and approved by the Senate on Wednesday. But more sweeping aid many providers wanted, including more grants for hospitals and a higher federal match rate for Medicaid, were left out of the legislation.
  • Provider groups like the American Hospital Association thanked Congress and the Trump administration for the relief, but AHA noted it would continue lobbying for Medicare loan forgiveness and an extended deadline for the Medicaid DSH cuts.

Dive Insight:

The continuing resolution, and its healthcare provisions within, are pretty much the only direct aid providers can expect from Washington before the looming November presidential election. Congress has largely punted on a fifth round of COVID-19 relief legislation amid partisan deadlock, with Republicans backing a much skinnier package than Democrats.

The CR delays the repayment date for $100 billion in advanced Medicare loans to providers by a year. CMS originally planned to start recouping the loans from providers’ fee-for-service Medicare payments in late July, but unilaterally decided to hold off as lawmakers negotiated the bill.

It also lowers the rate of recoupment to 25% for the first 11 months of repayment, down from the current 100% rate, and 50% for the next six months. Providers have 29 months to pay back the funds in full before interest kicks in, and the interest rate is decreased from 9.6% to 4%.

The original repayment terms and timeline would have been difficult for some cash-strapped doctor’s offices and hospitals to meet, as the burden imposed by COVID-19 hasn’t lifted and is worsening in many areas of the country. Many providers took out the loans earlier this year as a lifeline to stave off insolvency — still a very real threat for many practices.

About 35% of primary care physicians say revenue and income are still significantly lower than pre-pandemic levels, losses that could force them to close, according to a September survey by the Larry A. Green Center and the Primary Care Collaborative.

AHA CEO Rick Pollack said in a Wednesday statement the massive hospital association appreciated the provisions, but would keep pushing for full loan forgiveness, along with extending the delay of DSH cuts for all of the 2021 fiscal year. The CR pushed back the original payment cut start date from Dec. 1 to Dec. 12.

The Association of American Medical Colleges was more worried about the impact on the system.

“We are concerned that health care providers, researchers, students, and public health professionals — who have been our country’s first line of defense against COVID-19 — will remain in limbo despite ongoing challenges that the pandemic presents,” CEO David Skorton said in a statement. “We strongly believe that a larger COVID-19 legislative relief package is essential to our nation’s health.”

However, drastic estimates from providers on financial losses largely haven’t panned out, though public health experts do warn COVID-19 could worsen going into the winter months. AHA estimated U.S. hospitals would see operating profits fall by almost $51 billion in April, the month with the sharpest volume decline because of the pandemic. It’s likelier hospitals lost about half that, according to research from a congressional advisory board, with federal grants covering the worst of short-term losses.

The CR also includes a provision stopping Medicare beneficiaries from seeing a monthly $50 Part B premium hike next year. It will keep the government open until Dec. 11, setting up another funding fight to avoid a shutdown after the election.

 

 

 

 

Drug payment cuts to 340B hospitals spur debate on best path forward

https://www.healthcarefinancenews.com/news/drug-payment-cuts-340b-hospitals-spur-debate-best-path-forward

340B hospitals breathing easier under Dem-controlled House

Hospitals say revenue from the 340B program is essential, while others contend the original law is being abused.

On August 3, an federal appeals court ruled that 340B hospitals will now be subject to Medicare cuts in outpatient drug payments by nearly 30%, reversing an earlier ruling calling those cuts illegal. The 2-1 decision by the U.S Court of Appeals for the District of Columbia Circuit essentially gives the Trump Administration and the Department of Health and Human Services the legal authority to reduce payment for Medicare Part B drugs to 340B hospitals.

HHS Secretary Alex Azar said the action means patients – particularly those who live in vulnerable areas – will pay less out-of-pocket for drugs in the Medicare Part B program. But providers, including the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals, said the 340B decision will hurt hospitals and patients in these vulnerable areas.

Hospitals that serve large numbers of Medicaid, Medicare and uninsured patients were getting the drugs for a discounted price, but, getting reimbursed at the higher price, HHS pays all hospitals for Medicare Part B drugs. The hospitals, many of which are in the red or operating on thin margins, were using the pay gap in the price difference to cover operational expenses. HHS deemed it inappropriate that these facilities would use Medicare to subsidize other activities and initiatives, and the appeals court agreed.

As per the original 340B legislation, discounts on drugs can range from 13% to 32% off the average retail price for participating providers, but Medicare Part D sets reimbursement in an entirely different way, leading to the significant reimbursement discrepancies – until the ruling, which furthered HHS’ push to narrow the spread between acquisition price and reimbursement.

THE DEBATE

“The opportunity to exploit this buy/sell differential probably has something to do with the explosive growth there’s been in the number of participating institutions in 340B,” said Michael Abrams, cofounder and managing partner of Numerof and Associates. “According to the data I came across, discounted 340B purchases grew 23% from 2018 to 2019, and currently make up about 8% of the total of the U.S. drug market. So from my perspective this looks like a loophole that’s been used by a small number of large institutions, who in many cases don’t serve that many disadvantaged patients, but nonetheless serve enough to qualify for the 340B program and to purchase the drugs they buy at the discounted rate.”

Groups representing U.S. hospitals would disagree with that assessment, and, in fact, when the appeals court handed its ruling, the AHA, AAMC and America’s Essential Hospitals said 340B hospitals and their patients would “suffer lasting consequences.”

“The decision conflicts with Congress’ clear intent and defers to the government’s inaccurate interpretation of the law, a point that was articulated by the judge who dissented from the opinion,” the groups wrote in a statement. “For more than 25 years, the 340B program has helped hospitals stretch scarce federal resources to reach more patients and provide more comprehensive services. Hospitals that rely on the savings from the 340B drug pricing program are also on the front-lines of the COVID-19 pandemic, and today’s decision will result in the continued loss of resources at the worst possible time.”

President and CEO of 340B Health Maureen Testoni also lamented the appeals court’s decision, calling the cuts “discriminatory.”

“These cuts of nearly 30% have caused real and lasting pain to safety-net hospitals and the patients they serve,” she said earlier this month. “Keeping these cuts in place will only deepen the damage of forced cutbacks in patient services and cancellations of planned care expansions. These effects will be especially detrimental during a global pandemic.

Abrams contends that much of the confusion and legal wrangling can be attributed to the vagueness of the original 340B legislation, the stated goal of which was to “enable participating institutions to stretch scarce financial dollars.” With little else to go on in terms of the language, those on each side of the issue were able to interpret it in their own way, with participating institutions saying it’s within the bounds of the law to use that revenue stream to enhance their mission – another phrase that’s open to wide interpretation.

“There’s no question this is being put to uses that were never intended,” said Abrams, adding that the profits generated by the buy/sell differential often disappear into balance sheets with little to no accountability.

Hospitals, for their part, feel they’re under siege by HHS at a critical time for the healthcare system’s financial viability. Even before the COVID-19 pandemic, hospitals saw the migration of lucrative inpatient procedures, such as hip and knee replacements, to freestanding outpatient facilities, which in some cases are not owned by the hospital. That represents a significant loss of revenue. Factor in the lost revenue from cancelled or delayed elective procedures due to the coronavirus, as well as patients who are too cautious to enter the healthcare system, and hospitals are hurting. AHA President and CEO Rick Pollack said in July that half of all U.S. hospitals will likely be in the red by the end of the year.

A COMPLICATED PICTURE

Actions by the pharmaceutical industry are also adding to the complication. A recent statement from America’s Essential Hospitals alleges that recent actions by pharmaceutical manufacturers “hinder access to affordable medications for millions of people who face financial hardships and defy clear statutory requirements that they provide drugs to 340B Drug Pricing Program covered entities.”

The manufacturers have threatened punitive actions – including withholding 340B drugs to contract pharmacies – for failing to comply with reporting requirements that Essential Hospitals call “arbitrary.”

“These data requests have no clear link to program integrity,” the group said. “Rather, they seem to be little more than a fishing expedition.”

A concrete example can be found in AstraZeneca’s decision to refuse 340B pricing to hospitals with on-site pharmacies for any drugs that will be dispensed through contract pharmacies. In a statement this week, Testoni of 340B called this action an “attack” on the 340B program that will hurt healthcare institutions as well as low-income and rural Americans.

“We believe that refusing to offer discounts that the 340B statute requires is a violation of federal law,” said Testoni. “We are calling on Health and Human Services Secretary (Alex) Azar to exercise his authority to stop these overcharges before they cause permanent damage to the healthcare safety net.”

Abrams sides more with the appeals court decision, saying that requiring the pharmaceutical industry to sell drugs at a discount comes with significant regulation to ensure they do so – a stark contrast to the lack of regulation around the resulting revenue. Though another appeal certainly isn’t out of the question, Abrams expects participation in the program to shrink back to a level reflecting the size of the target populations.

“This is about helping disadvantaged patients get their drugs, and that should be the driving activity of the program,” he said. “I’m fine with HHS taking this problem on, because it was an abuse that was never intended in the original legislation. It just seems to me that HHS really wants the healthcare sector to deliver care that is more accountable both for efficient use of resources and outcomes.”

One person who disagrees is Circuit Judge Cornelia Pillard, who wrote the dissenting opinion in the appeals court decision.

“The challenged rules took a major bite out of 340B hospitals’ funding,” she said. “Often operating at substantial losses, 340B hospitals rely on the revenue that Medicare Part B provides in the form of standard drug-reimbursement payments that exceed those hospitals’ acquisition costs. 340B hospitals have used the additional resources to provide critical healthcare services to communities with underserved populations that could not otherwise afford these services.”

 

 

 

 

Healthcare groups call racism a ‘public health’ concern in wake of tensions over police brutality

https://www.fiercehealthcare.com/practices/healthcare-groups-denounce-systemic-racism-wake-tensions-over-police-brutality?mkt_tok=eyJpIjoiWmpobE5XVmlaRGd6T0dFdyIsInQiOiJsQmxnbVNxNVlISVNkczJIZkJXb3ZFZG9tVlpMblZ1XC9oVVB6SlRINzNhOXE4MWQzNk1cL3JTaDlcL2l0MGdhSnk0NUtqY1RzdThCN1wvZ1ZoVUxqOHJwZFJcL1wvK3FtS0o5NFwvSHA0WHhTUnhVNnY3bk5RNmhRQTdxYzYwclhYN3JTRW8ifQ%3D%3D&mrkid=959610

After days of protests across the world against police brutality toward minorities sparked by the killing of George Floyd in Minneapolis, healthcare groups are speaking out against the impact of “systemic racism” on public health.

“These ongoing protests give voice to deep-seated frustration and hurt and the very real need for systemic change. The killings of George Floyd last week, and Ahmaud Arbery and Breonna Taylor earlier this year, among others, are tragic reminders to all Americans of the inequities in our nation,” Rick Pollack, president and CEO of the American Hospital Association (AHA), said in a statement.

As places of healing, hospitals have an important role to play in the wellbeing of their communities. As we’ve seen in the pandemic, communities of color have been disproportionately affected, both in infection rates and economic impact,” Pollack said. “The AHA’s vision is of a society of healthy communities, where all individuals reach their highest potential for health … to achieve that vision, we must address racial, ethnic and cultural inequities, including those in health care, that are everyday realities for far too many individuals. While progress has been made, we have so much more work to do.”

The Society for Healthcare Epidemiology of America (SHEA) also decried the public health inequality highlighted by the dual crises.

“The violent interactions between law enforcement officers and the public, particularly people of color, combined with the disproportionate impact of COVID-19 on these same communities, puts in perspective the overall public health consequences of these actions and overall health inequity in the U.S.,” SHEA said in a statement. Association of American Medical Colleges (AAMC) executives called for health organizations to do more to address inequities. 

“Over the past three months, the coronavirus pandemic has laid bare the racial health inequities harming our black communities, exposing the structures, systems, and policies that create social and economic conditions that lead to health disparities, poor health outcomes, and lower life expectancy,” said David Skorton, M.D., AAMC president and CEO, and David Acosta, M.D., AAMC chief diversity and inclusion officer, in a statement.

“Now, the brutal and shocking deaths of George Floyd, Breonna Taylor, and Ahmaud Arbery have shaken our nation to its core and once again tragically demonstrated the everyday danger of being black in America,” they said. “Police brutality is a striking demonstration of the legacy racism has had in our society over decades.”

They called on health system leaders, faculty researchers and other healthcare staff to take a stronger role in speaking out against forms of racism, discrimination and bias. They also called for health leaders to educate themselves, partner with local agencies to dismantle structural racism and employ anti-racist training.