A recent CMS analysis of its Hospital Readmissions Reduction Program (HRRP) found that 2,500 hospitals will face HRRP penalty reductions and around 18% of hospitals will face penalties of at least 1% of their Medicare reimbursements for fiscal year (FY) 2022, Modern Healthcare reports.
Historically, hospitals received a penalty if their observed readmissions for any one of these conditions exceeded a national standard. However, in response to criticism, CMS in 2019 scrapped the national standard comparison standard. It now compares hospitals’ performance with that of other hospitals serving a similar population of low-income patients.
Under the current methodology, CMS has categorized all participating hospitals into quintiles according to the proportion of dual-eligible patients (patients eligible for Medicare and Medicaid) each hospital serves. Now, each hospital is compared with the median readmissions performance of its cohort, and hospitals with higher-than-cohort-median performance are penalized.
The program does not apply to veterans hospitals, children’s hospitals, psychiatric hospitals, or hospitals in Maryland, which has a federal waiver for how it distributes Medicare funding. In addition, hospitals are not evaluated under the program if they do not treat enough cases of the conditions evaluated.
Fewer hospitals are facing high HRRP penalties
In a recent analysis, CMS looked at HRRP data from July 2017 to December 2019. It found that 2,500 hospitals will face HRRP penalty reductions for FY 2022, and around 18% of hospitals will be penalized more than 1% of their reimbursements, down from 20% from July 2016 through June 2019. The financial value of readmissions reduction
The analysis also found that 80% of hospitals with the highest proportion of Medicare-Medicaid dual-eligible patients will pay penalties, while nearly 72% of hospitals with the lowest proportion of dual-eligible patients will receive penalties.
This likely will be the last set of readmissions data unaffected by the Covid-19 pandemic. Under ordinary circumstances, CMS reviews three years of data in calculating HRRP penalties, so the agency ordinarily would have considered data from July 2017 to June 2020 in calculating the fiscal year 2022 penalties. However, CMS elected to stop its analysis in December 2019 to exclude data gathered during the Covid-19 pandemic.
CMS has not yet said how it will handle readmissions data from the pandemic, Modern Healthcare reports.
Akin Demehin, director of policy for the American Hospital Association (AHA), said the drop in hospitals paying high HRRP penalties is a success.
“America’s hospitals and health systems have made substantial progress in reducing unnecessary readmissions, which has improved quality and enhanced care coordination,” Demehin said.
Demehin also praised CMS for excluding data from the Covid-19 pandemic from its analysis.
“We are pleased that CMS heard our concerns and excluded data from the first six months of 2020 to account for the pandemic when calculating performance,” he said. “We will continue to ask CMS to use its discretion to exclude pandemic-affected data in calculating performance in its hospital quality and value programs going forward.”
Demehin also added that CMS should expand its peer-grouping of hospitals by incorporating other social risk factors beyond a hospital’s control.
“Peer grouping provides relief to many hospitals serving the poorest and most vulnerable communities,” he said. “Congress gave CMS the ability to refine its social risk factor adjustment approach over time, and because the research and science on this issue continues to evolve, the AHA has encouraged CMS to consider ongoing refinements.” (Gillespie, Modern Healthcare, 10/1)
As the healthcare industry gears up to fall under the requirements of the No Surprises Act that bans balance billing, hospitals and insurers said they need more time and information to abide by the requirements.
Payers are asking for a safe harbor until 2023 calling the Jan. 1 start day is too soon for plans to determine payment amounts to out-of-network providers and as it seeks clarification on the resolution process.
Safety net hospitals represented by America’s Essential Hospitals want implementation to be delayed until six months after the public health emergency for COVID-19 ends, saying staff and resources are spread too thin dealing with the pandemic and especially the spread of the delta variant.
HHS released the first interim final rule to implement the No Surprises Act in June — one of multiple expected to be released this year — including those from the Departments of Treasury and Labor.
A major and much-debated aspect of the law is how qualifying payment amounts — the amount paid to providers who are not in network but are providing care at an in-network facility — are calculated.
Later rules are expected to provide more detail on the key issue of how the independent dispute resolution process will be conducted.
Payers and providers both argued in their comments that without more information on that process, it is hard to prepare.
The ERISA Industry Committee, which lobbies for large employers, said that as the resolution process is developed, deviation from QPAs “should be limited to extenuating circumstances.” That’s in direct contrast to the American Hospital Association, which requested the department not overly weigh the QPA as a factor in consideration.
When Congress debated a ban on surprise billing, whether a dispute resolution process would be used or whether rates for out-of-network providers would be based on a set rate was perhaps the most hotly contested aspect. In the end, providers got the win with the arbitration clause.
In comments on the rule, both AHA and payer lobby AHIP called for a multi-stakeholder group to advise on issues such as what provisions fall under state and federal jurisdiction and other operational challenges.
The hospital lobby requested clarification on a number of aspects of the rule, such as how good faith estimates of costs should be calculated on consent forms patients may sign to waive balance billing protections and when a provider can bill a patient if their claim is denied by the plan.
In multiple instances, the group asked the department to confirm that the initial payment should not be the QPA unless both the plan and provider agree to that circumstance.
The country’s largest hospital lobby is also concerned that the act won’t do enough to ensure network adequacy from insurers and will not institute enough oversight on plans’ compliance.
AHA said it is “deeply concerned that the existing oversight mechanisms are insufficient to monitor plan and issuer behavior and a more robust structure is needed to enforce the QPA requirements.”
The Federation of American Hospitals expressed similar concerns, particular regarding “abusive plan practices” like inappropriate claims denials and downcoding. The group urged the departments “to expand their oversight of plans and issuers to prevent and address unlawful and abusive plan practices.”
AEH, meanwhile, asked for assurances that administrative burdens like the notice and consent documentation would be fairly split with insurers.
Under the rule, the QPA is to be decided by a plan’s median in-network contracted rate for a geographic area. It must have a minimum of three contracted rates to use this method. If that is not available, the payer can use an independent claims database.
FAH, in particular, asked that the rule strengthen conflict of interest regulations for these databases and have their eligibility determined by the departments instead of the insurers themselves.
AHIP’s most immediate concern is the timeline for implementation. It asked for the good faith safe harbor request to develop QPA methodologies, create the infrastructure to transmit notice and consent forms with providers and for it to receive the forthcoming information on the arbitration process.
“Health plans and issuers have responsibility for developing work streams; updating information technology; creating forms, notices, and other communications; training employees; and other operational measures necessary to effectuate obligations” in the rule, the group wrote.
States with 1332 reinsurance waivers will have more pass-through funding to implement the waivers.
The Centers for Medicare and Medicaid Services and the Biden Administration have earmarked $452 million in federal funding through the American Rescue Plan for efforts to lower costs and improve health insurance access in 13 states.
Due to the changes made to the ARP, states with 1332 reinsurance waivers will have more pass-through funding to implement the waivers, and may also have their own state funding available to pursue further strategies to promote insurance affordability.
This funding, said CMS, might otherwise have been spent on 2021 reinsurance costs.
The “pass-through funding” is determined on an annual basis by the Department of Health and Human Services and the Department of the Treasury. They’re available to states with approved section 1332 waivers that have also lowered premiums to implement their waiver plans.
WHAT’S THE IMPACT?
State-based reinsurance programs created through section 1332 waivers are designed to improve health insurance affordability and market stability by reimbursing issuers for a portion of healthcare provider claims that would otherwise be paid by some consumers and by the federal government through higher premiums.
As a result, said CMS, these programs hold the potential to lower premiums for consumers with individual health insurance coverage, and may increase access to coverage and provide more health plan options for people in those reinsurance states, without increasing net federal costs.
The additional funds announced by CMS range from $2.5 million to $139 million per state – varying based on factors such as the size of the state’s reinsurance program. The funds are the result of expanded subsidies provided under the ARP, which will result in new people enrolled, and will cover a portion of the states’ costs for these reinsurance programs.
States with approved section 1332 state-based reinsurance waivers have experienced reduced premiums in the individual market, CMS said. Overall, from plan years 2018 to 2021, states that have implemented section 1332 state-based reinsurance waivers for the individual market have seen statewide average premium reductions ranging from 3.75% to 41.17%, compared to premiums absent the waiver, according to the agency’s internal data.
For example, in 2021, statewide average premium reductions due to the waiver were 4.92% in Pennsylvania, 18.47% in Colorado, and 34% in Maryland, compared to a scenario with no waiver in place.
Beyond reduced premiums, it’s expected that section 1332 state-based reinsurance waivers may help states maintain and increase issuer participation, and may increase the number of qualified health plans available in each county in such states from year to year. For example, states like Colorado, Wisconsin, Alaska and Maryland have seen additional issuers enter or re-enter the individual marketplace since their state reinsurance programs have been implemented.
The agency’s current thinking is that stronger issuer participation in the individual market may increase competition and translate to consumers having more opportunities to obtain affordable health insurance coverage. Nationally, on average, there are more QHP offerings in 2021 than in 2020, and in states with section 1332 state-based reinsurance waivers, the average number of QHPs weighted by enrollment increased by 30.6% from 2020 to 2021.
The states, and their pass-through funding amounts, include Alaska ($43,827,328), Colorado ($49,892,498), Delaware ($10,821,203), Maine ($8,562,238), Maryland ($139,159,548), Minnesota ($64,969,985), Montana ($7,129,995), New Hampshire ($8,820,847), North Dakota ($5,798,044), Oregon ($18,948,114), Pennsylvania ($28,558,672), Rhode Island ($2,590,540) and Wisconsin ($63,408,562). New Jersey’s pass-through funding amount will be announced at a later time.
THE LARGER TREND
In April 2021, the departments announced a total of $1.29 billion in pass-through funding for the 2021 plan year and posted a FAQ that noted that the departments would inform states of additional pass-through to account for the ARP.
ON THE RECORD
“This investment is a testament to our administration-wide commitment to making healthcare more accessible and affordable,” said HHS Secretary Xavier Becerra. “This funding from the American Rescue Plan will reduce monthly healthcare costs for consumers, increase coverage, and provide more options. We will continue to work with states to strengthen the healthcare system as we respond to the COVID-19 pandemic.”
“Reducing a family or individual’s average monthly health coverage costs frees up that money for other needs,” said CMS Administrator Chiquita Brooks-LaSure. “The Biden-Harris Administration continues to work with states to reduce costs and deliver more affordable health coverage options. This is another example of how the American Rescue Plan is helping more people meet their healthcare needs.”
Two major policy developments emerged from this week’s release by the Centers for Medicare & Medicaid Services (CMS) of the FY22 proposed rule governing payment for hospital outpatient services and ambulatory surgical centers.
First, CMS proposes todramatically increase the financial penalties assessed to hospitals that fail to adequately reveal prices for their services, a requirement first put in place by the Trump administration. According to a report by the consumer group Patient Rights Advocate, only 5.6 percent of a random sample of 500 hospitals were in full compliance with the transparency requirement six months after the regulation came into effect, with many instead choosing to pay the $300 per hospital per day penalty associated with noncompliance. The new CMS regulation proposes to scale the assessed penalties in accordance with hospital size, with larger hospitals liable for up to $2M in annual penalties, a substantial increase from the earlier $109,500 maximum annual fine. In a press release, the agency said it “takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021.” In a statement, the AHA stated that it was “deeply concerned” about the proposal, “particularly in light of substantial uncertainty in the interpretation of the rules.” The penalty hike is a clear signal that the Biden administration plans to put teeth behind its new push for more competition in healthcare, which was a major focus of the President’s recent executive order. We’d expect to see most hospitals and health systems quickly move to comply with the transparency rule, given the size of potential penalties.
More heartening to hospitals was CMS’ proposal to roll back changes the Trump administration made, aimed at shifting certain surgical procedures into lower cost, ambulatory settings. The agency proposed halting the elimination of the Inpatient Only (IPO) list, which specifies surgeries CMS will only pay for if they are performed in an inpatient hospital. Citing patient safety concerns, CMS noted that the phased elimination of the IPO list, which began this year, was undertaken without evaluating whether individual procedures could be safely moved to an outpatient setting. Nearly 300 musculoskeletal procedures have already been eliminated from the list, and will now be added back to the list for 2022, keeping the rest of the list intact while CMS undertakes a formal process to review each procedure. Longer term, we’d anticipate that CMS will look to continue the elimination of inpatient-only restrictions on surgeries, as well as pursuing other policies (such as site-neutral payment) that level the playing field between hospitals and lower-cost outpatient providers.
For now, hospitals will enjoy a little more breathing room to plan for the financial consequences of that inevitable shift.
The US Supreme Court recently announced that it will hear an ongoing debate over cuts to 340B drug payments to Medicare hospitals.
The case will be heard during the Supreme Court’s upcoming term, which starts in October. A decision is expected sometime next year.
The case was brought on by the American Hospital Association (AHA) and other national hospital groups seeking to overturn HHS’ decision to reduce Medicare reimbursement to hospitals in the 340B Drug Pricing Program by nearly 30 percent.
HHS had finalized the cuts in the 2018 Outpatient Prospective Payment System (OPPS) rule. The federal department said in a fact sheet that the cuts address the “recent trends of increasing drug prices, for which some of the cost burden falls to Medicare beneficiaries.”
Hospital groups led by the AHA challenged the cuts, arguing that reduced drug payments would harm access to care since the 340B Drug Pricing Program includes safety-net hospitals. An appeals court did not agree with their arguments in August 2020, ruling in favor of HHS.
“We are pleased that the U.S. Supreme Court has agreed to hear the compelling arguments in our case on payments cuts to the 340B drug pricing program that are adversely impacting care to patients,” Melinda Hatton, the AHA’s general counsel, said publicly on Friday.
“We are hopeful that the Court will reject the appellate court decision deferring to the government’s interpretation of the law that clearly imperils the important services that the 340B program helps allow eligible hospitals and health systems to provide to vulnerable communities, many of which would otherwise be unavailable,” Hatton continued.
Other hospital groups also cheered the Supreme Court’s decision to hear the 340B drug payment case.
“We are pleased that the Supreme Court has agreed to review the appellate court decision, which we believe was legally flawed,” Maureen Testoni, CEO of 340B Health, said on the group’s website.* “We are hopeful that the justices will reverse the lower court decision that upheld these damaging cuts to many 340B hospitals treating patients with low incomes. In the meantime, we continue to urge the Biden administration to change this harmful policy by abandoning the payment cuts for 2022 and beyond.”
The other plaintiff, Association of American Medical Colleges (AAMC), also said it is looking forward to the consideration of the case.
“The current reimbursement rates reduce the 340B drug discounts granted to safety-net providers, many of which are teaching hospitals,”explained David J. Skorton, MD, AAMC president and CEO. “These hospitals use the current savings to deliver critical health care services to low-income and vulnerable patients, which includes providing free or substantially discounted drugs to low-income patients, establishing neighborhood clinics, and improving access to specialized care previously unavailable in some areas. A reversal of the cuts will ensure that low-income, rural, and other underserved patients and communities are able to access the vital services they need.”
Neither HHS nor CMS provided a public statement regarding the Supreme Court’s decision to hear the 340B drug payment case.
Throughout the COVID-19 pandemic, experts have been warning of the dangers of postponed health care services. In January, the American Cancer Society, the National Comprehensive Cancer Network, and 73 other organizations, including many major health care systems, issued a statement stressing the urgency of preventive care. “We urge people across the country to talk with their health care provider to resume regular primary care checkups, recommended cancer screening, and evidence-based cancer treatment (PDF) to lessen the negative impact the pandemic is having on identifying and treating people with cancer,” the groups said.
That was sound advice not everyone could follow, as ProPublica’s Duaa Eldeib reported last week in a tragic story about Teresa Ruvalcaba. The 48-year-old single mother of three worked for 22 years at a candy factory on Chicago’s West Side. During the pandemic, disaster struck. “For more than six months, the 48-year-old factory worker had tried to ignore the pain and inflammation in her chest. She was afraid of visiting a doctor during the pandemic, afraid of missing work, afraid of losing her job, her home, her ability to take care of her three children,” Eldeib reported.
“Even though her chest felt as if it was on fire, she kept working. She didn’t want to get COVID-19 at a doctor’s office or the emergency room, and she was so busy she didn’t have much time to think about her symptoms,” Eldeib wrote.
Ruvalcaba’s pandemic fears were typical of patients across the nation, surveys revealed. A 2020 CHCF poll of 2,249 California adults revealed that even when people wanted to see a doctor for an urgent health problem, one-third did not receive care. Nearly half of those surveyed didn’t receive care for their nonurgent health problems.
Nationally, more than one in three people delayed or skipped care because they were worried about exposure to Covid-19, or because their doctor limited services, according to an Urban Institute analysis of a September 2020 survey.
The toll of this disruption in care — the forgone cancer screening, the chest pain that isn’t reported — will devastate some patients and families. Ruvalcaba had to face a diagnosis with a terrible prognosis, inflammatory breast cancer. “If she would have come six months earlier, it could have been just surgery, chemo and done,” Ruvalcaba’s doctor told Eldeib. “Now she’s incurable.”
“Unfortunately, we know we’re going to see some tragedies related to the delays,” Wiley Fowler, an oncologist at Dignity Health in Sacramento, told Ibarra.
Consequences of Delayed Care
Public health messages early in the pandemic urged people to avoid public places, including doctor’s offices. In April, as Hayley Smith noted in a Los Angeles Times story, the US Centers for Disease Control and Prevention (CDC) and the Centers for Medicare & Medicaid Services “both published guidelines recommending the postponement of elective and nonurgent procedures, including ‘low-risk cancer’ screenings, amid the first wave of the pandemic.”
Patients and doctors listened. Appointments were canceled. “Nonurgent” procedures encompassing a wide array of treatments and operations, including cancer surgeries, were delayed.
Preventive cancer screenings dropped 94% over the first four months of 2020, Eldeib reported. The National Cancer Institute expects to see 10,000 preventable deaths over the next decade because of pandemic-related delays in diagnosis and treatment of breast and colorectal cancer. Screenings for these cancers, which account for about one in six cancer deaths, are routine features of preventive care.
I know I should get another check soon, but the anxiety of COVID feels like more of a priority than the anxiety of cervical cancer.
—Molly Codner, a Southern Californian who received an abnormal Pap smear last summer
In California, cancer deaths have remained roughly the same as prepandemic rates, but that stability is not expected to last. Based on the National Cancer Institute data, Ibarra calculates that an additional 1,200 Californians will die from breast and colon cancer. The National Cancer Institute estimate is conservative “because it only accounts for a six-month delay in care, and people are postponing care longer than that,” Ibarra reported.
Nationally, death rates from cancer are expected to increase in a year or two. Slow-growing cancers will remain treatable despite a delayed diagnosis, Norman Sharpless, MD, director of the National Cancer Institute, told Eldeib. Yet for conditions like Ruvalcaba’s inflammatory breast cancer, delayed care can be disastrous.
Women, People of Color Disproportionately Affected
For women across Southern California, appointments have been delayed, exams canceled, and screenings postponed during the pandemic, Smith reported in the Los Angeles Times. “Some are voluntarily opting out for fear of encountering the virus,” Smith wrote, “while others have had their appointments canceled by health care providers rerouting resources to COVID-19 patients.”
Before Pap smears became part of routine American health care, cervical cancer was one of the deadliest cancers for women. Today, as many as 93% of cervical cancer cases are preventable, according to the CDC, and screenings are a crucial component of preventive care. Yet during the first phase of California’s stay-at-home orders, cervical cancer screenings dropped 80% among the 1.5 million women in Kaiser Permanente’s regional network, Smith wrote.
The effects of the pandemic shutdown extended beyond delayed Pap smears. Women who spoke to Smith said that “mammograms, fertility treatments and even pain prevention procedures have been waylaid by the pandemic.”
Sometimes, obstacles other than the pandemic are continuing to interfere with access to care. One woman had an appointment delayed and then lost her job and her health insurance, Smith reported.
“Molly Codner, 30, has needed a checkup ever since she received an abnormal Pap smear last summer,” Smith wrote, “but like many Southern Californians, the trauma of the last year still weighs heavily on her mind: Nearly a dozen people she knows have had COVID-19.” Codner told Smith that “I know I should get another check soon, but the anxiety of COVID feels like more of a priority than the anxiety of cervical cancer.”
People who face disparities in treatment and care are most likely to be hard hit by pandemic delays. That includes Black people, who were already more likely to die from cancer than any other racial group. Cancer also is the leading cause of death among Latinx people. Breast cancer is the most common cancer diagnosis for Latinx women. Overall, more Americans die of heart disease.
Black adults are more likely than White or Latinx adults to delay or forgo care, according to researchers from the Urban Institute.
Telehealth Solved Access Issues for Some, Not All
Telehealth was a boon for patients during the pandemic year. Yet, as Ibarra notes, “there’s only so much that doctors and nurses can do through a screen.” Dental visits, mammograms, and annual wellness checks were also put on hold by the pandemic.
Latinx, Asian, and Black respondents did not use telehealth as often as White respondents. USC researchers attribute these differences to “disparities in income, education and access to any kind of health care.”
Researchers at the Urban Institute report similar findings: “Black and Latinx adults were more likely than White adults to report having wanted a telehealth visit but not receiving one since the pandemic began, and that difficulties getting a telehealth visit were also more common among adults who were in poorer health or had chronic health conditions.”
After controlling for socioeconomic factors and health status, patients with limited English were half as likely to use telehealth compared to fluent English-speaking patients, the Urban Institute said. “Much work remains to ensure all patients have equitable access to remote care during and after the pandemic,” the researchers wrote.
Whether telehealth is conducted by video or phone may be crucial to ensuring access to care. A study of telehealth use at Federally Qualified Health Centers in California in 2020 found that “more primary care visits among health centers in the study occurred via audio-only visits (49%) than in-person (48%) or via video (3%). Audio-only visits comprised more than 90% of all telemedicine visits.”
Public health efforts might need to focus on two goals at the same time as the US recovers from the pandemic: increasing vaccine uptake to keep COVID-19 in check and proactively managing the fallout from delayed care.
“As we focus on recovery, we have to ensure that we get vaccinated,” Efrain Talamantes, a primary care physician in East Los Angeles, told Ibarra. “But also that we have a concerted effort to manage the chronic diseases that haven’t received the attention required to avoid complications.”
When it planned to go public through a SPAC merger, insurance startup Clover Health told investors that it already had 200,000 direct contracting lives under contract for 2021. But in new guidance shared on Monday, the company now plans to end the year just 70,000 to 100,000 covered lives from direct contracting.
After telling investors that it would more than quadruple its membership base in a year, insurance startup Clover Health is cutting its projections in half.
The insurance startup now plans to end the year with between 70,000 and 100,000 covered lives from direct contracting, a new payment program launched last by the Centers for Medicare and Medicaid (CMS) services last year, according to its most recent earnings report.
But its projections call into question the veracity of those shared when the company was looking to go public. In fact, Kevin Fischbeck, an analyst with Bank of America, called out the discrepancy when he asked the company about estimates that it would have nearly half-a-million members covered through direct contracting by 2023.
Clover could only manage a feeble response, with CFO Joe Wagner saying it was “too early to say in future years exactly where we’re going to end up.”
When asked about the current status of the investigation, co-founder and CEO Vivek Garipalli said it was the company’s policy not to comment on pending inquiries.
In an unusual move, the company fielded questions from Reddit during the investor call, alongside those from analysts.
Clover is one of 53 companies selected to participate in CMS’ direct contracting programs in 2021. The value-based payment models were created under the previous administration, which would allow the startup to strike contracts with doctors who are caring for patients under the traditional Medicare program and manage their care.
In the meantime, most of Clover’s business still comes from its Medicare Advantage plans, where it has 66,300 members, an 18% increase year-over-year. It brought in $200.3 million in revenue in the first quarter, up 21%, but its net loss jumped more than 70% to $48.4 million.
The company also decreased its revenue projections from what it originally told investors last year. The startup said it expects to bring in revenue of $810 million to $830 million by the end of 2021, a decrease from its previous projections of $880 million. A small portion of that, just $20 million to $30 million, would come from direct contracting.
This week Mayo Clinic and Kaiser Permanente announced a $100M joint investment in Boston-based Medically Home, a provider of virtual hospital solutions. Founded in 2016, Medically Home is one of a handful of companies that coordinate with hospitals and doctors to provide in-home clinician visits, round-the-clock communications and monitoring, and access to support services to enable hospital-level care in the home. While interest has surged during the pandemic, the first hospital at home programs launched in the 1990s, and the model has a proven track record of delivering care that is lower cost and clinically equivalent (or better), when compared to a traditional hospital admission.
A confluence of market forces has driven rapid expansion in the model across the past year. Health systems are increasingly looking to hospital at home to address emerging consumer demand for care outside the hospital,and achieve the longer-term goals of providing flexible, lower-cost acute care capacity. And payers are looking to add hospital at home capabilities to their growing virtual and home-based care platforms to manage acutely ill Medicare Advantage beneficiariesin a lower-cost care setting.
Early adopters estimate that as many as 30 percent of patients admitted to hospitals today could be candidates for treatment at home. The large infusion of funding from Kaiser and Mayo will enable Medically Home to scale across the US, and also provides an endorsement of, and commitment to, the care modelfrom these respected systems, which may help convince physicians who remain skeptical.
Coupled with the Centers for Medicare & Medicaid Services’ waiver program, allowing payment for home-hospital care, this investment should drive a new wave of growth in the model—and will likely make hospital at home a routine part of the care options available to patients.
The decision by the U.S. Centers for Medicare and Medicaid Services gives the hospitals a year to convince the Biden administration that for them, at least, there is no such thing as Central Jersey.
CMS released its decision as part of its final rules for fiscal 2022. It delayed a Trump-era proposal to move the hospitals out of the New York-Newark-Jersey City region and into the newly crafted New Brunswick-Lakewood core-based statistical area.
Any Central New Jersey designation usually is met locally with pride and joy, but this move came with a steep price. Hospitals’ Medicare reimbursements are tied in part to their labor costs. And the labor costs in their new region are about 17% lower than their old region.
The cuts in reimbursement rates would have saved money for federal taxpayers, but they also would have hit local hospitals hard. The industry during the pandemic was faced with higher expenses and forced to delay lucrative elective procedures.
As a result, 41% of New Jersey hospitals were losing money, according to the New Jersey Hospital Association, a trade group.
The group on Friday thanked the state’s congressional delegation for its help.
“NJHA has strongly advocated for the reversal of this ill-advised policy since it was first implemented last year, and this delay in further cuts in critical health care dollars to our state is welcomed news,” Cathy Bennett, the association’s president and chief executive officer, said.
U.S. Sen. Robert Menendez and U.S. Rep. Bill Pascrell Jr., both Democrats, led the campaign to stop the new classification at least until the 2020 U.S. Census data was released.
In a letter a month ago to U.S. Health and Human Services Secretary Xavier Becerra, the lawmakers said hospitals moved to the new statistical areas would have lost revenue, making it tougher to compete with hospitals in New York and northern New Jersey to attract skilled workers.
“This federal support will benefit patients by allowing our top-notch hospitals to retain and hire the best and the brightest,” Pascrell said in a statement Friday.
The Centers for Medicare & Medicaid Services (CMS) released its 2022 Inpatient Prospective Payment System (IPPS) proposed rule this week. Overall, the rule brings good news for hospitals: Medicare reimbursement rates are slated to increase by 2.8 percent,resulting in a $2.5B payment boost to the industry.
In another win, hospitals will no longer be required to disclose their contract terms with Medicare Advantage (MA) insurers. Hospitals had previously been mandated by the 2021 rule to report median, payer-specific, negotiated charges for MA insurers on their Medicare cost reports. Medicare’s goal was to use this data to create a new, market-based, inpatient reimbursement methodology—an effort which has also been tabled, at least for now.
Led by the American Hospital Association, hospitals have been embroiled in lengthy legal challenges over a variety of CMS price transparency requirements, maintaining they are neither beneficial for consumers, nor helpful in lowering healthcare costs.
It’s too early to tell whether this step back from price transparency, which was a key goal of the Trump administration, signals anything about the Biden administration’s priorities; it’s possible CMS may just be slowing down the effort in the wake of the pandemic.
Other highlights of the proposed rule includefunding 1,000 more residency slots over the next five years, and extending payments for COVID-19 treatments to the end of 2022, as CMS expects COVID patients will need care beyond the duration of public health emergency. The agency also proposed several changes to its readmissions and other value-based purchasing programs, to ensure hospitals aren’t penalized by COVID-related impacts on quality measures.
Comments on the proposed rule are due by June 28th.