Are you ready for price transparency?

https://interimcfo.wordpress.com/2020/10/22/are-you-ready-for-price-transparency/

Exploring the Fundamentals of Medical Billing and Coding

Abstract:  This article focuses on the correct strategic response to the impending implementation of price transparency on New Year’s Day of next year.

I have stated before that I have multiple articles in process at any given time.  Some of them have been ‘in process’ for years because newer topics sometimes rise to the queue’s top.  Price transparency is an example of such a case.  I have a friend who is developing AI-enabled solutions to help organizations respond to price transparency government diktats.  Few people beyond healthcare CFOs, healthcare financial consultants, and accountants have any useful understanding of how convoluted hospital pricing has become due to decades of ill-conceived government policy for the most part.

Another problem is endless confusion over terms.  People frequently interchange the terms ‘price’, ‘cost’, ‘payment’, and ‘reimbursement’ in situations where the polar opposite is true on the other side of the issue.  In other words, ‘cost’ to a payor is price or reimbursement to a provider.

Anyway, my friend’s questions finally inspired me to go to the Federal Register, acquire the final rule, and begin the process of learning where government is headed with these regulations.  There are probably at least fifty diatribe angles I could launch into over the final rule, but I will confine my rant to only a couple of points.  

First, the final draft of the rule is ‘only’ 331 pages long. The three-column final rule in the Federal Register is ‘only’ 83 pages long.  That pales compared to Obamacare that is over 1,200 pages long, so by government standards, this is but a trifle of regulation.  

Secondly, some parts of the final rule are actually funny.  For example, CMS estimates that the average hospital will spend only 150 staff hours in the first and 46 staff hours in subsequent years complying with price transparency requirements.  Is it constitutional for government to compel private enterprises to disclose the terms of what they thought were private contracts?  Apparently so.  Once government breaks this ice, will any agreement of any type ever be private?

As I have discussed price transparency with healthcare leaders, I sense that leaders are currently focused on technical compliance with the regulations.  With COVID on their plate simultaneously, they have little capacity to take on strategic financial planning.

The final rule lays out in excruciating detail what providers face complying with the regulation.  Reading the comments and responses is equally entertaining.  CMS repeatedly says something to the effect; we heard your concern, and we’re proceeding as planned anyway.  Litigation brought by the AHA and others has to date been unsuccessful in slowing stopping the price transparency snowball that is now most of the way down the mountain.

So, what are you supposed to do?  The CFO and CIO will work, possibly with consultants’ assistance, to prepare the organization’s data release.  Soon after the release occurs, expect the defecation to hit the rotary oscillator.  The press will call out organizations with high prices, and the rancor over learning what some systems have been able to get from third-party payors will be entertaining, to say the least.  Many people believe that one of the primary motivators of the massive consolidation occurring in the healthcare industry is the market leverage exerted by growing systems on third-party payors to obtain otherwise unachievable reimbursement rates.

Regardless of the course of action following price releases in January, the intended and most likely result of this initiative is to drive prices to a lower common denominator.  A lot of people think Medicare rates will become that benchmark.  There are two significant issues that I did not see addressed in the pricing rule that will have the effect of transferring substantial risk to providers.  

The first is that there will be little if any provision for recognition of complications, comorbidities, and hospital-acquired conditions that can dramatically impact the cost of care in a given diagnosis.  

The second is the elephant in the room. The current pricing system has developed over time to facilitate cross-subsidization among payors.  There is a reason that commercial rates are so high that has nothing to do with the cost of providing care.  I have stated before that, government has turned the entire healthcare industry into a taxing authority to extract tax from commercial payors for the benefit of government payors that routinely reimburse providers below the cost of providing care.  It has been entertaining to watch the reaction of Boards of Directors when they first realize that the healthcare system has been forced by government into a wealth redistribution mechanism.

So, what happens as providers lose the ability to cross-subsidize the cost of care?  Very few hospitals (<10%) are profitable on Medicare, and it is doubtful that any hospital is breaking even on services provided to Medicaid patients.  In my experience, hospital reimbursement for self-pay patients is less than 5% of charges.  If the prices hospitals realize for services start falling and they lose the current ability to cross-subsidize the cost of care . . . . . well, you don’t need an MBA to understand the likely outcome.

What to do?  If (when) prices start falling and providers lose pricing leverage, the only place to turn is operating expense.  Hospitals that have failed to undertake serious, highly focused, and robust operating cost reduction programs that yield quantifiable results may not have a very bright future.  If your organization is not in the bottom quartile of operating cost compared to its peer group and part of your mission is to remain independent, you must be losing sleep.  In a recent article related to COVID Response, I argued that the time has come to get after clinical process variance that is the source of most of the high cost, waste, and abuse in the healthcare system. For most organizations, the days of sourcing cheaper supplies and sending nurses home early are, for the most part, over as there is little if any juice remaining in that lemon.

If, as a leader, you do not have a plan that gets you to break-even on Medicare within the next 12-18 months, you had better have a plan B, something like tuning up your CV.  I can help you with your response to price transparency, working on your CV, or helping manage your next career transition as the case may turn out.  I am as close as your phone.  Best of luck.

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Hospitals that don’t submit daily COVID-19 data could lose participation in Medicare, Medicaid

US Department of Health and Human Services moves to Microsoft Office 365

Hospitals currently not reporting daily COVID-19 data have a few months to get in compliance or risk being thrown out of Medicare and Medicaid.

The Department of Health and Human Services (HHS) announced Tuesday it will send notices to all hospitals over their requirements for reporting COVID-19 data to the Trump administration.

Any hospital not in compliance with the daily reporting requirements will have 14 weeks to get in line or risk their participation in Medicare and Medicaid, officials said.

The agency gave an enforcement timeline that gives “hospitals ample opportunity to come into compliance,” said Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma on a call with reporters Tuesday.

The Trump administration wants hospitals to submit daily data that includes COVID-19 deaths and hospitalizations as well as patients currently in the intensive care unit with the virus. Hospitals must submit data on the ages of patients admitted with suspected COVID-19 infections. Facilities need to also report their inventory of the COVID-19 therapy Remdesivir, any staffing shortages and the number of ventilators. Every week hospitals also report data on their personal protective equipment on hand and supply of critical medications.

Facilities now must also report on new data for influenza cases. “The new requirements will allow us to gather critical information on influenza at hospitals across the U.S.,” said Centers for Disease Controls and Prevention Director Robert Redfield, M.D.

Verma said that the large majority of hospitals in CMS’ system are already reporting this data to the agency. CMS will also give hospitals that are not in compliance a wide berth to get them into compliance.

Hospitals will be sent multiple notices over the 14-week timeline to get their data reporting in line.

“This work of getting hospitals into compliance around reporting has been an ongoing effort,” Verma said.

CMS proposed the mandatory daily reporting requirements back in August, much to the chagrin of hospital advocates. 

The American Hospital Association (AHA) said that CMS tying Medicare and Medicaid participation to compliance “remains an overly heavy-handed approach that could jeopardize access to hospital care for all Americans,” according to a statement released Tuesday. 

“Today’s interpretive guidance on COVID data reporting does answer some of the questions hospitals and health systems have been asking about compliance since the interim final rule was released six weeks ago,” the group said. “In particular, the Administration will provide hospitals with information on whether their data are making it into HHS Protect and they will give hospitals the necessary time to adjust their data collection to come into compliance if need be.”

The Federation of American Hospitals called the new rules “sledgehammer enforcement.”

“It is both inappropriate and frankly overkill for CMS to tie compliance with reporting to Medicare conditions of participation,” said FAH President and CEO Chip Kahn in a statement.

Health Groups Turn Up Heat on 2021 Medicare Fee Schedule

The CMS logo over an illustration of a male and female physician having opposite reactions to a fever chart

Physician groups and other healthcare providers continued expressing their dissatisfaction with the 2021 Medicare physician fee schedule proposed rule from the Centers for Medicare & Medicaid Services (CMS).

“While we support the CPT coding revisions and revaluations of office and outpatient evaluation and management (E/M) services recommended by the AMA/Specialty Society RVS Update Committee [RUC], we strongly oppose the proposed budget neutrality reduction proffered by CMS for these and other physician fee schedule changes proposed for 2021,” said a letter sent Monday to CMS Administrator Seema Verma from 47 medical and health specialty groups including the American College of Surgeons, the American College of Radiology, and the American Academy of Ophthalmology. The groups represent 1.4 million providers, including physicians, social workers, and speech-language pathologists.

If adopted as proposed, the fee schedule would “reduce Medicare payment for services provided in patients’ homes, physician offices, non-physician practices, therapy clinics, skilled nursing facilities, hospitals and rehabilitation agencies — at a time when the spread of COVID‐19 remains unchecked,” the letter said.

The proposed fee schedule, which was announced in early August, includes “simplified coding and billing requirements for E/M visits [that] will go into effect January 1, 2021, saving clinicians 2.3 million hours per year in burden reduction,” CMS said. “As a result of this change, clinicians will be able to make better use of their time and restore the doctor-patient relationship by spending less time on documenting visits and more time on treating their patients.”

However, the proposed rule also lists (on p. 50375) the estimated impacts of the rule’s payment changes for each specialty, which includes losers as well as winners.

Three specialties fare the best: endocrinology, with a 17% increase; rheumatology, with a 16% increase; and hematology/oncology, with a 14% increase. At the bottom are nurse anesthetists and radiologists, both with an 11% decrease; chiropractors, with a 10% decrease; and interventional radiology, pathology, physical and occupational therapy, and cardiac surgery, all with a 9% decrease. Surgical specialties in general took some of the biggest hits, with cuts in every category ranging from 5% to 9%.

The proposed rule also lists the fee schedule’s final conversion factor — the amount that Medicare’s relative value units (RVUs) are multiplied by to arrive at a reimbursement for a particular service or procedure under Medicare’s fee-for-service system. Due to budget neutrality changes required by law, the proposed 2021 conversion factor is $32.26, a decrease of $3.83 from the 2020 conversion factor of $36.09, CMS said. Comments on the proposed rule were due by 5 p.m. on Monday.

American Medical Group Association (AMGA), which represents group practices, also weighed in on the proposed rule. “AMGA is concerned that the CMS proposed 2021 Physician Fee Schedule rule would inadvertently exacerbate the financial situation facing our membership that is a result of the ongoing novel coronavirus 2019 (COVID-19) pandemic,” the association said in a statement. “While appreciative of the effort to increase support for primary care services, the Physician Fee Schedule’s budget neutrality requirements effectively shift funds from one specialty to another, potentially undermining the team-based approach to care that is the hallmark of the group practice model.https://tpc.googlesyndication.com/safeframe/1-0-37/html/container.html

In its comments on the rule, the American Association of Neurological Surgeons (AANS) took particular issue with the fact that the changes to the E/M codes were not included in global payments for some surgical procedures that include an E/M visit. “The AANS … strongly urges CMS to apply the RUC-recommended changes to the E/M component of the 10- and 90-day global surgery codes to maintain the relativity of the fee schedule and to comply with the Medicare law’s prohibition on specialty payment differentials,” the AANS wrote in its comments.

The AANS also wasn’t happy with a proposed add-on code known as GPC1X, which CMS said could be used for “visit complexity inherent to E/M associated with medical care services that serve as the continuing focal point for all needed health care services and/or with medical care services that are part of ongoing care related to a patient’s single, serious, or complex condition.”

The code is nothing more than a “holdover” from an earlier bundled payment scheme that has since been replaced, the AANS said. “Instead of correcting a system that would have resulted in unfair payment reductions, the agency is creating a new coding scheme that inappropriately discriminates among physician specialties — over-inflating payments to individual specialties and causing steep cuts to others.” The association urged CMS to get rid of the add-on code, noting that “more than $3.3 billion will be redistributed between specialties if this code is implemented, and it is a significant contributor to the steep reduction in the conversion factor.”

The American Association of Orthopaedic Surgeons objected to a decrease in the work RVUs for knee and hip arthroplasties. “The overall physician work for these procedures has not changed since they were last evaluated in 2013,” the group said in a statement. “If anything, orthopaedic surgeons and their staff are spending more time on the preoperative work that is essential to the clinical success and cost savings of Medicare alternative payment models.”https://tpc.googlesyndication.com/safeframe/1-0-37/html/container.html

If these Medicare cuts are finalized, it sends a strong signal: when providers in the vanguard of value-based care begin to achieve some efficiencies in the delivery of care, CMS will use those positive developments as a justification to cut Medicare fee-for-service reimbursement regardless of the extra work that goes into achieving these outcomes,” C. Lowry Barnes, MD, president of the American Association of Hip and Knee Surgeons, said in a statement.

Congress has also gotten involved in the proposed rule. Last Friday, representatives Michael Burgess, MD (R-Texas) and Bobby Rush (D-Ill.) introduced H.R. 8505, which would temporarily waive the legislation’s budget neutrality provision and avoid the payment cuts.

Medicare Advantage should not ‘game the system’ but prioritize patient care, honest billing

https://www.healthcaredive.com/news/medicare-advantage-should-not-game-the-system-but-prioritize-patient-care/585613/

We all agree healthcare providers should prioritize patient well-being and bill honestly. Most do. But, if not, my office, the Office of Inspector General for the HHS, and other government agencies, are watching. 

We are especially monitoring an area of concern: abuse of risk adjustment in Medicare Advantage, the managed care program serving 23 million beneficiaries, 37% of the Medicare population, at a cost of about $264 billion annually. We have good reason to pay attention. Our recent report found that Medicare Advantage paid $2.6 billion a year for diagnoses unrelated to any clinical services.

Plans used a tool called “health risk assessments” to collect these diagnoses. Ideally, health risk assessments might be part of a Medicare beneficiary’s annual wellness visit and help care teams identify health issues. However, some Medicare Advantage plans use risk assessments without involving the patients’ regular care providers. 

Some plans partner with businesses whose primary livelihood entails identifying diagnoses by conducting risk assessments. Some organizations send professional risk assessors, perhaps practitioners with some medical credentials but not physicians or other clinicians involved in the person’s care, to the beneficiaries’ homes.  Our study found that 80% of that extra $2.6 billion payment resulted from in-home health risk assessments. 

Medicare’s capitated payments vary by beneficiary for good reason. If Medicare paid the same for every beneficiary, plans might favor younger and healthier enrollees. It may not hold true every month, but, on average, it will cost a plan less to serve a healthy 65-year-old than an older person with diabetes or cancer.

Risk adjustment tailors the capitated rate to each beneficiary’s expected costs, so plans should enroll any interested beneficiary and not discriminate. But the risk adjustment is just a projection. Beneficiaries need not actually incur higher costs for the plan to receive higher payments. Some beneficiaries with a seemingly low risk will incur high costs in a given year and some beneficiaries with a high risk will incur low or even no costs.

In fact, one Medicare Advantage plan received about $7 million for beneficiaries who did not appear to receive any clinical care that year — other than the risk assessment, which was the only reason for the higher Medicare payment. Finding beneficiaries with high risk scores but low care utilization can prove a profitable business strategy. 

Without gaming, on the aggregate, risk-based payments and utilization should even out over time.  But what if plans do game the system? Perhaps making their beneficiaries look sicker? Or not providing care for beneficiaries’ health conditions?

We identified two main concerns:

  • bad data — risk of incorrect diagnoses identified in the health risk assessment resulting in incorrect payments to plans.
  • suboptimal care — risk that diagnoses are correct, but patients are not getting the care they need.

The question of whether beneficiaries are experiencing quality and safety problems requires more study. For example, it is possible that beneficiaries are receiving care, but plans are not submitting this data as required. Regardless, plans that use risk assessments to gather diagnoses, but then take no further action, are clearly missing an opportunity for meaningful care coordination. We urge Medicare Advantage plans to:

  • Ensure practices drive better care and not just higher profits.  
  • Enact policies and procedures to ensure the integrity and usefulness of the data.

This could include measures like educating patients about the identified diagnoses and sharing them with caregivers. These steps are consistent with the best practices identified by CMS and provided to Medicare Advantage Plans in 2015.

It is not necessarily bad that Medicare allows risk assessments to influence payment, trusting that plans use risk assessments to identify missed diagnoses and not to fabricate nonexistent diagnoses. 

However, this practice only helps patients if there is some additional intervention to improve care. If risk assessments are performed by third parties, at minimum, the beneficiary and the beneficiary’s care team should learn the results. Risk assessments should trigger meaningful care coordination, patient engagement and help ensure the care team takes appropriate action. Risk assessments that generate diagnoses for payment purposes, but result in no follow-up care raise serious concerns.

Ensuring beneficiaries receive the care they need should be front of mind for executives as they design risk assessment programs with an eye to quality of care and better care coordination. Failing that, executives should know that government agencies will scrutinize risk adjustment for abuse. 

In response to our report, CMS promised to provide additional oversight and target plans that reap the greatest payments from in-home health risk assessments and conditions generated solely by risk assessments for which the beneficiaries appeared to receive no other clinical services. My office has identified red flags in some industry patterns and recommends plans adopt best practices. Executives should champion best practices and make sure their plans are driving correct diagnoses and quality care.

Ensuring that beneficiaries are properly diagnosed is important, not just for the integrity of taxpayer-funded federal healthcare programs, but also for the welfare of the beneficiaries served. Coordinating care and providing appropriate follow up is critical.

My office and other government agencies are targeting oversight to make sure plans do not pad risk adjustments with unsupported diagnoses. When plans find new real diagnoses, the plans deserve the extra payment, but only if patients get appropriate care.

 

 

 

 

Moody’s: Hospital financial outlook worse as COVID-19 relief funds start to dwindle

https://www.fiercehealthcare.com/hospitals/moody-s-hospital-financial-outlook-worse-as-covid-19-relief-funds-start-to-dwindle?mkt_tok=eyJpIjoiWTJZek56Z3lNV1E0TW1NMyIsInQiOiJKdUtkZE5DVGphdkNFanpjMHlSMzR4dEE4M29tZ24zek5lM3k3amtUYSt3VTBoMmtMUnpIblRuS2lYUWozZk11UE5cL25sQ1RzbFpzdExcL3JvalBod3Z6U3BZK3FBNjZ1Rk1LQ2pvT3A5Witkc0FmVkJocnVRM0dPbFJHZTlnRGJUIn0%3D&mrkid=959610

For-profit hospitals are expected to see a financial decline over the next 12 to 18 months as federal relief funds that shored up revenue losses due to COVID-19 start to wane, a recent analysis from Moody’s said.

The analysis, released Monday, finds that cost management is going to be challenging for hospital systems as more surgical procedures are expected to migrate away from the hospital and people lose higher-paying commercial plans and go to lower-paying government programs such as Medicaid.

“The number of surgical procedures done outside of the hospital setting will continue to increase, which will weaken hospital earnings, particularly for companies that lack sizeable outpatient service lines (including ambulatory surgery centers),” the analysis said.

A $175 billion provider relief fund passed by Congress as part of the CARES Act helped keep hospital systems afloat in March and April as volumes plummeted due to the cancellation of elective procedures and reticence among patients to go to the hospitals.

Some for-profit systems such as HCA and Tenet pointed to relief funding to help generate profits in the second quarter of the year. The benefits are likely to dwindle as Congress has stalled over talks on replenishing the fund.

“Hospitals will continue to recognize grant aid as earnings in Q3 2020, but this tailwind will significantly moderate after that,” Moody’s said.

Cost cutting challenges

Compounding problems for hospitals is how to handle major costs.

Some hospital systems cut some costs such as staff thanks to furloughs and other measures.

“Some hospitals have said that for every lost dollar of revenue, they were able to cut about 50 cents in costs,” the analysis said. “However, we believe that these levels of cost cuts are not sustainable.”

Hospitals can’t cut costs indefinitely, but the costs for handling the pandemic (more money for personal protective equipment and safety measures) are going to continue for some time, Moody’s added.

“As a result, hospitals will operate less efficiently in the wake of the pandemic, although their early experiences in treating COVID-19 patients will enable them to provide care more efficiently than in the early days of the pandemic,” the analysis found. “This will help hospitals free up bed capacity more rapidly and avoid the need for widespread shutdowns of elective surgeries.”

But will that capacity be put to use?

The number of surgical procedures done outside of the hospital is likely to increase and will further weaken earnings, Moody’s said.

“Outpatient procedures typically result in lower costs for both consumers and payers and will likely be preferred by more patients who are reluctant to check-in to a hospital due to COVID-19,” the analysis said.

The payer mix will also shift, and not in hospitals’ favor. Mounting job losses due to the pandemic will force more patients with commercial plans toward programs such as Medicaid.

“This will hinder hospitals’ earnings growth over the next 12-18 months,” Moody’s said. “Employer-provided health insurance pays significantly higher reimbursement rates than government-based programs.”

Bright spots

There are some bright spots for hospitals, including that not all of the $175 billion has been dispersed yet. The CARES Act continues to provide hospitals with a 20% add-on payment for treating Medicare patients that have COVID-19, and it suspends a 2% payment cut for Medicare payments that was installed as part of sequestration.

The Centers for Medicare & Medicaid Services also proposed increasing outpatient payment rates for the 2021 fiscal year by 2.6% and in-patient rates by 2.9%. The fiscal year is set to start next month.

Patient volumes could also return to normal in 2021. Moody’s expects that patient volumes will return to about 90% of pre-pandemic levels on average in the fourth quarter of the year.

“The remaining 10% is likely to come back more slowly in 2021, but faster if a vaccine becomes widely available,” the analysis found.

 

 

 

 

House government funding bill gives providers relief on Medicare advance payments

https://www.fiercehealthcare.com/hospitals/house-government-funding-bill-gives-providers-relief-medicare-advance-payments?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWTJZek56Z3lNV1E0TW1NMyIsInQiOiJKdUtkZE5DVGphdkNFanpjMHlSMzR4dEE4M29tZ24zek5lM3k3amtUYSt3VTBoMmtMUnpIblRuS2lYUWozZk11UE5cL25sQ1RzbFpzdExcL3JvalBod3Z6U3BZK3FBNjZ1Rk1LQ2pvT3A5Witkc0FmVkJocnVRM0dPbFJHZTlnRGJUIn0%3D

The House passed a short-term government funding bill that extends the deadline for providers to start repaying Medicare advance payment loans to the end of the COVID-19 public health emergency.

The bill that the House passed late Tuesday is a major win for provider groups who worried they could struggle to repay the Medicare loans starting in August. The bill still has to pass through the GOP-controlled Senate.

The continuing resolution, which funds the federal government through Dec. 11, also lowers the interest rate for payments made under the Medicare Accelerated and Advance Payment Program to 4%, down from 10.25%.

The Centers for Medicare & Medicaid Services (CMS) gave out more than $100 billion in advance payments in March to providers slammed by the pandemic. The payments are essentially loans which CMS recoups by garnishing Medicare payments to providers. That process starts 120 days after the first payment was received.

But the bill would give providers one year before Medicare can claim their payments.

It would also give providers 29 months since the first payment to fully repay the loan amount. Currently, CMS gives providers a year to fully repay.

In addition to the changes to the repayment terms, the bill also delays $4 billion in payment cuts to disproportionate share hospitals that were supposed to go into effect as part of the Affordable Care Act. The cuts will now be delayed until December.

The bill earned plaudits from the hospital industry, which has pressed Congress for help as providers are still struggling with the pandemic and could not afford to have Medicare payments become garnished.

“Our hospitals continue to suffer high costs and revenue losses associated with COVID-19, and they welcome the relief this continuing resolution would provide,” said Bruce Siegel, president and CEO of America’s Essential Hospitals, which represents safety net hospitals.

The Federation of American Hospitals said earlier this week before the House vote that the advance payment program is a “vital lifeline to hospitals and healthcare providers during the pandemic that has enabled hospitals and providers to maintain access to critical patient care. But the ongoing pressures of the current crisis required a revision of the repayment terms.”

The bill, which has approval from the White House, now heads to the Senate. The chamber must reach a decision on the legislation to avoid a government shutdown when funding runs out on Sept. 30.

 

 

 

 

CMS kills controversial Medicaid fiscal accountability rule

https://www.healthcaredive.com/news/cms-kills-controversial-medicaid-fiscal-accountability-rule/585206/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202020-09-15%20Healthcare%20Dive%20%5Bissue:29671%5D&utm_term=Healthcare%20Dive

What You Need to Know About the Medicaid Fiscal Accountability Rule (MFAR)  | KFF

Dive Brief:

  • CMS is axing its proposed Medicaid Fiscal Accountability Rule, agency head Seema Verma announced via Twitter late Monday afternoon, in a move quickly cheered by provider organizations.
  • The rule proposed last year would have increased federal oversight of how states fund their Medicaid programs and potentially resulted in funding cuts for the cash-strapped safety net insurance. Myriad providers, patient advocacy groups and lawmakers in both states and the halls of Congress opposed the rule as a result.
  • “We’ve listened closely to concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study. Therefore, CMS is withdrawing the rule from the regulatory agenda,” Verma said.

Dive Insight:

MFAR was designed to increase fiscal transparency in the 55-year-old Medicaid program, but was quickly met with a firestorm of controversy, with even bipartisan House and Senate members raising concerns it could lead to states being forced to choose between program cuts or raising taxes to replace the lost funding.

One estimate, conducted by Manatt Health for the American Hospital Association, estimated the changes proposed in the rule would cut Medicaid funding by almost $50 billion annually, shrinking the program by 8%.

“Hospitals and health systems will be greatly relieved when the proposed rule is formally withdrawn,” AHA EVP Tom Nickels said in a statement.

Bruce Siegel, CEO of America’s Essential Hospitals, a lobby representing hospitals serving a disproportionate amount of vulnerable patients, called CMS’ decision “wise and welcome … especially as state budgets and providers strain under the heavy financial burden and economic fallout of COVID-19.”

Medicaid is jointly funded by the states and the federal government. Generally, CMS matches every dollar states spend at rates that vary depending on the state, its covered services and its population. There are no limits for how much federal funding a state can receive, and snowballing spending in Medicaid has resulted in concerns about cost control.

Medicaid spending swelled from $456 billion in 2013 to $576 billion in 2016, per CMS data, mostly due to an expanding federal share.

The most acute worries on the federal side stemmed from supplemental payments, or payments state Medicaid agencies give to providers for going above and beyond routine care, normally for high-need patients or those in underserved areas.

Supplemental payments to healthcare providers have increased from 9.4% of all other payments in 2010 to 17.5% in 2017, according to CMS, and are generally uneven across state lines, contributing to geographic funding disparities.

Oversight agencies, including the Government Accountability Office and the Office of the Inspector General, flagged the growth in payments and called for stronger Medicaid oversight in a series of reports from 2006 to 2015.

As a result, CMS proposed the MFAR rule in November 2019. If finalized, it would require states to report Medicaid payment and financing data at the individual provider level, instead of an aggregate, and establish definitions for “base” and “supplemental” payments. It would also have allowed CMS to sunset existing supplemental payment methodologies after up to three years, requiring states to get approval for a longer period, and close financing loopholes that might allow states to re-use federal Medicaid dollars to fund additional payments.

At the outset, CMS attempted to stamp out criticisms the rule could winnow Medicaid funding. “Alarmist estimates that this rule, if finalized, will suddenly remove billions of dollars from the program and threaten beneficiary access are overblown and without credibility,” Verma wrote in a blog post on the proposal in February.

But the rule received more than 4,000 public comments, most of them negative. The swirling concerns about unintended consequences, especially as COVID-19 exacerbates worries about care access, have now brought CMS back to the drawing board on Medicaid fiscal accountability.

As of late Monday, MFAR remained on the Federal Register.

Other actions from the Trump administration to overhaul Medicaid have faced similar backlash, including unpopular efforts to instill requirements linking coverage to work hours and an early 2020 push to cap federal funding for states in exchange for wider latitude in program administration.

 

 

 

 

Spending millions on the Seema Verma Experience

https://mailchi.mp/365734463200/the-weekly-gist-september-11-2020?e=d1e747d2d8

$3,000 for a girls night at someone's home? I hope she at least hired  strippers. - the more you know post - Imgur

This week Politico broke the news of a scathing Congressional investigation into the lavish spending of Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, centered around boosting her own “brand image” and position among inside-the-beltway Washington power brokers.

According to the report, Verma sidestepped the use of CMS’ internal public relations team, and instead engaged a handpicked group of consultants, who charged the government over $6M in less than two years for their work in polishing her public profile and personal brand, arranging meetings with media, and traveling with her to events around the country.

The spending line items included tens of thousands of dollars focused on “getting Seema on lists”, including Politico’s “50 Most Powerful People in DC” and Washingtonian’s “Most Powerful Women in Washington”. Consultants were paid to arrange op-eds and interviews for Ms. Verma, with outlets such as AARP, Christian Broadcasting Network, and Fox News, and $450 was spent on a makeup artist to ensure Ms. Verma was perfectly camera-ready for a two-minute video shoot. The outside advisers even charged nearly $3,000 to arrange a private “Girls’ Night” event held last November at the home of a USA Today bureau chief, to network Verma with other DC insiders.

This isn’t the first time that Verma’s spending has come under scrutiny. In July the Office of the Inspector General found that Verma’s publicity spending violated federal contracting rules, and she was widely criticized for filing a $47,000 expense request for personal items stolen on an official trip, including a $325 jar of moisturizer and a $5,900 Ivanka Trump-brand necklace.

Public relations expenses to educate the public and promote official initiatives are standard fare, but Verma’s lavish spending, often focused on boosting her personal image, shows a stunning lack of judgement, if not an overt misuse of taxpayer dollars. We’d rather see those dollars put to more worthwhile uses, like educating people on how to best shop for insurance, or how to access testing and other needed care services during the largest healthcare crisis of our lifetimes.

Hospital revenue at risk in CMS’ proposal to move joint replacement to outpatient care

https://www.healthcarefinancenews.com/news/hospital-revenue-risk-cmss-proposal-move-joint-replacement-outpatient-care

Hospital revenue at risk in CMS' proposal to move joint replacement to outpatient  care | Healthcare Finance News

The Centers for Medicare and Medicaid Services’ push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021.

CMS’s continued push to the outpatient setting has been going on for some time, but the agency has found its sea legs in the recent hospital outpatient prospective payment system proposed rule, according to Stuart Clark, a managing director for The Advisory Board Company, in an August 27 presentation on payment updates.

CMS is slowly phasing out the inpatient only list over the next three years and is adding more services to the ambulatory surgical center list. There’s around 1,400 total codes on the list right now which are expected to be phased out by 2024.

MORE ON REIMBURSEMENT

Hospital revenue at risk in CMS’ proposal to move joint replacement to outpatient care

At stake is $3.2 billion in revenue for a one-day length of stay as 80% of revenue for all services is in joint replacement.

Susan Morse, Managing Editor

 

The Centers for Medicare and Medicaid Services’ push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021.

CMS’s continued push to the outpatient setting has been going on for some time, but the agency has found its sea legs in the recent hospital outpatient prospective payment system proposed rule, according to Stuart Clark, a managing director for The Advisory Board Company, in an August 27 presentation on payment updates.

CMS is slowly phasing out the inpatient only list over the next three years and is adding more services to the ambulatory surgical center list.

There’s around 1,400 total codes on the list right now which are expected to be phased out by 2024.

For 2021, CMS has added 11 new procedures to the ASC list, including musculoskeletal services and total hip replacement.

WHY THIS MATTERS 

Eighty percent of hospital revenue for all services is in joint replacement. At stake is $3.2 billion in revenue for a one-day length of stay.

Per hospital, 12-15 procedures may shift from a one-day stay to outpatient, according to Clark and Shay Pratt, vice president of Strategy and Service Line Research for the Advisory Board.

Hospitals may not see a huge amount of revenue at risk if they can continue to keep the services in-house, but in an outpatient setting.

However, there is less revenue to be made from the move to a lower cost care setting. And an estimated 83% of ambulatory surgical centers are physician-owned.

There is still debate on the efficacy of total hip replacement done as an outpatient service. Commercial payers say ASCs can provide total hip replacement, while opponents say they are not equipped for the service, according to the Advisory Board.

The comment period for the proposed rule is set to close on October 5.

Next year, CMS is expected to add cardiovascular services to the outpatient list, but the volume and revenue is not on as large a scale as joint replacement.

THE LARGER TREND IN TELEHEALTH

In telehealth, CMS is implementing incremental change as its use has increased dramatically during the coronavirus pandemic.

For Medicare reimbursement, 22 services have been added to the telehealth list. Of these, nine codes have been added permanently and 13 are approved through the end of the year in which the public health emergency ends.

Audio-only services are eligible under the public health emergency, but CMS is inviting input on how long they should remain eligible. The agency has said it’s uncertain about the value of an audio-only visit.

 

 

 

 

CMS to require positive COVID-19 test results for Medicare pay boost

https://www.beckershospitalreview.com/finance/cms-to-require-positive-covid-19-test-results-for-medicare-pay-boost.html?utm_medium=email

CMS to Pay For Hospital COVID-19 Care Furnished in Other Settings

CMS recently released guidance that includes a new requirement for hospitals to get a Medicare payment boost for caring for patients diagnosed with COVID-19. 

The Coronavirus Aid, Relief and Economic Security Act provided a 20 percent add-on payment to the inpatient prospective payment system diagnosis-related group rate for treating patients diagnosed with COVID-19. Until now, a physician’s documentation that a patient has COVID-19 was sufficient to receive the add-on payment. However, recent guidance from CMS adds the requirement to have a positive COVID-19 laboratory test documented in the patient’s medical record for the claim to be eligible for the add-on payment. The new requirement applies to admissions occurring on or after Sept. 1.

To receive the payment boost under the new guidance, the COVID-19 test must be taken within 14 days of the hospital admission. Only the results of viral testing that are consistent with CDC guidelines can be used. Tests performed by an entity other than the hospital, such as a local government-run testing center, can be manually entered into the patient’s medical record, CMS said.

Meeting the new requirement for the add-on payment could be difficult for hospitals, Ronald Hirsch, MD, vice president of the regulations and education group at R1 Physician Advisory Services, told Becker’s Hospital Review

“There is no way to indicate on a claim for a hospital patient that a test was positive or negative,” he said. “First, the hospital will manually need to go into every record for a patient with U07.1 as a diagnosis and look for a positive test in their own lab system. If one is not found, they will need to search the notes to see if the patient had a test in the 14 days prior to admission and if that test was positive. If there is a note the patient self-reported that they had a positive test, the hospital must decide if they must go through due diligence and attempt to get that actual test result for their records.”

In cases where there isn’t a positive test noted in the medical record, hospitals would need to notify the Medicare audit contractor that they are submitting a claim for a COVID-19 diagnosis that was made clinically, Dr. Hirsch said. The MAC would need to make the appropriate adjustment to ensure the 20 percent add-on payment is not made.

The “undue burden” that the new requirement will place on hospitals was one of the concerns the American Hospital Association highlighted in an Aug. 26 letter to CMS Administrator Seema Verma. The group is also concerned that requiring a positive COVID-19 test will lead to unnecessary additional testing.

“Basing the COVID-19 diagnosis code on clinical judgment alone — in line with coding rules — continues to be an important approach given that test accuracy may not be reliable, re-testing is unnecessarily onerous, and some communities face persistent testing shortages.” 

The AHA is urging CMS to drop the new requirement and allow provider documentation of a COVID-19 diagnosis to be sufficient for the add-on payment if the test result is unavailable.