Category Archives: Medicare Disproportionate Share Reimbursement

MedPAC recommendations on 2024 payment rates get mixed reaction

Posted on by • Posted in Ambulatory Surgery Centers (ASC), Health System, Hospital, Hospital Industry, Long Term Care Hospital, Medicare, Medicare Advantage, Medicare Disproportionate Share Reimbursement, Medicare Fee Schedule, Medicare Part D, Medicare Payment Advisory Commission (MedPAC), MedPAC, Physician, Physician Reimbursement • Leave a comment

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The Medicare Advisory Payment Commission recommends a higher-than-current-law fee-for-service payment update in 2024 for acute care hospitals and positive payment updates for clinicians paid under the physician fee schedule. It recommends reductions in base payment rates for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

MedPAC gave Congress recommendations on payment rates in both traditional fee-for-service and Medicare Advantage for 2024, satisfying a legislative mandate comparing per enrollee spending in both programs.

MedPAC estimates that Medicare spends 6% more for MA enrollees than it would spend if those enrollees remained in fee-for-service Medicare.

In their March 2023 Report to the Congress: Medicare Payment Policy, commissioners said they were acutely aware of how providers’ financial status and patterns of Medicare spending varied in 2020 and 2021 due to COVID-19 and were also aware of higher and more volatile cost increases.

However, they’re statutorily charged to evaluate available data to assess whether Medicare payments are sufficient to support the efficient delivery of care and ensure access to care for Medicare’s beneficiaries, commissioners said. 

FEE-FOR-SERVICE RATE RECOMMENDATIONS 

MedPAC’s payment update recommendations are based on an assessment of payment adequacy, beneficiaries’ access to and use of care, the quality of the care, the supply of providers, and their access to capital, the report said. As well as higher payments for acute care hospitals and clinicians, MedPAC recommends positive rates for outpatient dialysis facilities.

It recommends providing additional resources to acute care hospitals and clinicians who furnish care to Medicare beneficiaries with low incomes. It also recommends a positive payment update in 2024 for hospice providers concurrent with wage adjusting and reducing the hospice aggregate Medicare payment cap by 20%.

It recommends negative updates, which are reductions in base payment rates, for skilled nursing facilities, home health agencies and inpatient rehabilitation facilities. 

Acute care

For acute care hospitals paid under the inpatient prospective payment system, commissioners recommend adding $2 billion to current disproportionate share and uncompensated care payments and distributing the entire amount using a commission-developed “Medicare SafetyNet Index” to direct funding to those hospitals that provide care to large shares of low-income Medicare beneficiaries.

This recommendation got pushback from America’s Essential Hospitals.

“We appreciate the Medicare Payment Advisory Commission’s desire to define safety net hospitals for targeted support, but the commission’s Medicare safety net index (MSNI) could have the perverse effect of shifting resources away from hospitals that need support the most,” said SVP of Policy and Advocacy Beth Feldpush. “The MSNI methodology fails to account for all the nation’s safety net hospitals by overlooking uncompensated care and care provided to non-Medicare, low-income patients – especially Medicaid beneficiaries. Any practical definition of a safety net provider must consider the care of Medicaid and uninsured patients, yet the MSNI misses on both counts.”

Feldpush urged policymakers to develop a federal designation of safety net hospitals and to reject the MSNI.

“Further, policymaking for these hospitals should supplement, rather than redistribute, existing Medicare DSH funding, which reflects a congressionally sanctioned, well-established methodology,” she said.

Physicians and clinicians

For clinicians, the commission recommends that Medicare make targeted add-on payments of 15% to primary care clinicians and 5% to all other clinicians for physician fee schedule services provided to low-income Medicare beneficiaries. 

The American Medical Association commended MedPAC, but also said that an update tied to just 50% of the Medicare Economic Index would cause physician payment to chronically fall even further behind increases in the cost of providing care. AMA president Dr. Jack Resneck Jr. urged Congress to pass legislation providing for an annual inflation-based payment update.

MedPAC has long championed a physician payment update tied to the Medicare Economic Index, Resneck said. Physicians have faced the cost of inflation, the COVID-19 pandemic and growing expenses to run medical practices, jeopardizing access to care, particularly in rural and underserved areas.

“Not only have Medicare payments failed to respond adequately, but physicians saw a 2% payment reduction for 2023, creating an additional challenge at a perilous moment,” Resneck said. “As one of the only Medicare providers without an inflationary payment update, physicians have waited a long time for this change. When adjusted for inflation, Medicare physician payment has effectively declined 26% from 2001 to 2023. These increasingly thin or negative operating margins disproportionately affect small, independent, and rural physician practices, as well as those treating low-income or other historically minoritized or marginalized patient communities. Our workforce is at risk just when the health of the nation depends on preserving access to care.”

The AMA and 134 other health organizations wrote to congressional leaders urging for a full inflation-based update to the Medicare Physician Fee Schedule.

MGMA’s SVP of Government Affairs Anders Gilberg said, “Today’s MedPAC report recommends Congress provide an inflationary update to the Medicare base payment rate for physician and other health professional services of 50% of the Medicare Economic Index (MEI), an estimated annual increase of 1.45% for 2024. In the best of times such a nominal increase would not cover annual medical practice cost increases. In the current inflationary environment, it is grossly insufficient.”

MGMA urged Congress to pass legislation to provide an annual inflationary update based on the full MEI.

Ambulatory surgical centers and long-term care hospitals

Previously, the commission considered an annual update recommendation for ambulatory surgical centers (ASCs). However, because Medicare does not require ASCs to submit data on the cost of treating beneficiaries, the commissioners said they had no new significant data to inform an ASC update recommendation for 2024.

Commissioners also previously considered an annual update recommendation for long-term care hospitals (LTCHs). But as the number of cases that qualify for payment under Medicare’s prospective payment system for LTCHs has fallen, they said they have become increasingly concerned about small sample sizes in the analyses of this sector.

“As a result, we will no longer provide an annual payment adequacy analysis for LTCHs but will continue to monitor that sector and provide periodic status reports,” they said in the report. 

MEDICARE ADVANTAGE

Commissioners said that overall, indicators point to an increasingly robust MA program. In 2022, the MA program included over 5,200 plan options, enrolled about 29 million Medicare beneficiaries (49% of eligible beneficiaries), and paid MA plans $403 billion (not including Part D drug plan payments). 

In 2023, the average Medicare beneficiary has a choice of 41 plans offered by an average of eight organizations. Further, the level of rebates that fund extra benefits reached a record high of about $2,350 per enrollee, on average.

Medicare payments for these extra benefits – which are not covered for beneficiaries in FFS – have more than doubled since 2018. For 2023, the average MA plan bid to provide Medicare Part A and Part B benefits was 17% less than FFS Medicare would be projected to spend for those enrollees. 

However, the benefits from MA’s lower cost relative to FFS spending are shared exclusively by the companies sponsoring MA plans and MA enrollees (in the form of extra benefits). The taxpayers and FFS Medicare beneficiaries (who help fund the MA program through Part B premiums) do not realize any savings from MA plan efficiencies. 

Medicare should not continue to overpay MA plans, MedPAC said. Over the past few years, the commission has made recommendations to address coding intensity, replace the quality bonus program and establish more equitable benchmarks, which are used to set plan payments, the report said. All of these would stem Medicare’s excess payments to MA plans, helping to preserve Medicare’s solvency and sustainability while maintaining beneficiary access to MA plans and the extra benefits they can provide. 

PART D

Medicare’s cost-based reinsurance continues to be the largest and fastest growing component of Part D spending, totaling $52.4 billion, or about 55% of the total, according to the report. 

As a result, the financial risk that plans bear, as well as their incentives to control costs, has declined markedly. The value of the average basic benefit that is paid to plans through the capitated direct subsidy has plummeted in recent years. 

In 2023, direct subsidy payments averaged less than $2 per member per month, compared with payments of nearly $94 per member, per month, for reinsurance. To help address these issues, in 2020 the commission recommended substantial changes to Part D’s benefit design to limit enrollee out-of-pocket spending; realign plan and manufacturer incentives to help restore the role of risk-based, capitated payments; and eliminate features of the current program that distort market incentives.

In 2022, Congress passed the Inflation Reduction Act, which included numerous policies related to prescription drugs. One such provision is a redesign of the Part D benefit with many similarities to the commission’s recommended changes. 

The changes adopted in the IRA will be implemented over the next several years, and are likely to alter the drug-pricing landscape, commissioners said.

$1.6B CMS pay bump next year isn’t enough, hospitals say

Posted on by • Posted in American Hospital Association (AHA), Center for Medicare and Medicaid Services (CMS), Health Policy, Medicare Disproportionate Share Reimbursement, Medicare Hospital Wage Index • Leave a comment
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The CMS proposed payment increase of 3.2 percent, or $1.6 billion, for fiscal year 2023, is inadequate due to inflation and labor and supply costs, Stacey Hughes, executive vice president of the American Hospital Association, said April 18.

Hospitals would actually see a net decrease in payments from this year to next year because of proposed cuts to Disproportionate Share Hospital payments and other payment cuts, Ms. Hughes said.

“This is simply unacceptable for hospitals and health systems and their caregivers that have been on the front lines of the COVID-19 pandemic for over two years now,” she stated in an April 18 news release. “While we have made great progress in the fight against this virus, our members continue to face a range of challenges that threaten their ability to continue caring for patients and providing essential services for their communities.”

The association is happy with the proposed 5 percent cap on a decrease to a hospital’s wage index, but Ms. Hughes asked that this be used in a “non-budget neutral” way.

CMS released the Inpatient Prospective Payment System proposed rule April 18 and is now accepting comments on it through June 17.

Read the full American Hospital Association statement here.

5 biggest health care provisions inside the House reconciliation bill

Posted on by • Posted in ACA, Disproportionate Share, Health Insurance Coverage Adequacy, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, Home Health, Home-Based Care, Medicaid, Medicaid Childrens Health Insurance Program (CHIP), Medicaid Coverage Gap, Medicaid Disproportionate Share Reimbursement (DSH), Medicaid Expansion, Medicaid Home, Medicare Disproportionate Share Reimbursement, Medicare Hearing Benefit, Out of Pocket Expenses, Permanent Funding • Leave a comment
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House to consider modified reconciliation bill with health care provisions | AHA News

After months of negotiations, House Democrats on Friday passed their version of the Build Back Better bill—an expansive $1.7 trillion package that contains some of the largest health reforms since the Affordable Care Act’s passage in 2010.

While the overall scope of the bill is roughly half the size of President Biden’s original $3 trillion proposal, many of Democrats’ key health care provisions made it in, albeit with some modifications. What’s more, the Congressional Budget Office projected that while the overall bill would add $367 billion to the deficit over the 10 year period, the health care provisions would all be largely paid for by provisions aimed at lowering drug prices.

Below, I round up the five biggest health care changes included in the House bill.

Find out where the states stand on Medicaid expansion

1. Health care coverage expansions

The House bill leverages the ACA’s exchanges and federal tax credits to expand access to coverage in two ways. First, the bill would extend the American Rescue Plan’s enhanced ACA tax credits through 2025. The enhanced tax credits, which are currently slated to expire in 2023, fully subsidize coverage for people with annual incomes up to 150% of the federal poverty level (FPL) and have enabled people above 400% FPL to qualify for subsidies and capped their premium costs at 8.5% of their incomes.

While Democrats had originally proposed to permanently expand those subsidies, they ultimately had to scale back this—and other proposals—to ensure they could cover the costs. But as we’ve seen in the past, it is much harder to take away an existing benefit or subsidy than it is to create a new one—so while the current bill was able to cover the cost of the health care provisions by making them temporary, lawmakers will have to revisit the tax credits before 2025 and find new money to either further extend them or permanently authorize them. This is one of several health care provisions we could see the Senate take a closer week at in the coming weeks.

Second, the House bill takes aim at the so-called Medicaid coverage gap. The bill would enable residents below 138% FPL who live in states that have not expanded their Medicaid programs to qualify for fully subsidized exchange plans through 2025. While an earlier version of the House bill included language for a new federal Medicaid program covering those below 138% FPL who live in non-expansion states to begin in 2025, the final House bill contains no such program.

Instead, the bill aims to encourage non-expansion states to expand their Medicaid programs by reducing their Disproportionate Share Hospital (DSH) payments by 12.5% beginning in 2023—a significant cut that the American Hospital Association (AHA) estimates would reduce DSH payments in those states by $2.2 billion over five years and $4.7 billion over 10 years. At the same time, expansion states would see their federal match for spending on the Medicaid expansion population rise from 90% to 93% from 2023 through 2025.

While the AHA and others are pushing back against the proposed DSH payment cuts—the move addresses the moral hazard component that critics raised about earlier versions. It no longer rewards holdout states for not expanding their programs—effectively punishing those who did and are now on the hook for 10% of their expansion population’s costs. It’s a clever move, and one we’ll be watching to see if it survives the Senate.

2. New Medicare benefits.

The House bill adds a hearing benefit to Medicare beginning in 2023. The hearing benefits would cover hearing aids and aural rehabilitation, among other services. While this is certainly a win for many Medicare beneficiaries who do not have or cannot afford private Medicare Advantage plans, this is significantly scaled back from the original proposal to add hearing, as well as dental and vision benefits.

However, given that Sen. Bernie Sanders (I-Vt.) has named Medicare benefit expansions as one of his top priorities, it’s possible we could see this topic revisited in the Senate. But any meaningful change would mean Democrats need to find more money to cover the costs—and so far, that has proved challenging.

3. Medicaid home and community care.

The House bill allocates $150 billion for home- and community-based care. The funding would be used to help increase home care provider reimbursement rates and help states bolster home- and community-based care infrastructure.

While the funding is down from an original proposal of $400 billion, the Biden administration—and the Covid-19 pandemic—have made it clear that home-based health care will continue to grow and be a key player in the U.S. health care delivery system. Providers looking at their offerings should keep an eye on how states are investing these funds and building out home-based health care delivery in their areas.

4. Lowering the costs of prescription drugs.

Democrats scored a huge win in the House bill, and that is securing Medicare authority—albeit narrower authority than they sought—to negotiate prices for some of the highest-priced Part B or Part D drugs. Under the bill, HHS would be able to select 10 drugs to negotiation in 2025, up to 15 drugs in 2026 and 2027, and then up to 20 drugs per year in 2028. To be eligible for negotiation, a drug could no longer be subject to market exclusivity.

Drug manufacturers that do not negotiate eligible drug prices could be subject to an excise tax. This was perhaps one of the most contentious provisions debated in the health care portions of this bill. Democrats for years have been seeking to give Medicare drug pricing authority, but intense lobbying and Republican—and some Democrat—objections have kept this proposal on the shelf. While it’s not the first time the House has passed a bill with drug price negotiation—it is the first time we are in a place where the Senate could reasonably pass either this or a modified version of the proposal.

The bill also would redesign the Medicare Part D benefit to create an annual cap of $2,000 on seniors’ out-of-pocket drug costs, and impose an inflation rebate on drug manufacturers’ whose drug prices rise faster than inflation (based on 2021) in a given year.

5. Other notable provisions.

The House bill also includes provisions to permanently fund CHIP, bolster the country’s pandemic preparedness and response, and bolster the health care workforce through new training and workforce programs, the nation’s first permanent federal paid family and medical leave program, investments in childcare, and more.

What’s next?

While the health care provisions in the House bill are notable, it’s important to remember that this is not the end of the road. The House bill now goes to the Senate, where the Senate parliamentarian will check provisions against the Byrd rule—a Senate rule requiring reconciliation bills to meet certain budgetary requirements.

Democrats also will enter a new round of negotiations, and industry groups—including PhRMA and AHA—are expected to launch a new round of lobbying. PhRMA objects to the bill’s drug price negotiation provision and AHA is fighting the provision to reduce DSH payments in non-Medicaid expansion states by 12.5%. Any Senate-passed reconciliation bill will need to go back to the House for final approval before it can go to Biden’s desk.

But this is not the only thing on lawmakers’ plates in December. Members of Congress also face several other deadlines, including addressing looming physician payment cuts and passing end of the year spending bills. The short-version is, while there’s a lot to learn from the House-passed bill, it’s possible the Senate version could look very different—and it may take several weeks before we see that bill take shape.

New spending from Build Back Better would outweigh cuts in DSH payments, finds Urban Institute

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Earlier this year, President Joe Biden proposed a framework called Build Back Better that would, among other things, expand Medicaid. If the BBB plan is implemented, a new Urban Institute analysis predicts that federal health subsidies would outweigh a projected increase in hospital spending by about 3-to-1.

The current draft of the Build Back Better Act (BBBA) includes provisions that would extend enhanced ACA subsidies to people below 100% of the federal poverty limit in the 12 states that have not expanded Medicaid. These provisions are intended to extend health insurance coverage to millions of people and to lower the cost of healthcare for many families.

Hospitals in non-expansion states would see more than $6.8 billion in new spending as a result of the BBBA’s closing of the Medicaid gap, which is about 15 times larger than the expected disproportionate share hospital allotment cuts of $444 million, the findings showed.

Overall, new federal health subsidies disbursed to non-expansion states for people in the coverage gap would be $19.6 billion. Florida, Texas, Georgia and North Carolina hospitals are among those that would have the most substantial increases in spending because of added coverage, the analysis found.

The Urban Institute also determined that the benefits of the changes would not necessarily go to the same hospitals that would sustain reductions in DSH allotments. If true, that means some hospitals may be worse off with the proposed changes.

Still, though only a portion of the total increased federal spending under the BBBA provisions would flow to hospitals, the researcher concludes that in the years during which additional subsidies would be provided, hospitals would be substantially better off overall than they are under current law, even after proposed Medicaid DSH cuts are taken into account.

WHAT’S THE IMPACT?

The effects of the new federal health subsidies would vary across states, largely because of differences in state populations, the Urban Institute showed. 

Florida hospitals, for instance, are projected to gain $1.7 billion in new spending because of added coverage, and to lose $33 million in DSH allotments, resulting in a net gain of $1.6 billion. Texas hospitals could gain $1.6 billion in new spending and lose $157 million in DSH allotments, gaining almost $1.5 billion. Georgia and North Carolina hospitals would also have substantial increases in spending because of added coverage that would exceed their reduced Medicaid DSH allotments by more than $750 million and almost $900 million, respectively. 

Meanwhile, because Wisconsin already covers adults up to the FPL under Medicaid, it would have a small net loss in payments to hospitals for the Medicaid gap population, but a net gain overall.

Hospitals serving a disproportionately high share of undocumented people would see less benefit from reform than other hospitals, and could see substantial DSH cuts. At the same time, the overall decline in the number of uninsured people could save spending on uncompensated care for the uninsured, data showed. If states and localities save on uncompensated care, the savings could be distributed to hospitals most in need after DSH cuts.

THE LARGER TREND

The BBBA’s increased subsidies are set to end after 2025, whereas the bill’s Medicaid DSH cuts would be permanent. More broadly, nationwide Medicaid DSH cuts specified under the Affordable Care Act have been repeatedly delayed, but they are now due to be implemented in fiscal year 2024. At $8 billion in that year, those cuts are much larger than the DSH cuts specified in the BBBA. 

Unless Congress intervenes, UI said, these ACA-related DSH reductions would be in addition to the DSH cuts in the BBBA for the 12 non-expansion states. 

The BBBA was slated to go to a vote the week of November 15, but that timetable may shift. According to CNN, the Congressional Budget office has yet to give a final cost estimate score for the bill; a group of moderate Democrats is waiting to see the CBO score before deciding whether to vote for the bill.

Duke Health, Geisinger sue HHS over Medicare payments

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January Healthcare Industry Lawsuits and Settlements - Elite Learning

Five hospitals recently sued HHS over its calculation of Medicare Part A disproportionate share hospital payments for patients who were enrolled in Medicare Advantage plans under Part C of the Medicare Act.

The federal lawsuit was filed Dec. 21 by Duke Raleigh (N.C.) Hospital, Durham (N.C.) Regional Hospital, Geisinger Medical Center in Danville, Pa., Geisinger Wyoming Valley Medical Center in Wilkes-Barre, Pa., and The Washington (Pa.) Hospital. 

The hospitals’ lawsuit takes issue with a Medicare policy change, adopted in 2004, that included a new methodology for allocating Medicare Part C days in the disproportionate share hospital formula. The appeals court has ruled against HHS in three actions challenging its attempts to apply its Part C days policy to deny DSH payments to hospitals. However, the hospitals argue that HHS is disregarding those decisions and a decision by the U.S. Supreme Court. 

“The agency has continued to apply the Part C days policy adopted in the now-vacated 2004 rule in violation of these decisions, including in the payment determinations at issue for the plaintiff hospitals in this case, in a recently issued proposed rule seeking to re-adopt the same 2004 policy retroactively, and in a ruling that would leave undisturbed the payment determinations from which hospitals have appealed and, as construed by the agency’s administrative Board, not permit further administrative or judicial review of those determinations,” the complaint filed Dec. 21 states. 

The hospitals argue that HHS’ attempts to apply the policy should be rejected. The hospitals are asking the court to declare the final payment determinations reflecting the policy change invalid. 

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

Posted on by • Posted in American Hospital Association (AHA), Association of American Medical Colleges, Association of American Medical Colleges (AAMC), Continuing Resolution, Health Policy, Health System, Hospital, Hospital Industry, Medicare, Medicare Advance Payments, Medicare Disproportionate Share Reimbursement, Physician, Physician Practice Management • Leave a comment

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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.

 

 

 

 

House government funding bill gives providers relief on Medicare advance payments

Posted on by • Posted in America's Essential Hospitals, Cash Management, Cash Reserves, Center for Medicare and Medicaid Services (CMS), Health Policy, Health System, Hospital, Hospital Industry, Medicare, Medicare Advance Payments, Medicare Disproportionate Share Reimbursement • Leave a comment

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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.

 

 

 

 

Wonky Supreme Court Ruling on Medicare DSH Formula to Affect More Than Money

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Moving forward, the government will have to complete notice-and-comment rulemaking for a broader set of its decisions.

KEY TAKEAWAYS

Monday’s decision by the Supreme Court kicks the dispute back to the District Court level. What happens next is unclear.

Beyond the money at stake, this case increases the rulemaking burden on HHS and CMS, though the extent of that burden is disputed.

Hospitals that treat high numbers of low-income patients secured a big win this week at the U.S. Supreme Court.

Seven of the justices agreed that officials in the U.S. Department of Health and Human Services stepped out of line when they rejiggered a Medicare reimbursement formula for disproportionate share hospitals (DSH) five years ago without a formal notice-and-comment process.

The decision carries implications well beyond the money hospitals say they are owed.

“It’s a big deal for the hospitals, obviously,” says Helen R. Pfister, JD, a New York–based partner with Manatt Health.

By the government’s estimates, the dispute implicates $3-4 billion in payments over nine years. That’s how much more the Centers for Medicare & Medicaid Services would have paid in DSH reimbursements, had the formula not been changed, according to court records.

“But I think it’s also a big deal in terms of the fact that the Supreme Court has clearly indicated that, going forward, CMS is going to have to do notice-and-comment rulemaking for a much more expansive set of agency decisions than they thought and argued in this case that they would need to do,” Pfister adds.

Precisely how much of the routine work completed by HHS and CMS will be affected by this broader take on notice-and-comment rulemaking remains to be seen. While some stakeholders have raised concerns the added burden could stifle the government’s work, others contend any inconvenience imposed will be both manageable and beneficial.

In any case, the impact of Monday’s decision will flow along two distinct paths, affecting not only hospital finances but also, for better or worse, the way HHS and CMS operate.

What’s Next, Procedurally?

In 2016, nine hospitals led by Allina Health Services lost their case against HHS at the U.S. District Court in D.C., where a judge ruled that notice-and-comment rulemaking wasn’t required. In 2017, however, three judges at the D.C. Circuit Court of Appeals reversed the lower court’s decision and sent the dispute back for further proceedings.

In 2018, attorneys for HHS asked the Supreme Court to review the appellate decision. Now that the justices have affirmed the Circuit Court’s decision, the parties have up to seven days to file a status report at the District Court level on where the case stands, according to court records. That filing, expected by early next week, could shed light on where things are headed procedurally.

Pfister says she doesn’t think anyone knows for the time being whether the government will automatically revise DSH payments for the affected fiscal years, pursue another round of notice-and-comment rulemaking, or take some other course of action in response to the Supreme Court ruling.

And the parties themselves aren’t saying much. When asked about the agency’s plans, a CMS spokesperson told HealthLeaders on Wednesday that the agency is still reviewing the decision. Allina referred questions to its law firm, which declined to comment.

Beyond the nine plaintiff hospitals involved in this week’s Supreme Court decision, there are hundreds of plaintiffs suing HHS on similar grounds. Dozens of follow-on lawsuits have been consolidated into a single docket pending before U.S. District Judge Amy Berman Jackson. Parties to that proceeding have up to 14 days to file a status report in light of the Supreme Court’s decision, according to court records.

An Overly Burdensome Decision?

The government’s attorneys had issued dire warnings about the potential consequences of the decision the Supreme Court ultimately reached.

The notion that CMS must go through a notice-and-comment process for the sort of routine process at issue in this case could “substantially undermine effective administration of the Medicare program” because it would apply not just to DSH formula calculations but to “nearly every instruction” the agency gives to its contractors as well, U.S. Solicitor General Noel J. Francisco argued on HHS’ behalf.

Pfister largely rejects the government’s dire take on the decision’s impact.

“I think that might have been a little bit hyperbolic,” she says.

But other stakeholders outside the government have taken the Supreme Court’s ruling as a troubling sign of uncertainty to come.

“This is a frightening decision, that throws a lot of doubt on the validity of thousands of pages of Medicare sub-regulatory guidance,” Adam Finkelstein, JD, MPH, counsel with Manatt Health and a former health insurance specialist with the CMS Innovation Center, wrote in a tweet.

Stephanie A. Kennan, senior vice president of federal public affairs for McGuire Woods Consulting in Washington, D.C., tells HealthLeaders that she thinks the government’s argument “is somewhat overblown.” Officials should be able to manage any added burden from this ruling, even if it slows them down a bit, she says.

“I think it may mean they cannot move as quickly on some policies as they would like to,” Kennan says.

A Boon to Public Input?

The benefits of a more-transparent process justify any added hassle that may stem from having to go through a mandatory comment process more often as a result of this decision, Kennan says.

“In this case, they have to do 60-day comment periods, which can seem like an eternity if you want to keep the process moving, regardless of whether you’re the agency or a stakeholder,” she says. “The transparency is probably worth the 60 days.”

But others reject the notion that this decision should be seen as balancing effective governance with transparency.

“Allina isn’t a vindication of the importance of public participation in agency decision-making. It’s a testimonial to the heedlessness of lawyers who impose silly procedural rules on an administrative state they only dimly understand,” Nicholas Bagley, JD, a law professor at the University of Michigan who teaches on administrative law and health law, wrote in a series of tweets.

“Bear in mind,” he added, “that CMS is a tiny, beleaguered agency … To further encumber it will make Medicare more capricious, not less, as staffers tend to senseless procedures instead of doing their jobs.”

Moving forward, HHS and CMS will continue to have discretion to determine whether to go through notice-and-comment with a given action, Pfister says. The difference now, she says, is that there’s a stronger incentive for government officials to cover themselves; otherwise, another case like Allina’s could pull them into another round of prolonged litigation.

 

 

Supreme Court rejects HHS’ Medicare DSH changes

Posted on by • Posted in 2020 Election Issues, Health Policy, Health System, Hospital, Hospital Industry, Medicare, Medicare Disproportionate Share Reimbursement, Supreme Court • Leave a comment

https://www.modernhealthcare.com/legal/supreme-court-rejects-hhs-medicare-dsh-changes?utm_source=modern-healthcare-alert&utm_medium=email&utm_campaign=20190603&utm_content=hero-readmore

The U.S. Supreme Court on Monday ruled that HHS improperly changed its Medicare disproportionate share hospital payments when it made billions of dollars in cuts.

In a 7-1 decision, the justices said HHS needed a notice-and-comment period for the Medicare DSH calculation change. Justice Neil Gorsuch wrote in the decision that HHS’ position for not following the procedure was “ambiguous at best.”

“Because affected members of the public received no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, we agree with the court of appeals that the new policy cannot stand,” Gorsuch wrote.

The case was highly technical, and hinged on a dueling interpretations of agency activity that constitutes a “substantive legal standard” in a payment policy change to Medicare.

Under the new Medicare DSH formula, the CMS began to lump Medicare Advantage enrollees in with traditional Medicare enrollees to calculate a hospital’s DSH payment.

But Medicare spending is about $700 billion per year, and the program covers nearly one-fifth of Americans.
“Not only has the government failed to document any draconian costs associated with notice and comment, it also has neglected to acknowledge the potential countervailing benefits,” Gorsuch wrote. “Notice and comment gives affected par-ties fair warning of potential changes in the law and an opportunity to be heard on those changes—and it affords the agency a chance to avoid errors and make a more informed decision.”

The majority opinion also emphasized the size and scope of Medicare, noting that “even seemingly modest modifications to the program can affect the lives of millions.” “As Medicare has grown, so has Congress’s interest in ensuring that the public has a chance to be heard before changes are made to its administration,” Gorsuch wrote.

During oral arguments in the case in January, Gorsuch and Justice Sonia Sotomayor doubled down on the economic magnitude of the change, which HHS estimated to be between $3 billion and $4 billion between fiscal 2005 and 2013.

Justice Stephen Breyer dissented from the majority, and Justice Brett Kavanaugh recused himself because he participated in the U.S. Court of Appeals for the D.C. Circuit ruling that the Supreme Court upheld.

Breyer wrote he believed the government had the legal grounds to skip the public comment period in this policy.
“The statutory language, at minimum, permits this interpretation, and the statute’s history and the practical consequences provide further evidence that Congress had only substantive rules in mind,” he wrote. “Importantly, this interpretation of the statute, unlike the court’s, provides a familiar and readily administrable way for the agency to distinguish the actions that require notice and comment from the actions that do not.”