New CMS payment rule is good news, bad news for hospitals

https://mailchi.mp/b5daf4456328/the-weekly-gist-july-23-2021?e=d1e747d2d8

Centers for Medicare & Medicaid Services - Wikipedia

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 to dramatically 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.

MedPAC calls for 2% bump to hospital payments, no update for docs in 2022

MedPAC March 2019 Report to the Congress Released - ehospice

A key Medicare advisory panel is calling for a 2% bump to Medicare payments for acute care hospitals for 2022 but no hike for physicians.

The report, released Monday from the Medicare Payment Advisory Commission (MedPAC)—which recommends payment policies to Congress—bases payment rate recommendations on data from 2019. However, the commission did factor in the pandemic when evaluating the payment rates and other policies in the report to Congress, including whether policies should be permanent or temporary.

“The financial stress on providers is unpredictable, although it has been alleviated to some extent by government assistance and rebounding service utilization levels,” the report said.

MedPAC recommended that targeted and temporary funding policies are the best way to help providers rather than a permanent hike for payments that gets increased over time.

“Overall, these recommendations would reduce Medicare spending while preserving beneficiaries’ access to high-quality care,” the report added.

MedPAC expects the effects of the pandemic, which have hurt provider finances due to a drop in healthcare use, to persist into 2021 but to be temporary.

It calls for a 2% update for inpatient and outpatient services for 2022, the same increase it recommended for 2021.

The latest report recommends no update for physicians and other professionals. The panel also does not want any hikes for four payment systems: ambulatory surgical centers, outpatient dialysis facilities, skilled nursing facilities and hospices.

MedPAC also recommends Congress reduce the aggregate hospice cap by 20% and that “ambulatory surgery centers be required to report cost data to [Centers for Medicare & Medicaid Services (CMS)],” the report said.

But it does call for long-term care hospitals to get a 2% increase and to reduce payments by 5% for home health and inpatient rehabilitation facilities.

The panel also explores the effects of any policies implemented under the COVID-19 public health emergency, which is likely to extend through 2021 and could continue into 2022.

For instance, CMS used the public health emergency to greatly expand the flexibility for providers to be reimbursed for telehealth services. Use of telehealth exploded during the pandemic after hesitancy among patients to go to the doctor’s office or hospital for care.

“Without legislative action, many of the changes will expire at the end of the [public health emergency],” the report said.

MedPAC recommends Congress temporarily continue some of the telehealth expansions for one to two years after the public health emergency ends. This will give lawmakers more time to gather evidence on the impact of telehealth on quality and Medicare spending.

“During this limited period, Medicare should temporarily pay for specified telehealth services provided to all beneficiaries regardless of their location, and it should continue to cover certain newly-covered telehealth services and certain audio-only telehealth services if there is potential for clinical benefit,” according to a release on the report.

After the public health emergency ends, Medicare should also return to paying the physician fee schedule’s facility rate for any telehealth services. This will ensure Medicare can collect data on the cost for providing the services.

“Providers should not be allowed to reduce or waive beneficiary cost-sharing for telehealth services after the [public health emergency],” the report said. “CMS should also implement other safeguards to protect the Medicare program and its beneficiaries from unnecessary spending and potential fraud related to telehealth.”

The pandemic is causing an unprecedented drop in health spending

https://www.axios.com/the-pandemic-is-causing-an-unprecedented-drop-in-health-spending-b4801ec8-8da5-42a5-a66c-68c78dbd6e13.html

The coronavirus pandemic has caused national health care spending to go down this year — the first time that’s ever happened.

The big picture: Any big recession depresses the use of health services because people have less money to spend. But this pandemic has also directly attacked the health system, causing people to defer or skip care for fear of becoming infected.

By the numbers: Year-to-date spending on health services is down about 2% from last year. Health spending for the calendar year may end up lower than it was in 2019.

  • In April, when the pandemic forced many facilities to temporarily close, spending on health services had fallen an eye-popping 32% on an annualized basis.
  • The largest drop-offs were in outpatient care. Telehealth visits increased dramatically but did not make up all of the difference.

Context: This is the first time expenditures for patient care have fallen year-over-year since data became available in the 1960s.

What’s next: Spending and utilization have been recovering, but could fall again if the current spike in cases prompts either hospitals or patients to again hold off on elective care.

  • There has been a decline in cancer screenings and visits to manage chronic conditions, but it will take more research before we know precisely how this has affected outcomes.

Go deeper.

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.

 

 

 

 

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.

 

 

 

 

US hospitals losing $1.4B in revenue per day

https://www.beckershospitalreview.com/finance/us-hospitals-losing-1-4b-in-revenue-per-day.html?utm_medium=email

Facing a financial squeeze, hospitals nationwide are cutting jobs

Hospitals across the U.S. are losing more than $1 billion in daily revenue as they experience significant declines in patient volume during the COVID-19 pandemic, according to a report from Crowe, a public accounting, consulting and technology company. 

With the exception of those in San Francisco and New York City, health systems across the country saw patient volume decline an average of 56 percent between March 1 and April 15. As a result, net revenue at hospitals with more than 100 beds dropped roughly $1.44 billion per day, according to the report.

The report, released May 1, said inpatient admissions are down more than 30 percent, emergency room visits dropped 40 percent and outpatient surgery volume plummeted 71 percent, compared to January.

“Hospitals and governments prepared for a surge in patient volume to treat those infected with the novel coronavirus,” Brian Sanderson, managing principal of healthcare services at Crowe, said. “However, any possible surges that might have been expected due to COVID-19 patient volume appear to be dramatically offset by a significant decline in volume in all other areas.”

 

 

UnitedHealthcare’s policy will limit outpatient surgery payments to hospitals

https://www.beckershospitalreview.com/finance/unitedhealthcare-s-policy-will-limit-outpatient-surgery-payments-to-hospitals.html?oly_enc_id=2893H2397267F7G

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UnitedHealthcare has expanded prior authorization requirements and site of service medical necessity reviews for certain surgeries in an effort to shift surgical procedures to less expensive locations, according to Modern Healthcare.

The outpatient surgery policy will limit the circumstances under which UnitedHealthcare will pay for certain surgeries in a hospital outpatient setting.

Taking effect in November for fully insured groups in most states, UnitedHealthcare will only pay for a surgical procedure performed in an outpatient hospital setting if the insurer determines the site of service for the procedure is medically necessary, UnitedHealthcare told Becker’s Hospital Review.

“Medical necessity reviews for site of service occur during our prior authorization process and are only conducted if the surgical procedure will be performed in an outpatient hospital setting,” UnitedHealthcare said. “We utilize our Outpatient Surgical Procedures – Site of Service Utilization Review Guideline to help make our site of service medical necessity determinations. Site of service medical necessity reviews are currently being conducted for certain surgical procedures and will apply to additional surgical procedures beginning on Nov. 1, 2019 for most states.”

In California, Colorado, Connecticut, New Jersey and New York, medical necessity reviews will begin for certain surgeries occurring on or after Dec. 1, according to a UnitedHealthcare bulletin. Site of service medical necessity reviews do not apply to providers in Alaska, Kentucky, Massachusetts, Maryland and Texas.  

With the outpatient surgery policy, the insurer said it hopes to reduce healthcare spending by guiding patients toward ambulatory surgery centers, where care may be cheaper when there isn’t a substantial medical reason for the surgery to be performed in a hospital outpatient setting.