Category Archives: Uncategorized

Supreme Court to hear DSH payments case

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https://www.healthcaredive.com/news/supreme-court-to-hear-dsh-payments-case/533427/

Dive Brief:

  • The U.S. Supreme Court agreed Thursday to review an appellate court ruling that HHS improperly changed the reimbursement formula for Medicare disproportionate share hospital payments.
  • The crux of the case is whether HHS violated federal law by making the change in the DSH reimbursement calculation without public notice and comment.
  • At stake for HHS is up to $4 billion in DSH reimbursements made between FY 2005 and 2013. 

Dive Insight:

Policy changes since 2010 have cut payments to hospitals by billions of dollars, a report earlier this year from consulting firm Dobson DaVanzo & Associates forecast, with a prediction the cuts would reach $218.2 billion by 2028.​

The cuts include $25.9 billion for Medicaid Disproportionate Share Hospital (DSH) payments, a key source of financing for hospitals that serve low-income populations.

HHS petitioned the high court to hear the case after the D.C. Circuit Court of Appeals ruled in favor of Minneapolis-based Allina Health Services and a group of hospitals. The decision, written by embattled Supreme Court nominee Brett Kavanaugh, overturned a lower court ruling that sided with HHS.

In his 2017 opinion, Kavanaugh concluded that HHS violated the Medicare Act when it revised its reimbursement adjustment formula with going through the usual rulemaking process. In particular, he rejected the government’s argument that the notice-and-comment requirement for regulations setting or modifying a “substantive legal standard” does not apply to “interpretive rules.”

Kavanaugh also held that HHS erred in including Medicare Part C enrollees with Part A enrollees in its new DSH payment calculations.

“That difference in interpretation makes a huge difference in the real world,” Kavanaugh wrote. “Part C enrollees tend to be wealthier than Part A enrollees. Including Part C days in Medicare fractions therefore tends to lead to lower reimbursement rates. Ultimately, millions of dollars are at stake for the Government and the hospitals.”

In its petition, HHS maintains that the appellate court’s decision would “significantly impair” its ability to administer annual Medicare reimbursements through the third-party contractors it employs to pay hospitals.

“The court of appeals’ decision threatens to undermine HHS’s ability to administer the Medicare Program in a workable manner,” the petition states. Given the time and cost involved in formal rulemaking, “converting the agency’s non-binding manuals and other interpretive materials into regulations requiring notice and comment would jeopardize the flexibility needed in light of Medicare’s complex and frequently changing statutory context and administrative developments.”

 

 

Three-fourths of Medicare Advantage denials overturned on appeal, OIG finds

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https://www.healthcaredive.com/news/three-fourths-of-medicare-advantage-denials-overturned-on-appeal-oig-finds/533463/

Dive Brief:

  • An investigation by the HHS Office of Inspector General found large numbers of overturned denials upon appeal from Medicare Advantage organizations, raising concerns that some needed payments and services aren’t going to providers and patients.
  • Between 2014 and 2016, MAOs reversed 75% of their own denials, or about 216,000 a year, according to a report released Thursday. Additional denials were overturned by independent reviewers at higher levels of the appeals process.
  • The numbers are particularly troubling because of the infrequency with which beneficiaries and providers used the appeals process — for just 1% of denials at the initial appeal level, according to the report. 

Dive Insight:

The findings are important in light of the growing popularity of Medicare Advantage. Payers like the stability of the marketplace, and it’s popular with patients, too. In a recent Avalere Health study, MA beneficiaries with chronic conditions had 23% fewer inpatient stays and 33% fewer emergency department visits than people enrolled in Medicare fee-for-service plans.

That said, neither providers nor patients want to feel like they regularly have to appeal payment or service denials, especially with out-of-pocket costs on the rise.

Of the roughly 216,000 overturned denials, more than 80% were payments to providers for services the beneficiary had already received. The remainder — 18% — were for preauthorization of services not yet rendered.

But while some denials are justified, filing and processing appeals puts a burden on providers, MAOs and beneficiaries, especially those needing immediate care, OIG says. 

“Further, although overturned payment denials do not affect access to services for the associated beneficiaries, the denials may impact future access,” the report states. “Providers may be discouraged from ordering services that are frequently denied — even when medically necessary —to avoid the appeals process.”

OIG also points to CMS audits that show “widespread and persistent” problems with MAO denials of payment and care. In 2015, for instance, CMS cited more than half of audited contracts for inappropriate denials and 45% for sending incomplete denial letters. The latter could hinder efforts to successfully appeal a denial, the report notes.

While the agency imposed penalties and sanctions against the affected MAOs, more action is needed, the HHS watchdog says.

Specifically, OIG recommends CMS boost oversight of MAO contracts, with an eye toward identifying those with high overturn rates, and take enforcement actions when needed. The report also calls on CMS to address chronic issues around inappropriate denials and deficient denial letters and inform beneficiaries of serious MAO violations. 

CMS agreed to all three suggestions.

 

Hospitals prepare for uncompensated care payment change

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https://www.healthcaredive.com/news/hospitals-prepare-for-uncompensated-care-payment-change/530719/

 

Hospitals will soon get paid for uncompensated care differently, and though supporters of the change say it will create a fairer measurement, hospitals are leery about how the move will affect their bottom lines.

Starting Oct. 1, CMS will begin a three-year phase-in for how it pays hospitals for uncompensated care. No longer will they get paid based solely on a Medicaid, dual-eligible and disabled patient headcount. Instead, hospitals will need to provide patient-level detail of the services performed, as well as total uncompensated care totals.

Rita Numerof, co-founder and president of Numerof & Associates, told Healthcare Dive that counting heads is easier for hospitals, but it’s not always accurate. That distortion can result in institutions having an “unfair advantage” in terms of payments under the Disproportionate Share Hospital program. Instead, CMS will now gauge the actual care experience.

Numerof said the move looks to target flaws in the current payment model and improve transparency and accountability. “I think that looking at the services that are provided rather than just looking at the number of people and making an assumption about what their utilization is is a lot more accurate,” she said.

Chuck Alsdurf, director of healthcare finance policy and operational initiatives at Healthcare Financial Management Association, told Healthcare Dive the change “levels the playing field” for hospitals. However, several issues and concerns remain.

Worksheet S-10 and uncompensated care

CMS recently released its hospital inpatient prospective payment system final rule for fiscal year 2019, which included a provision that will require hospitals to use Worksheet S-10 to provide patient-level compensated care information that can be used to make payments to disproportionate share hospitals.

That patient-level data includes forms in which hospitals must attest to a patient’s eligibility, such as whether the person meets the criteria through disability, dual eligibility or Medicaid.

At the same time, CMS will audit Worksheet S-10 data in the fall and says it will continue provider education efforts and look to improve Worksheet S-10 instructions.

CMS made the change to improve the accuracy in the way that DSH payments are made. “Historically, the approach has been a head-count approach, essentially taking a look and totaling up the number of Medicaid patients, dual patients and those that are disabled,” Numerof said.

The new method isn’t as easy as a headcount, but it improves accuracy and is closer to what a hospital is actually owed.

According to the agency, about half of hospitals that receive uncompensated care payments felt the need to modify their S-10 data. Alsdurf said that’s not a large enough number to assume the data is accurate or reliable. “HFMA members view this as half of the hospitals possibly submitted imprecise data based on vague instructions that impact their hospital payments. So, at the current time, we do not feel this model is clear or accurate enough to utilize for such a significant distribution of funds,” he said.

Critics charge that the change might hurt Medicaid expansion states and help hospitals in states that didn’t expand the program. Now, hospitals calculate Medicaid Patient Days and send that information along to CMS. However, supporters of the change say that non-expansion states with fewer Medicaid recipients now lose out on uncompensated care payments compared to expansion states.

In a letter to CMS about the change, Dallas-based Parkland Memorial Hospital CEO Frederick Cerise said his facility is one of the largest providers of uncompensated care in Texas, which has not expanded Medicaid.

He said Parkland supports the change and called using S-10 data a “more exact measure.” The system provided $2.37 billion in uncompensated care in FY 2015. More than three-fourths of the system’s payer mix is unfunded (nearly half) or Medicaid (almost one-third).

The American Hospital Association agrees that Worksheet S-10 has the potential to provide a more accurate measure of uncompensated care costs. However, Erika Rogan, senior associate director of policy at AHA, told Healthcare Dive in a statement the group has concerns about the “accuracy and consistency of the S-10.”

Meanwhile, America’s Essential Hospitals, which represents more than 325 member hospitals with much of the country’s uncompensated care, sent a 44-page letter to CMS in June listing a series of concerns and recommendations to resolve the issues.

“The high cost of providing complex care to struggling Americans leaves our hospitals with limited resources, driving them to find increasingly innovative strategies for high-quality care,” AEH CEO Bruce Siegel said. “But improving care coordination and quality while staying true to a mission of helping those in need can be a delicate balance. This balance is threatened by payment cuts to hospitals.”

What does the change mean for hospitals?

Uncompensated care costs in community hospitals are on the rise after years of decreases following the Affordable Care Act.

Uncompensated care is bad debt charges plus financial assistance charges. This includes caring for uninsured patients unable to pay their bills. Uncompensated care doesn’t include underpayments from Medicare or Medicaid.

The AHA earlier this year said 4,840 community hospitals provided a total of $38.3 billion in uncompensated care in 2016, up from $35.7 billion at 4,862 community hospitals in 2015. And uninsured numbers have increased in the years since 2016, so those numbers are likely higher now.

Hospitals are concerned about any change that might result in them losing out on uncompensated care funding. However, what the change will mean for hospitals depends on multiple factors, including patient mix, location and how much the facility already relies on uncompensated care payments.

The AHA had hoped CMS would put into place protections to shield hospitals hurt by the change. In its comments to CMS, the hospital group requested a stop-loss policy that would kick in if hospitals lost more than 10% of DSH payments in a year after using the S-10 worksheet. AHA estimated that nearly one-fifth of hospitals might face that problem in FY 2019. AEH also requested a stop-loss policy.

Ultimately, CMS didn’t put in that provision. Numerof said she understands the agency’s choice. Hospitals need to understand where the market is headed and build infrastructure and systems to meet those demands accordingly. She added that no other business would request stop-loss protection based on changes like the S-10.

Concerning community relations, Alsdurf doesn’t expect the change will have an impact. “Hospitals will continue to provide care to those who cannot afford it, so I don’t think this change will have any impact on the community, positive or negative,” he said.

How should hospitals prepare?

There are still questions about the S-10, but hospitals can’t wait for CMS to provide all answers and clarifications. The change is here and hospitals need to move forward with the information available to them.

This process means maximizing uncompensated care payments in the new system. One step is for hospitals to make sure their charity care and bad debt policies are updated and that those policies are followed, so they receive the level of payments they’re owed.

Alsdurf said hospitals are already collecting Medicaid days data. Now they’ll have to add another piece. He expects the change will be minor for reporting and data gathering practices.

“Until they receive feedback from CMS on their data, it’s hard to do much other than make sure they feel good about the data … I’d suggest they begin running reports from their billing systems and reconciling the data (if they haven’t already) to the S-10 worksheet for FY 2014 to present,” Alsdurf said.

He added that hospitals should also continue to review their data as CMS provides more explicit instructions about S-10 in the coming months.

 

‘DEEPLY DISAPPOINTED’: HOSPITALS URGE CMS TO CHANGE COURSE ON OPPS 2019

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https://www.healthleadersmedia.com/finance/deeply-disappointed-hospitals-urge-cms-change-course-opps-2019

Two major hospital groups suggested separately that CMS had overstepped its legal authority in proposals for next year.

KEY TAKEAWAYS

The administration has touted site-neutral payment policies as a way to rationalize reimbursement.

Industry groups contend that site-specific costs should be considered when calculating rates.

The proposals intersect with administration efforts to reduce drug costs.

The deadline to comment on proposed changes to the Medicare outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system for next year passed Monday evening.

Hospital groups did not pass up the opportunity to make their displeasure known, and they hinted that legal action to block the proposal could be warranted.

Among the more than 2,800 comments received, there were some unsurprisingly unhappy responses from the American Hospital Association (AHA), America’s Essential Hospitals (AEH), and others who had already expressed their general opposition the government’s plan when it was announced in July.

Both groups added detail to their feedback Monday and accused the Centers of Medicare & Medicaid Services (CMS) of pursuing changes beyond its legal authority.

“The AHA is deeply disappointed in certain proposals that CMS has chosen to set forth in this rule, which run afoul of the law and rely on the most cursory of analyses and policy rationales,” AHA Executive Vice President Thomas P. Nickels wrote. “Taken together, they would have a chilling effect on beneficiary access to care and new technologies, while also dramatically increasing regulatory burden.”

The AHA objects specifically to three items in the CMS proposal:

  1. A payment reduction for hospital outpatient clinic visits in certain off-campus provider-based departments (PBD). These visits would be reimbursed at the physician fee schedule rate, which equals 40% of the OPPS rate.
  2. A payment reduction for “services from expanded clinical families” in certain off-campus PBDs. This would also be set at 40% of the OPPS rate.
  3. A continuation of the policy that pays for 340B program separately payable drugs at 22.5% less than the average sales price and an expansion of that policy to certain PBDs.

The AEH comment, signed by organization President and CEO Bruce Siegel, MD, MPH, made similar points.

“We are deeply concerned about several provisions of the proposed rule that exceed the agency’s statutory authority and would have a disproportionately negative impact on essential hospitals—those that provide stability and choice for people who face barriers to care,” Siegel wrote.

CMS Administrator Seema Verma has touted the so-called “site-neutral” payment proposal as an effort to rationalize the way the federal government reimburses services, saying it doesn’t make sense for taxpayer-funded healthcare programs to pay different rates depending upon the site of service.

“It’s a great example of some of the bizarre things in the Medicare program that just don’t make sense and that are actually having a perverse incentive on the entire healthcare delivery system,” Verma said.

In a comment on behalf of about 4,000 hospitals and 165,000 other providers, Premier Senior Vice President of Public Affairs Blair Childs contended that there are key differences between PBDs and physician practices that should be taken into account in CMS reimbursement decisions.

“At a time when providers are adopting population health strategies that seek to limit inpatient care when it is safe and medically appropriate, we are concerned that CMS’ over-reach is counterproductive and will have negative consequences for beneficiaries,” Childs wrote. “In lieu of expansive site-neutral payment policies, CMS should focus on methods to encourage providers to adopt risk-based alternative payment models”

Less than 20% of the comments received by CMS had been released publicly as of Tuesday morning, but major industry groups released their comments publicly on their own, reflecting a variety of concerns beyond the site-neutral payment policy. The Pew Charitable Trusts, for example, focused on a request for information in the proposal pertaining to the Competitive Acquisition Program.