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OIG: Acute care hospitals owe Medicare $51.6M, CMS agrees to provider clawbacks
A new government report finds that Medicare improperly paid acute care hospitals for outpatient services they provided to patients who were inpatients at other facilities. And now Medicare wants the money back
The Centers for Medicare and Medicaid Services has agreed to claw back the $51.6 million and require hospitals to refund patient copays and deductibles.
The Department of Health and Human Services Office of Inspector General audited (PDF) Medicare payments made between Jan. 1, 2013, and Aug. 31, 2016, and found that in that window CMS made $51.6 million in improper payments to hospitals for outpatient services provided to patients who were inpatients at long-term care facilities, critical access hospitals, inpatient rehabilitation facilities and inpatient psychiatric facilities.
Medicare typically would not pay an acute care hospital for outpatient treatments for a patient who is an inpatient at a different facility, according to the OIG, and instead the services should be rendered through an agreement between the two facilities, with payments going to the inpatient provider.
In addition, Medicare beneficiaries were responsible for $14.4 million in coinsurance and unnecessary deductibles paid to the acute care hospitals, the OIG found.
“Medicare overpaid the acute care hospitals because the system edits that should have prevented or detected the overpayments were not working properly,” the OIG concluded.
“If the system edits had been working properly since 2006, Medicare could have saved almost $100 million, and beneficiaries could have saved $28.9 million in deductibles and coinsurance that may have been incorrectly collected from them or someone on their behalf.”
OIG made three recommendations to CMS to resolve this issue:
- Recover the $51.6 million in inappropriate payments.
- Have the acute care hospitals refund the patients’ $14.4 million in coinsurance and deductibles.
- Identify improper payments outside of the audit window, and recover those as well.
CMS has agreed to these recommendations, OIG said.
OIG conducted the audit as previous investigations showed Medicare made inappropriate payments for outpatient services for people who were inpatients at acute care hospitals, and the organization wanted to see whether the trend extended to other types of facilities.
Little-known ACA provision could have big impact on hospitals’ bottom lines
Investors should keep a close eye on healthcare, as a little-known element of the Affordable Care Act could leave some hospitals strapped for cash.
The ACA allows Medicare to adjust reimbursements based on workers’ productivity, meaning reimbursement rates decrease as productivity grows in the economy, according to an article from The Wall Street Journal.
The Congressional Budget Office projected (PDF) that this piece of the law would cause reimbursement rates to grow at 2.2% each year between 2012 and 2025, a decrease from 3% growth.
These changes could hurt the bottom line for hospitals. Although the consumer-price index for medical care has been slowing, it has grown by an average of 2.9% over the past five years, according to WSJ. A lengthy window of costs rising faster than reimbursement would widen the gap between revenue and cost.
In general, Medicare already pays less in reimbursement than commercial insurers. The CBO report suggests that if the reimbursement changes stick, the number of hospitals unable to turn a profit could reach 60% by 2025.
WSJ’s analysis did note, however, that this grim outlook did not take into account increased cost efficiency at hospitals. It also noted that the political climate, as the GOP continues to push for a repeal of the ACA, leaves plenty up in the air.
“The good news for investors is that most hospitals aren’t for-profit and few have publicly traded shares,” according to the article. “But the impact of financial pressure still could be significant.”
Also worth considering is the impact that the industry’s ongoing consolidation can have; Tenet Healthcare, for instance, is looking to divest its hospital portfolio.
Moody’s maintains for-profit hospitals’ stable outlook
http://www.healthcaredive.com/news/moodys-maintains-for-profit-hospitals-stable-outlook/505680/
Dive Brief:
- Moody’s Investors Service announced in a recently released report that the outlook for U.S. for-profit hospitals is stable.
- Outpatient services will drive revenue growth. Moody’s said outpatient service growth will result in EBITDA growth of 2.5-3% for for-profit hospitals over the next 18 months. That growth will be offset somewhat by higher patient costs and more uninsured Americans, which may lead to more bad debt for hospitals.
- Moody’s warned that recent hurricanes in Florida and Texas, which are the two largest states by revenue among for-profit hospitals, may cause short-term financial issues, but Moody’s expects those hospitals will recover quickly.
Dive Insight:
Payers, both private and public, continue to squeeze hospital margins as they push patients to outpatient services. Moody’s said volumes to lower-cost settings will continue. Revenue growth from outpatient services will rise faster than inpatient services.
Moody’s said patients with high-deductible health plans, who pay more out-of-pocket costs, are going to seek less costly settings than hospitals to save money. Also, the CMS’ proposal to allow several orthopedic procedures on an outpatient basis could cause more financial harm for hospitals. “If finalized, this will further push surgeries out of the inpatient setting.”
For-profit hospitals will capture some of the added outpatient volume through their own outpatient departments and associated ambulatory surgery centers. However, some volume will go to competitors, Moody’s warned.
Moody’s expects payer rates will rise, but lower than usual — 1.5-2% net revenue per adjusted admission over the next 18 months. Some factors that will affect the slower growth include the CMS changing disproportionate share payments and proposing 1.75% rates for hospital outpatient procedures, and private payers implementing cost-controlling policies. These policies include Anthem’s plan to no longer pay for MRIs and CTs scans in hospital outpatient departments. Instead, patients will need to get the services at lower-cost, freestanding imaging centers.
Moody’s also warned that rising bad debt and expenses are pressuring margins.
“Higher patient responsibility and fewer insured patients will lead to lower volumes, but also higher costs of uncompensated care. Even with strong cost controls, given the high fixed costs of operating hospitals, it will be difficult to expand margins in an environment of weak patient volumes and rising bad debt expense. At the same time, nursing shortages and rising fees associated with medical specialists (including outsourced emergency departments) will also pressure margins,” said Moody’s.
However, some for-profit systems may see improved margins in the coming months. Moody’s said Quorum Health and Community Health Systems (CHS) will benefit from shedding less profitable facilities, while LifePoint Health and HCA Healthcare will improve margins over time as they improve efficiencies at recently acquired facilities.
Moody’s also warned that Hurricanes Harvey and Irma, which destroyed portions of Texas and Florida, will affect the largest for-profit hospitals: HCA Healthcare, Tenet Healthcare and CHS, which all have “significant presence” in those areas. For those states, Moody’s expects “incremental expenses,” such as cleanup and remediation, staffing and overtime, as well as transporting critically ill patients to other facilities, will play a financial role for those systems in the next two quarters.
The amended version of Graham-Cassidy is a mess
The revised bill was leaked last night and will apparently be unveiled today. The reporting has suggested that it’s worse than before. Not only is Graham-Cassidy now full of bribes and giveaways to lure hesitant senators, but it also makes it much easier for states to avoid the application of the ACA’s insurance regulations.
That’s because states that want to get out from under the ACA no longer have to submit waivers that the Trump administration has to then approve. They just have to submit applications. Once they do, section 204 of the bill appears to allow the states to establish their own rules for their insurance markets.
Section 204 is really convoluted. Even for lawyers who do this kind of thing for a living, it’s difficult to parse. And on one critical point in particular—whether insurers will be allowed to charge sicker people more for their coverage—it appears to be internally inconsistent.
In general, section 204 says that the states are free to adopt new rules for any insurance plans supported by the Graham-Cassidy block grants. To the extent that the states’ new rules diverge from certain specified ACA rules—the “non-applicable provisions”—the new rules supersede the ACA’s rules.
Which ACA rules can be superseded? It’s a familiar list: the requirement to cover the essential health benefits, the cap on cost-sharing limitations, and the obligation to sell tiered plans (gold, silver, bronze). Insurers can exclude preventive services, including contraception, and states no longer have to treat insurers as part of a single risk pool.
Look carefully at section 204(b)(2), however. It says that the rules that can be superseded include subsections (ii) and (iii) of 42 U.S.C. 300gg(a)(1)(A), which governs community rating. If you chase down that cross-reference, you’ll see that (ii) and (iii) allow health insurers to vary their premiums based on age and rating areas.
But here’s the key: the basic obligation of 300gg(a)(1)(A)—the requirement that premiums can’t vary along anything but the specified conditions—isn’t listed as one of the provisions that states can supersede. No matter what rules the states adopt, then, insurers still can’t discriminate based on health status.
Or can they? If you keep reading, section 204(c) asks states to supply a “description” of the state’s new rules. In that description, the state must specify “[t]he criteria by which, and the degree to which, a health insurance issuer of such coverage may vary premium rates for such coverage, except that in no case may an issuer vary premium rates on the basis of sex or on the basis of genetic information.”
The suggestion is pretty clear: states can allow insurers to vary their premiums, including on the basis of health status, so long as insurers don’t discriminate on the basis of sex or genetics. Plus, it doesn’t make much sense to give the states the freedom to establish separate risk pools if insurers still had to charge the same rate to everyone, healthy or sick.
So what the hell does section 204 mean? Can states discriminate on the basis of health status or not? Who knows?
The craziest thing is that the sloppy drafting may be intentional. It reads to me like a deliberate effort to allow senators to read whatever they want to into the bill. Senator Cassidy and other moderates can claim it preserves the protections for preexisting conditions. Senator Cruz and other conservatives can claim it doesn’t.
Both have a point—but they can’t both be right. One of them is being sold a bill of goods.
My own tentative view is that the statute doesn’t allow insurers to vary their rates based on health status. Nothing in section 204(c) expands the carefully specified list of ACA provisions that can be superseded. There’s internal tension, to be sure, but absent something more, my working assumption is that insurance plans nationwide will remain subject to rules on community rating.
Even if that’s right, however, Graham-Cassidy would still allow insurers to discriminate against the sick. States could liberate insurers to sell plans with huge deductibles and missing benefits, which will discourage sick people from signing up. Since those plans would be in their own risk pools, they could keep their premiums low. Sick people would then be forced into comprehensive plans with sky-high premiums. (Thanks to Tim Jost for walking me through this.)
However you read Graham-Cassidy, then, it allows insurers to screw sick people. It’s just not clear exactly how they can screw them.
Diabetic Amputation Rates Soar in California, Nationally
https://www.medpagetoday.com/Endocrinology/Diabetes/68086?xid=fb_o_
No clear cause, but experts suggest numerous possibilities.
Over the past 7 years, California clinicians have been amputating toes, feet, ankles and legs of patients with diabetes-related ischemia with much greater frequency than before, and public health officials, diabetes clinicians, and surgeons said they’re puzzled by the trend.
Statewide, there was a 31% increase in these non-trauma amputations after adjusting for changes in population from 2010 to 2016. Adjusted increases reached 66% in San Diego County, with a population of 3.3 million.
In other populous areas of the state, Riverside County (population 2.4 million) had a 62% increase in diabetes amputations among residents. San Bernardino County (2.1 million) had a 61% increase. Sacramento County (1.5 million people), 47%. And Los Angeles County, with more than 10 million people, saw a 20% increase.
By raw numbers statewide, there were 12,490 diabetes-related amputations in 2016, up from 8,980 in 2010, with almost all counties seeing steady increases year over year.
The data — filtered for more than 100 ICD-9 and ICD-10 codes by county, hospital, body part surgery, and payer — was requested from the Office of Statewide Health Planning and Development, the California agency that collects diagnostic codes for inpatients treated by all hospitals within the state. It was then analyzed to adjust for changes in population.
Asked for comment, officials for the California Department of Public Health responded with one sentence, saying it “does not have information” on possible reasons.
CDC Taking Note
Edward Gregg, chief of epidemiology and statistics for the CDC, said the trend is troublesome. National statistics for 2010 to 2014 show a 27% increase; before 2009, amputation rates had been dropping.
Gregg said that from a public health standpoint, “the rate of amputations is a very important indicator of overall diabetes care. If we see it going down, then it’s a good sign, because so many aspects of good diabetes care in theory are affected. And when you see it going up, that’s a concern,” he said.
He couldn’t say definitively why rates have been increasing, adding that the CDC will be working on the issue. But he and others offered theories.
For starters, the nation is aging, and advancing age is a risk factor for diabetes, and more people are being diagnosed with diabetes. But neither explanation can account for much of the recent increases, Gregg said. For one thing, rates in the diabetic population are increasing too, even after adjusting for age: from 2.7 per 1,000 in 2009 to 4.1 in 2014.
Clinician Factors
Though amputations can stop infection and save lives, diabetes-related amputations deprive patients of independence, increase the need for social services, and add to disability and medical costs. On occasion, they must be repeated when infections spread and amputation incisions don’t heal. But amputations are drastic, and should be performed only when other remedies fail, many experts stressed.
But too many clinicians are impatient, said Caesar Anderson, MD, a University of California San Diego diabetes wound and emergency medicine specialist, who said he was “shocked” by the data. He pointed to emergency room personnel and surgeons who he sees rushing to amputate “even when the wound is not that alarming.”
Anderson blamed a “culture of frustration” among clinicians who say to the patient “you’ll never get better; we’ll probably just save you the headache and just amputate … and we have some fantastic protheses we can get you into … let’s just get it over with.”
Misty Humphries, MD, a vascular surgeon and diabetes-related amputation researcher at the University of California Davis, also noticed the increase with data she collected between 2010 and 2013. She suggested hospitals may be more diligently coding patients with diabetes because of payment rule changes that increase reimbursement when health services involve patients with multiple comorbidities.
But that appeared unlikely, at least for parts of the California. According to the state’s data, the number of patients admitted to any San Diego hospital for any reason who were coded for diabetes increased only one-fifth of 1 percent from 2010 to 2016.
Humphries said that better medication and devices such as pacemakers are keeping people with high blood pressure and cardiac disease alive longer, but those medical advances don’t “protect the rest of their body from age-related deterioration” of blood vessels in their lower limbs. “We do see an increase in amputations for that particular group of patients who are now elderly, non-ambulatory, and not really doing as much but they are still alive.”
Patient Factors
Humphries said she believes a big part of the problem is how common diabetes now is, with an estimated 29 million nationally with the disease. Being diabetic may have become so much the norm, patients think they “can just take a pill … and you don’t really have to change your diet.”
Benjamin Cullen, MD, a foot and ankle surgeon with Scripps Mercy Hospital, noted that many patients may delay care until a family member notices the wound, and rushes them to the emergency room.
California’s data underscored Cullen’s point: At least in San Diego County, more than 76% of the patients who received an amputation entered the hospital through the emergency room, suggesting that patients waited, or even didn’t recognize a problem, until it became acute.
“With diabetes, patients have neuropathy, so they can’t feel their foot,” Cullen said. “They get a wound, don’t know it’s there, the wound gets infected and they don’t realize it. The first sign that they have is a foul odor coming from their foot, or a family member notices drainage.”
Often, the infection has gotten into the bone, he said, leaving “no choice but to go ahead with the amputation” to try to save other parts of the limb.
Cullen and others noted that after patients with diabetes-related infections or other wounds are seen by a doctor or at a hospital, surgeons often perform revascularization procedures to restore circulation.
Then, patients are often referred to wound clinics and given prevention instructions going forward.
System Factors
But those strategies don’t work for everyone, said James Longobardi, DPM, chief of surgery at Scripps Mercy’s Chula Vista campus, just north of the Mexican border, and one who specializes in diabetes-related foot care.
He blamed the increase at his hospital on health literacy. Many of his patients — for a variety of cultural, dietary and other reasons — “can’t grasp the seriousness of the situation, and it’s very, very frustrating to many of our clinicians.”
Gregg speculated that the American Diabetes Association’s 2010 recommendation that clinicians use A1c tests to diagnose diabetes may be capturing patients with “worse heath status, higher blood pressure, worse circulation” than fasting glucose tests. “That could affect rates of amputations too,” he said.
Other factors include less attention to risk factor management by patients or clinicians, and perhaps some subgroups getting screened later or less often than recommended, Gregg said.
Linda Geiss, director of the CDC’s diabetes surveillance section, postulated some of the increase may be delayed fallout from the 2008 recession, when people lost jobs and health insurance, and perhaps skipped medical care for several years. The Affordable Care Act’s health coverage expansions could explain increases from 2014 to 2016, but not those between 2010 and 2013.
In California, many clinicians had numerous explanations for higher numbers, especially in certain counties.
Jonathan Labovitz, DPM, a Pomona foot and ankle surgeon and podiatry researcher affiliated with the UCLA Center for Health Policy Research, blamed the state Medicaid program’s policy change in July 2009, and documented his reasons in this June policy brief.
That cost-cutting move excluded podiatry services from being reimbursed, except in certain situations. That may have reduced wound and foot care services that allowed conditions to worsen, said Labovitz, who also is assistant dean at Western University of Health Sciences College of Podiatric Medicine.
State health officials confirmed the policy change, but declined to comment on whether it increased amputations.
David Armstrong, DPM, MD, PhD, of the University of Southern California’s Keck School of Medicine, theorized that a small portion of the increase might be due to the American Diabetes Association’s broadened definition of diabetes in 1997, from at least 140 mg/dL fasting glucose to at least 126 mg/dL.
That lower threshold resulted in healthier people being captured in the denominator, and made the rate of amputations among people with diabetes appear to drop over the next decade or so, he said. It’s possible that over the next 10 to 20 years, as those people with diabetes progressed, more developed severe blood circulation problems that since 2010 resulted in them having to undergo limb surgery, Armstrong suggested.
But if that indeed is an important factor, the increased rates of amputations would not be as dramatic since 2010, he acknowledged. In the California data, the denominator is hospitalized patients with diabetes, not all diabetes patients.
“It’s just as likely, if not more so, that the economic funk in 2009, [which also was] when podiatric care was eliminated for people with diabetes, contributed to a bump in amputation rates,” he said.
Anne Peters, MD, director of the University of Southern California Clinical Diabetes Program, blamed regional impediments to access to care.
For example, she said, San Diego has no county hospital, like Los Angeles and many other large counties. She stressed the need for better access to care and stronger prevention messages, “letting people know what to look for and where to go should they develop a small lower extremity lesion so it can be treated before it becomes an amputation.”
Could more amputations be better?
Several diabetes specialists and public health officials suggested the increase in amputations could be a good thing, a sign that persistent diabetes-related wounds are not being allowed to fester. Maybe with more distal amputations of toes, and feet, ankles and legs are being spared, they said.
It could be “more a marker of success than failure,” said Philip Goodney, MD, a vascular surgeon and limb amputation researcher with the Dartmouth Institute in New Hampshire, which analyzes Medicare data to see health trends.
While it’s hard to know what California’s data means without more complicated analyses, Goodney said amputations of toes and transmetatarsal procedures across the foot may spare the ankle and leg, and still maintain enough of the foot so patients can still walk.
“I tell my patients that the toes are there for decoration. If we can help you keep your foot, then you can live at home and live independently. It’s when you get your below-knee amputation or your above-knee amputation that the sort of major impacts on quality of life starts to happen,” Goodney said.
The CDC’s Gregg, however, was doubtful. “It’s hard to buy the argument that an increase is good,” he said.
GOP’s Obamacare Repeal Looks to Be on the Verge of Collapse … Again
With just five days left for Republicans to pass an Obamacare repeal bill in 2017 without fear of facing a Democratic filibuster, the push by Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) entered a new phase Sunday night. Call it the “if at first you don’t succeed, try to buy the votes you need” stage. But even with the changes, the GOP’s health care reform effort looks likely to fall short.
What It Does: The revised legislation, formally introduced Monday, sweetens the deal for some states that just so happen to be home to senators who represent the deciding votes on the bill. The updated bill would still pool together Obamacare money for insurance subsidies and expanded Medicaid and deliver it to states in the form of block grants, but it changes the distribution of that funding. The bill also creates a carve-out allowing Alaska to get a 25 percent increase in federal Medicaid matching funds. And it makes it easier for states to roll back federal insurance regulations, a step that health care analyst Larry Levitt of the Kaiser Family Foundation says could leave people with pre-existing conditions priced out of insurance markets.
A state-by-state summary of the effects of the bill released by Cassidy shows Alaska gaining 3 percent from 2020 through 2026 compared to current law, Arizona getting 14 percent more, Kentucky getting 4 percent more and Maine gaining 43 percent. Some analysts charge that the updated numbers aren’t accurate because they don’t reflect Medicaid spending caps introduced by the legislation while treating reduced spending by states as a result of the elimination of Medicaid expansion as “savings.”
What It Means: “The substance of the Senate’s latest health care bill is different from its predecessor, but the politics are not, in part because only a few Republican senators care about the substance of the bill,” Axios’s Sam Baker writes.
Sen. Rand Paul (R-KY) on Monday reiterated his opposition to the bill. Sen. John McCain (R-AZ) had objected to the bill on more fundamental grounds, saying last week that health care reform ought to go through a bipartisan process and regular order in the Senate. The current scramble hardly qualifies on either front. Sen. Susan Collins (R-ME) said Sunday that “it’s very difficult for me to envision a scenario where I would end up voting for this bill.” The revisions don’t do much if anything to address her stated concerns. And Sen. Ted Cruz has also voiced concerns about the bill. “Right now, they don’t have my vote and I don’t think they have Mike Lee’s vote either,” he said Sunday, referring to Utah’s junior senator. The changes haven’t gotten him to “yes.”
The Bottom Line: Even President Trump is skeptical about the bill’s chances of passing. “Looks like Susan Collins and some others who will vote against,” Trump said Monday during an interview with the Alabama-based “Rick & Bubba” radio show. “We’re going to lose two or three votes and that’s the end of that.”
One Other Complication: Even if this bill fails, the push to repeal Obamacare may not be over. Graham said Sunday that he and Sen. Ron Johnson (R-WI) would not vote for a 2018 budget resolution “that doesn’t allow the health care debate to continue.” Squeezing both health care and tax reform into the budget resolution may be possible, but it would further complicate an already difficult task for Republicans.
HENRY KOTULA 