Proposed changes to 340B program would cut DSH eligibility by half

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A new congressional proposal would raise the minimum disproportionate share hospital adjustment percentage that DSH hospitals must meet to qualify for the 340B drug discount program, eliminating 340B eligibility for over half the participating hospitals, according to a study by 340B Health.

Under the bill, proposed by Rep. Joe Barton, R-Texas, 573 of the 1,115 DSH hospitals enrolled in the 340B program would no longer be eligible for the drug discounts. Under the current rules, DSH hospitals are eligible for the 340B program if their Medicare DSH adjustment percentage is greater than 11.75 percent. The proposal would raise the qualifying rate to 18 percent.

Here are the 10 states with the most DSH hospitals that would lose 340B eligibility under the proposal:

  1. California (39)
  2. Texas (35)
  3. North Carolina (33)
  4. Georgia (31)
  5. Ohio (29)
  6. Michigan (23)
  7. New York (21)
  8. Illinois (19)
  9. Alabama (19)
  10. Pennsylvania (18)



About 30 New Lawsuits Await Supreme Court Input in High-Stakes DSH Payments Case

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In latest filing, HHS argues there’s a broader principle at play than the potential reimbursements totaling up to $4 billion.

As the U.S. Supreme Court prepares to consider this fall whether to take up a case implicating potentially billions of dollars in Medicare payments, hospitals that provide high rates of uncompensated care are lining up to ask the federal government for their piece of the pie.

The D.C. Circuit Court ruled less than a year ago that Health and Human Services violated the Medicare statute by failing to conduct a notice-and-comment rulemaking process when it implemented a policy affecting disproportionate-share hospital (DSH) reimbursements. Since then, providers have filed about 30 lawsuits in the D.C. District Court raising similar claims, according to a filing submitted Thursday to the Supreme Court on HHS Secretary Alex Azar’s behalf.

Some of the suits include dozens of plaintiffs. Most of them have been stayed pending the Supreme Court’s next move.

“The monetary stakes and hospitals’ legal sophistication will likely lead to future cases raising similar issues being litigated in the District of Columbia, where the decision below constitutes binding precedent,” Solicitor General Noel J. Francisco wrote in the filing, arguing that the Supreme Court should take the case so HHS may argue that the appellate court’s decision should be overruled.

The respondents—who argued the Supreme Court should deny the HHS request and let the Circuit Court decision stand—include just nine hospitals, but their claims for a single year total $48.5 million in additional reimbursement. Considering that about 2,700 hospitals receive DSH payments, the financial stakes surrounding this case are clearly quite high.

Although the appellate court sided with the hospitals’ claim that HHS broke the law by skipping notice-and-comment rulemaking, the latest HHS filing argues that the ruling was faulty and that there’s a broader issue at play.

The respondents both “miss the point and are wrong” about the legal standard, the HHS filing states.

“They miss the point because the logic of the decision below would apply to any context in which the agency gives its contractors interpretive instructions about making initial reimbursement decisions,” the filing states, noting that providers have the option to challenge initial cost-reporting determinations.

In other words, if HHS is required to engage in notice-and-comment rulemaking to calculate DSH reimbursements, then it must be required to do the same in other matters that would make running Medicare and other programs unworkable, HHS argues.

The Supreme Court is set to consider in a conference September 24 whether to take up the case.



Senate poised to approve budget redistributing state Medicaid funding


The Senate proposal, which would funnel away higher state Medicaid payments to hospitals with a large fraction of Medicaid patients, would need to be reconciled with the House’s budget preserving the current policy.

Safety net hospitals in Florida could see their state Medicaid payments decrease by $170 million under a proposal in the budget the state Senate is poised to approve Thursday. The proposal, which would target about $318 million in payments that currently go to 28 hospitals with a higher percentage of Medicaid patients, would funnel those funds into the base rates paid to all hospitals instead.
The reshuffling in the Senate budget would largely affect safety net hospitals, which include public and teaching hospitals, while for-profit hospitals could gain more than $63 million, according to the Safety Net Hospital Alliance of Florida.
Miami’s Jackson Memorial Hospital would lose $59 million, Broward Health would lose about $17 million and Tampa General would lose $14 million, according to Safety Net’s analysis. Nicklaus Children’s Hospital in Miami and Johns Hopkins All Children’s, which each see about 70 percent of patients covered by Medicaid, would lose $10.5 million and $5 million respectively. In contrast, for-profit chain HCA could see its reimbursements rise more than $40 million.
Senate Health and Human Services Appropriations Chairwoman Anitere Flores, R-Miami, said the new system would more fairly distribute funds to all hospitals, which she said also provide charity care like the 28 hospitals that currently meet the 25 percent threshold of Medicaid patients to receive automatic rate enhancements.
“We’re making sure that the dollars actually follow the patient that is being served,” she said.
Flores contended that the new proposal corrects an “arbitrary” formula that set the higher payment rates in past years, and that the hospitals that had been reimbursed at a higher rate would be able to recoup their losses through federal Low Income Pool funding, which reimburses hospitals for charity care serving the uninsured.
But Lindy Kennedy, vice president of the Safety Net Alliance, told the Senate Democratic Caucus that the policy is needed because Medicaid rates do not cover the cost of care. Those 28 hospitals, which largely comprise public or not-for-profit private institutions in the state, lose proportionately more money because a larger slice of their patients are covered by Medicaid, she said.
“If Medicaid would pay these costs and if didn’t go into the red for every Medicaid patient we had, we wouldn’t need this policy,” she said. “This puts us back to status quo.”
“These hospitals cannot afford this type of cut,” she added.

Lidia Amoretti, a spokeswoman for Jackson Health System, called the Senate’s plan “alarming,” though she added “it is still early in the process.”

“We trust that the Miami-Dade delegation will fight fiercely – as it always does – to protect the people who rely upon Jackson for world-class care,” she said in a statement. 
Sen. Jose Javier Rodriguez, D-Miami, proposed an amendment that would revert the Senate proposal to match the House’s version this year, though it was rejected on the floor.
Tony Carvalho, president of the Safety Net Hospital Alliance, said that the Senate plan would also cut $94 million from three of the four largest teaching hospitals — UF’s Shands in Gainesville, Jackson Memorial and Tampa General.
“All hospitals lose money, and I appreciate that, but the average annual margin for the three largest teaching hospitals is $57 million over the last five years…for the operation of in-patient out-patient services in hospitals,” he said. “The Senate bill would cut them $95 million — that’s $30 million more than their operating margin in the last five years.”
By contrast, he said, HCA makes an operating margin, on average over the last five years, of $868 million per year.
Carvalho said one of the biggest cuts to hospitals are employees and this would be “damaging some of your premier medical institutions.”
“Their slogan is the money follows the patient,” he said. “That would be pertinent if all hospitals were paid their cost of care or all hospitals did the same percentage of Medicaid. That’s not the case. If you are going to pay hospitals way below the cost of care, our position is — and it has been the legislative position for years — is that you make a special adjustment when one of four of their patients are in the Medicaid pool.”
The Senate is expected to pass its budget tomorrow, setting up a clash with the House, whose version of the budget preserves the higher reimbursement system. The Senate’s plan also includes $130 million in nursing home funding, which differs from the House plan.

Bipartisan Senate Budget Deal Boosts Health Programs

Bipartisan Senate Budget Deal Boosts Health Programs

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In a rare show of bipartisanship for the mostly polarized 115th Congress, Republican and Democratic Senate leaders announced a two-year budget deal that would increase federal spending for defense as well as key domestic priorities, including many health programs.

Not in the deal, for which the path to the president’s desk remains unclear, is any bipartisan legislation aimed at shoring up the Affordable Care Act’s individual health insurance marketplaces. Senate Majority Leader Mitch McConnell (R-Ky.) promised Sen. Susan Collins (R-Maine) a vote on health legislation in exchange for her vote for the GOP tax bill in December. So far, that vote has not materialized.

The deal does appear to include almost every other health priority Democrats have been pushing the past several months, including two years of renewed funding for community health centers and a series of other health programs Congress failed to provide for before they technically expired last year.

“I believe we have reached a budget deal that neither side loves but both sides can be proud of,” said Senate Minority Leader Chuck Schumer (D-N.Y.) on the Senate floor. “That’s compromise. That’s governing.”

Said McConnell, “This bill represents a significant bipartisan step forward.”

Senate leaders are still negotiating last details of the accord, including the size of a cut to the ACA’s Prevention and Public Health Fund, which would help offset the costs of this legislation.

According to documents circulating on Capitol Hill, the deal includes $6 billion in funding for treatment of mental health issues and opioid addiction, $2 billion in extra funding for the National Institutes of Health, and an additional four-year extension of the Children’s Health Insurance Program (CHIP), which builds on the six years approved by Congress last month.

In the Medicare program, the deal would accelerate the closing of the “doughnut hole” in Medicare drug coverage that requires seniors to pay thousands of dollars out-of-pocket before catastrophic coverage kicks in. It would also repeal the controversial Medicare Independent Payment Advisory Board (IPAB), which is charged with holding down Medicare spending for the federal government if it exceeds a certain level. Members have never been appointed to the board, however, and its use has not so far been triggered by Medicare spending. Both the closure of the doughnut hole and creation of the IPAB were part of the ACA.

The agreement would also fund a host of more limited health programs — some of which are known as “extenders” because they often ride along with other, larger health or spending bills.

Those programs include more than $7 billion in funding for the nation’s federally funded community health centers. The clinics serve 27 million low-income people and saw their funding lapse last fall — a delay advocates said had already complicated budgeting and staffing decisions for many clinics.

And in a victory for the physical therapy industry and patient advocates, the accord would permanently repeal a limit on Medicare’s coverage of physical therapy, speech-language pathology and outpatient treatment. Previously, the program capped coverage after $2,010 worth of occupational therapy and another $2,010 for speech-language therapy and physical therapy combined. But Congress had long taken action to delay those caps or provide exemptions — meaning they had never actually taken effect.

According to an analysis by the nonpartisan Congressional Budget Office, permanently repealing the caps would cost about $6.47 billion over the next decade.

Lawmakers would also forestall cuts mandated by the ACA to reduce the payments made to so-called Disproportionate Share Hospitals, which serve high rates of low-income patients. Those cuts have been delayed continuously since the law’s 2010 passage.

Limited programs are also affected. The deal would fund for five years the Maternal, Infant and Early Childhood Home Visiting Program, a program that helps guide low-income, at-risk mothers in parenting. It served about 160,000 families in fiscal year 2016.

“We are relieved that there is a deal for a 5-year reauthorization of MIECHV,” said Lori Freeman, CEO of advocacy group the Association of Maternal & Child Health Programs, in an emailed statement. “States, home visitors and families have been in limbo for the past several months, and this news will bring the stability they need to continue this successful program.”

And the budget deal funds programs that encourage doctors to practice in medically underserved areas, providing just under $500 million over the next two years for the National Health Service Corps and another $363 million over two years to the Teaching Health Center Graduate Medical Education program, which places medical residents in Community Health Centers.


Senate strikes 2-year budget deal: 5 takeaways for healthcare leaders

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Republican and Democrat Senate leaders unveiled a two-year budget deal Wednesday that would boost federal spending for several health programs.

Here are five things to know about the budget agreement.

1. The budget deal includes an additional four-year extension of the Children’s Health Insurance Program. That extension is on top of the six years of CHIP funding Congress approved in late January.

2. The plan includes more than $7 billion in funding over two years for the nation’s community health centers. Federal funding for community health centers, which serve more than 27 million people, expired Sept. 30.

3. The spending deal would delay payment cuts to Disproportionate Share Hospitals mandated by the ACA, which have been pushed back since 2010, according to Kaiser Health News.

4. The budget deal includes $2 billion in additional funding for the National Institutes of Health and $495 million for the National Health Service Corps.

5. The budget deal would repeal the ACA’s Independent Payment Advisory Board, which was intended to hold down Medicare payments if the program’s spending exceeded a certain threshold. Members have never been appointed to the IPAB, according to Kaiser Health News.


Healthcare bankruptcies more than triple in 2017

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Regulatory changes, the rise of high-deductible health plans and advances in technology are a few of the factors that have taken a toll on healthcare companies’ finances, and these challenges may lead many hospitals and other medical companies to restructure their debt or file for bankruptcy in the coming year, according to Bloomberg.

Although hospitals are expected to face financial challenges in the year ahead, many healthcare companies are already struggling. According to data compiled by Bloomberg, healthcare bankruptcy filings have more than tripled in 2017. Healthcare bankruptcies are on the rise as filings across the broader economy have fallen since 2010, according to the report.

The challenges in the healthcare sector may hit rural hospitals the hardest due to the reduction in Disproportionate Share Hospital payments.

The ACA calls for annual ggregate reductions to DSH payments from fiscal year 2014 through fiscal year 2020. Subsequent legislation delayed the start of the reductions until fiscal year 2018, which began Oct. 1, and pushed the end date back to fiscal year 2025.

David Neier, a partner at Winston & Strawn, told Bloomberg the cuts to DSH payments may “single-handedly throw hospitals into immediate financial distress.”


With 18 days cash on hand, NYC Health + Hospitals calls on state to release $380M in DSH funding

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NYC Health + Hospitals is in a dire financial situation, and the system’s outgoing CEO Stan Brezenoff is accusing Gov. Andrew Cuomo of withholding hundreds of millions in disproportionate share hospital payments, according to Politico.

“It is mystifying that approximately $380 million of DSH funds — the majority of which we expected to receive months ago — is languishing, awaiting action by the State Department of Health and the Division of Budget,” Mr. Brezenoff wrote in a letter to New York Health Commissioner Howard Zucker. Mr. Brezenoff said the $380 million is for services provided to about 1.2 million patients.

In a statement issued Friday, the governor said New York City should provide assistance to the struggling hospital system, which only has 18 days cash on hand.

“New York City with a $4 billion surplus needs to help H + H,” Mr. Cuomo said, according to The New York Times. “The first source of financial assistance for these hospitals must be their associated local governments and [State University of New York].”

A spokeswoman for New York City Mayor Bill de Blasio told The New York Times the city has already given $1.8 billion to the public hospital system this fiscal year. “We have always said our reserves are for a rainy day,” the spokeswoman said, “not for when Governor Cuomo refuses to give our public hospitals what they’re owed for caring for New Yorkers.”

Adding further stress to New York City’s public hospitals, federal cuts to DSH payments kicked in on Sunday.

The ACA calls for aggregate reductions to DSH payments annually from fiscal year 2014 through fiscal year 2020. Subsequent legislation delayed the start of the reductions until fiscal year 2018, which began Oct. 1, and pushed the end date back to fiscal year 2025. DSH payments would be gradually reduced by a total of $43 billion over the eight-year period.

Lawmakers are working on a solution to the funding issue. On Monday, Sen. Chuck Schumer, D-N.Y., told The New York Times he was “cautiously optimistic that we can forge a common-sense, bipartisan agreement to preserve DSH”