Tag Archives: Medicaid Disproportionate Share

Safety-net providers operated with an average margin of 1.6% in 2017

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https://www.healthcarefinancenews.com/news/safety-net-providers-operated-average-margin-16-2017?mkt_tok=eyJpIjoiWkdWbVpqTmxZelJpT1RNMCIsInQiOiJBa3NWRnZ1KzVEc29BeFkyMnRTUUtmaFRZNWgrVmVGTXJ0SlwvdW5NVitiUGQzVDJjYXFXRkd4eUlvckROVG1uQkxQdE9ROVZOM0pwQWJBUlpmK0dGZnEwS0V2XC9wRUs4SUQ3bFc3bmorbVlTeXZQaHhHbjRva2V6UnQwakZtVHZaIn0%3D

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This is less than half their 2016 average and below the 7.8 percent average of other U.S. hospitals, according to the annual study.

Hospitals that serve vulnerable patients have much lower average margins that other providers, according to America’s Essential Hospitals.

The safety-net providers have persistently high levels of uncompensated and charity care that pushed average margins down to one-fifth that of other hospitals in 2017, according to the annual study, Essential Data: Our Hospitals, Our Patients. They operated with an average margin of 1.6 percent in 2017 — less than half their 2016 average and far below the 7.8 percent average of other U.S. hospitals, according to the data from Essential Hospitals’ 300 members.

While these hospitals represent about 5 percent of all U.S. hospitals, they provided 17.4 percent of all uncompensated care, or $6.7 billion, and 23 percent of all charity care, or $5.5 billion in 2017, the study said.

THE IMPACT

Amercia’s Essential Hospitals fears further financial pressure from $4 billion in federal funding cuts to disproportionate share hospitals slated to go into effect on October 1. This represents a third of current funding levels.

The DSH payments are statutorily required and are intended to offset hospitals’ uncompensated care costs. In 2017, Medicaid made a total of $18.1 billion in DSH payments, including $7.7 billion in state funds and $10.4 billion in federal funds, according to the Medicaid and CHIP Payment and Access Commission, or MACPAC.

MACPAC recommends starting with cuts of $2 billion in the first year.

The association and other organizations have been urging Congress to stop or phase-in the cuts. Speaker Nancy Pelosi said Congress must take action to ease the DSH cuts.

TREND

Since 1981, Medicaid DSH payments have helped offset essential hospitals’ uncompensated care costs.

The study data shows essential hospitals provide disproportionately high levels of uncompensated and charity care.

In 2017, three-quarters of essential hospitals’ patients were uninsured or covered by Medicaid or Medicare and 53 percent were racial or ethnic minorities. They served 360,000 homeless individuals, 10 million with limited access to healthy food, 23.9 million living below the poverty line, and 17.1 million without health insurance, the study said.

The association’s members averaged 17,000 inpatient discharges, or 3.1 times the volume of other acute-care hospitals. They operated 31 percent of level I trauma centers and 39 percent of burn care beds nationally.

ON THE RECORD

“Our hospitals do a lot with often limited resources, but this year’s Medicaid DSH cuts will push them to the breaking point if Congress doesn’t step in,” said association President and CEO Dr. Bruce Siegel. “Our hospitals are on the front lines of helping communities and vulnerable people overcome social and economic barriers to good health, and they do much of this work out of their own pocket. They do this because they know going outside their walls means healthier communities and lower costs through avoided admissions and ED visits.”

 

 

Federal cuts to hospitals to reach $218B in next decade, AHA report says

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https://www.fiercehealthcare.com/hospitals-health-systems/report-federal-cuts-to-hospitals-to-reach-218b-next-decade

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A report commissioned by the American Hospital Association and the Federation of American Hospitals warns that a conglomeration of health measures could result in funding losses of up to $218.2 billion for hospitals by 2028.

The report looked at multiple measures—from sequestration to cuts in Medicare payments for bad debt, hospital coding and documentation adjustment and clarifications to the three-day payment window—to project the cumulative losses between 2010 and 2028.

The single most costly changes they found? Adjustments to Medicare Severity Diagnosis Related Groups documentation and coding, which is expected to add up to $79.3 billion in cuts over that time period.

Here’s a look at what else they took into account:Sequestration

Among the reductions taken into account under sequestration, the Budget Control Act of 2011 imposed across-the-board cuts in federal spending, including a 2% reduction in Medicare payments after April 1, 2013. Sequestration cuts have since been extended several times to stretch through fiscal 2027.
Estimated cost: $73.1 billion by 2028.

Changes to Medicaid Disproportionate Share Hospital payments

The group took multiple pieces of legislation into account, namely the Affordable Care Act, which required cuts to federal DSH payments beginning in 2014 to account for the decrease in uncompensated care anticipated under health insurance coverage expansion. It was delayed but will take effect in 2020 and extend through 2025.
Estimated cost: $25.9 billion between 2020 and 2025

Off-campus provider-based departments

The Bipartisan Budget Act of 2015 modified the CMS definition of provider-based off-campus hospital outpatient departments so only those off-campus PBDs that were billing under CMS’ outpatient prospective payment system prior to November 2015 could continue to bill under the OPPS starting in 2017. Off-campus PBDs would otherwise be eligible under reimbursements from other payment schedules.
Estimated cost:  $13.2 billion between 2017 and 2028

Post-acute care reductions

The Medicare Access and CHIP Reauthorization Act of 2015 capped Medicare reimbursements to post-acute care facilities by no more than 1% in fiscal 2018. Further, the Bipartisan Budget Act of 2018 continued restricting inflation-based payment increases for home health services starting in fiscal 2020.
Estimated cost: $6.1 billion between 2018 and 2028.

Hospice transfer policy

The Bipartisan Budget Act of 2018 extended the definition of post-acute care providers to include hospitals, which meant patients who are discharged from an IPPS hospital to a hospital will result in a reduced payment to the hospital starting in fiscal 2019.
Estimated cost: $5.5 billion

Bad debt

Under the Middle-Class Tax Relief and Job Creation Act of 2012, bad debt reimbursement was phased down to 65%.
Estimated cost: $5 billion between 2013 and 2028.

3-day window

This refers to the American Jobs and Closing Tax Loopholes Act of 2010, which was meant to prevent unbundling of related services within three days of an inpatient admission.
Estimated cost: $4.2 billion in 2010 and 2011.

 

 

What the 2018 Midterm Elections Means for Health Care

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https://www.healthaffairs.org/do/%2010.1377/hblog20181107.185087/full/?utm_source=Newsletter&utm_medium=email&utm_content=What+the+Midterms+Mean+For+Health+Care%3B+%22Stairway+To+Hell%22+Of+Health+Care+Costs%3B+Patient+Safety+In+Inpatient+Psychiatry&utm_campaign=HAT%3A+11-07-18

Whatever you want to call the 2018 midterm elections – blue wave, rainbow wave, or purple puddle – one thing is clear: Democrats will control the House.

That fundamental shift in the balance of power in Washington will have substantial implications for health care policymaking over the next two years. Based on a variety of signals they have been sending heading into Tuesday, we can make some safe assumptions about where congressional Democrats will focus in the 116th Congress. As importantly, there were a slew of health care-related decisions made at the state level, perhaps most notably four referenda on Medicaid expansion.

In this post, I’ll take a look at which health care issues will come to the fore of the Federal agenda due to the outcome Tuesday, as well as state expansion decisions. And it should of course be noted that, in addition to positive changes Democrats are likely to pursue over the next two years, House control will allow them to block legislation they oppose, notably further GOP efforts to repeal the Affordable Care Act (ACA).

Drug Pricing

Democrats have long signaled they consider pharmaceutical pricing to be one of their highest priorities, even after then-candidate Trump adopted the issue as part of his campaign platform and maintained his focus there through his tenure as President.

While aiming to use the issue to drive a wedge between President Trump and congressional Republicans, who have historically opposed government action to set or influence prices, Democrats will also strive to distinguish themselves by going further on issues like direct government negotiation of Medicare Part D drug reimbursement.

Relevant House committee chairs, perhaps especially likely Oversight and Investigations chair Elijah Cummings (D-MD), will also take a more aggressive tack in investigating manufacturers and other sector stakeholders for pricing increases and other practices. Democratic leaders believe it will be easier to achieve consensus on this issue than on more contentious issues like single payer (more detail below) among their diverse caucus, which will include dozens more members from “purple” districts as well as members on the left flank of the party

Preexisting Condition Protections

If you live in a contested state or district, you have probably seen political ads relating to protecting patients with preexisting conditions. As long as a Republican-supported lawsuit seeking to repeal the ACA continues, Democrats believe they can leverage this issue to demonstrate the importance of the ACA and their broader health care platform.

A three-legged stool serves under current law to protect patients with chronic conditions: (1) the ban on preexisting condition exclusions; (2) guaranteed issue; and (3) community rating. Democrats will likely seek to bolster these protections with measures to shore up the ACA exchange markets. In the same vein, they will likely strive to rescind Trump Administration proposals to expand association-based and short-term health plans, which put patients with higher medical costs at risk by disaggregating the market.

Opioids

Congressional Democrats believe that there were some stones left unturned in this year’s opioid-related legislation, especially regarding funding for many of the programs it authorized. This is a priority for likely Ways & Means Committee Chair Richie Neal (D-MA) and could potentially be a source of bipartisan compromise.

Medicare for All

While this issue could become a bugaboo for old guard party leaders, the Democratic base will likely escalate its calls for action on Medicare for All now that the party has taken the House. Because the details of what various camps intend by this term are still vague (some believe it is tantamount to single payer, others view it as a gap-fill for existing uninsured, etc.), we will likely see a variety of competing proposals arise in the coming two years. Expect less bona fide committee action and more of a public debate aired via the presidential primary season that will kick off about, oh, right now.

Surprise Bills

The drug industry is not the only health care sector that can expect heightened scrutiny of their pricing practices now that Democrats control the people’s chamber. Most notably, the phenomenon of surprise bills (unexpected charges often stemming from a hospital visit) has risen as a salient issue for the public and thus a political winner for the party. Republicans have shown interest in this issue as well, so it could be another source of bipartisanship next year.

Regulatory Oversight

Democrats believe they are scoring well with the public, and certainly their base, every time they take on President Trump. The wide range of aggressive regulation (and deregulation) the Administration has pursued will be thoroughly investigated and challenged by Democratic committee leaders, especially administration efforts to dismantle the ACA and to test the legal bounds of the hospital site neutrality policy enacted in the Bipartisan Budget Act (BBA) of 2015.

Extenders

While it instituted permanent policies for Medicare physician payments and some other oft-renewed ‘extenders’, the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 left a variety of policies in the perennial legislative limbo of needing to be repeatedly extended. While the policies in the Medicare space have dwindled to subterranean, though not necessarily cheap, affairs like the floor on geographic adjustments to physician payments, a slew of Medicaid-related and other policies are up for renewal in 2019.

For example, Medicaid Disproportionate Share Hospital (DSH) payments face a (previously delayed) cliff next year. That and the most expensive extender, ACA-initiated funding for community health centers, alone spring the cost of this package into the high single digit billions at least, driving a need for offsetting payment cuts and creating a vehicle for additional policy priorities.

A likely addition to this discussion will be the fact that Medicare physician payments, per MACRA, are scheduled to flatline for 2020-2025 before beginning to increase again, albeit in divergent ways for doctors participating in the Merit-Based Incentive Payment Program (MIPs – 0.25 percent/year) and Advanced Alternative Payment Models (APMs – 0.75 percent/year). The AMA assuredly noticed this little wrinkle in the celebrated legislation but hundreds of thousands of doctors probably did not.

Medicaid Expansion

Of the variety of state-level health policy decisions voters made on Tuesday, perhaps the most significant related to Medicaid expansion. In there states where Republican leaders have blocked expansion under the ACA – Nebraska, Idaho, and Utah – voters endorsed it via public referenda. Increasing the Medicaid eligibility level in those three states to the ACA standard will bring coverage to approximately 300,000 people.

Notably, voters in Montana rejected a proposal to continue funding the Medicaid expansion the state enacted temporarily in 2015 by an increase to the state’s tobacco tax. Their expansion is now scheduled to lapse in July 2019 if the legislature doesn’t act to maintain it. If they do not act, about 129,000 Montanans will lose Medicaid coverage.

Finally, Democratic gubernatorial wins in Maine, Kansas, and Wisconsin will make Medicaid expansion more likely in those states.

As they say, elections have consequences. While the Republican-controlled Senate and White House can block any Democratic priorities they oppose, the 2018 midterm elections assure a busy two years for health care stakeholders.

 

 

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.”