March 18, 2019
Advisory
panels to Congress on Medicare and Medicaid are sounding the alarm over cuts to
reimbursements to disproportionate share hospitals, pointing to flaws in
methodology that could jeopardize critical access hospitals.
Reductions
in DSH allotments have been delayed several times since first scheduled in
2014, but are set to take effect in 2020 beginning with a reduction of $4
billion and increasing to $8 billion by 2025. Both the Medicare Payment
Advisory Commission (MedPAC) and the Medicaid and CHIP Payment and Access
Commission (MACPAC) pointed out flaws in methodology that could jeopardize
critical access hospitals.
The
rate of uninsured has consistently grown over the past four years, reaching the
highest point its been since just after the Affordable Care Act's individual
mandate was implemented in 2014, according to a January Gallup poll. When
the uninsured rate reached its historical low in 2016, Medicare inpatient
payment per case increased 4.6%, while uncompensated care payments to DSH fell
$1.1 billion to $9.9 billion, according to the annual report to Congress
from MedPAC.
Increased
coverage under the ACA reduced charity care totals by 8% to $35 billion.
Uncompensated care costs for DSH totaled $20 million, a increase of 24% caused
by widened disparity between Medicaid payments and costs of services, according
to MACPAC, which also submitted it's annual report to federal lawmakers Friday.
As
both commissions highlight, DSH is designed to help critical access hospitals
offset the high costs of treating acute and uninsured patients. However, states
are allowed to make DSH payments to any hospital with a Medicaid inpatient
utilization rate of at least 1% — almost half of all hospitals. Major
teaching hospitals, which MedPAC says have higher overall Medicare margins
than the average inpatient hospitals, receive the largest share of DSH
funding.
The
DSH cuts are set for Oct. 1. America's Essential Hospitals, the industry group
that represents critical access hospitals, said many essential hospitals will
be unable to provide the level of service their communities are accustomed
to.
"We
cannot overstate the threat this cut poses to healthcare access and to
hospitals that care for low-income and other vulnerable patients," an AEH
statement reads. "Growth in Medicaid shortfall — reimbursement that fails
to cover cost — has been larger than the projected decline in uncompensated
care under the Affordable Care Act. This finding undermines the very premise of
the cuts: that ACA coverage expansion would lessen the need for DSH
funding."
Although
both the MACPAC and MedPAC reports were concerned that the magnitude of
DSH cuts under current law may affect the financial viability of some
safety-net hospitals, both focused on budget-neutral ways to restructure
available funding.
MedPAC also
suggested a quality measure program overhaul to alleviate DSH fiscal troubles,
in addition to its usual recommendations of increasing provider payments in
2020 and consolidating quality reporting programs.
MedPAC again
proposed CMS consolidate four quality reporting programs: the Hospital
Inpatient Quality Reporting Program, the
Hospital Readmissions Reduction Program, the Hospital-Acquired
Condition Reduction Program and the Hospital Value-Based Purchasing Program.
In June of 2018, MedPAC developed
a single payment program, called the Hospital Value Incentive Program (HVIP),
that it claims would be patient-centric, focus on population health and
encourage coordinated care across providers.
By
implementing MedPAC's reporting proposal, the commission says CMS would
eliminate two penalty-only programs that are responsible for about $1 billion
in penalties incurred by hospitals every year. The commission argues HVIP would
not only reduce administrative burden and be easier to administer, but would
also put disproportionate share hospitals on a level playing field.
Flaws
in Medicare Advantage
While
critical access hospitals face reductions, commercial insurers reap the
benefits of Medicare Advantage.
MA
has been a gold mine for payers, with several crediting the plans with
increases in revenue and membership. About 21 million Americans — more than a third
of Medicare beneficiaries — are enrolled in MA plans, and that number is
only expected to rise as CMS creates more flexibility for payers. L.E.K
Consulting predicts MA enrollment will jump to 38 million, or 50% of market
penetration, by 2025.
But MedPAC wants
CMS to pump the brakes, and recommended the agency work to curtail the practice
of intensive coding practices and plan consolidation that allow payers inflate
payments by as much as 2%. The committee also suggested CMS revisit its star
rating system for MA plans.
MA
star ratings, MedPAC argued, ignore geographic differences, making them
difficult to reliably compare.
"Because
contracts can cover wide (and discontiguous) geographic areas and quality
results are often determined based on only a small sample of beneficiary
medical records, Medicare and beneficiaries lack important information about
the quality of care of MA plans in their market," MedPAC said.
The
report's focus on MA star ratings coincides with CMS' long-awaited update to
its hospital star rating system, which issues a one-to-five rating for
providers based on quality reporting. Though it's designed to provide consumers
with a way to compare hospitals, the system itself has been repeatedly
lambasted for being flawed and damaging the reputation of providers.
The
commission also re-emphasized what it feels is the need to consolidate
CMS' many quality measurement programs, and urged the agency to boost
reimbursements to providers in 2020.
MedPAC
has been a leader in the widespread opposition to CMS' myriad quality reporting
programs. While the commission's recommendations aren't binding, they are
meant to inform Congress as it makes important rulemaking decisions.
https://www.healthcaredive.com/news/medicare-medicaid-advisory-commissions-alarmed-by-dsh-cuts/550634/
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