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Apr. 30—Medicare cuts under the so-called sequester apply only final payment amounts and do not affect rates, the Centers for Medicare & Medicaid Services (CMS) recently confirmed.
The clarification was sought by the American Hospital Association (AHA) and 17 state hospital associations in May 2013 after some Medicare Advantage organizations (MAOs) began passing along to hospitals the 2 percent cut they received debt-reduction provisions of the Budget Control Act of 2011. Medicare providers also were subject to the 2 percent payment cut under the law.
The insurers were apparently confused over how the policy could affect certain payment terms used in Medicare Advantage contracts with providers, according to the AHA.
The April 17 letter from CMS Administrator Marilyn Tavenner reiterated earlier statements that the agency is prohibited by law from “interfering in the payment arrangements between MAOs and contracted providers.”
“Thus, whether and how reductions to plan payments due to sequestration might affect a MAO’s payments to its contracted providers are governed by the terms of the contract between the MAO and the provider,” Tavenner wrote.
Her letter also noted that the insurers “must follow the prompt pay provisions established in their contracts with providers and pay providers under the terms of those contracts.”
Last year, hospitals and other providers accused the insurers of breaching contracts by unilaterally reducing payments due to the sequester cuts and some considered lawsuits, according to published reports. Insurers countered that the cuts were contractually allowed.
Some healthcare experts said contracts between a provider and an MAO tied to rates or rate schedules did not allow insurers to pass along the 2 percent cut, according to published reports. However, contracts tied to what Medicare would have paid could allow insurers to pass on the cuts.
Some hospital advocates said the insurers’ cuts were not based on contract provisions.
Publication Date: Wednesday, April 30, 2014
Russ Graney, founder and CEO for Aidin, and John Laursen, head of business development for Aidin, share insights on how to improve care transitions between acute and post-acute care settings and incentivize high-quality patient outcomes.
Scott Elston, strategic accounts manager, GE Healthcare Services, describes how substantial cost reduction in health care requires rethinking business strategy and asset use.
Robert Williams, MD, director, Deloitte Consulting LLP, and Arielle Freiberger, product strategist, ConvergeHEALTH by Deloitte, explain how sophisticated retrospective, real-time, and predictive data analytics can inform decision making to reduce costs and improve care.
Stuart Hanson, director of business development (healthcare solutions) at Citi Retail Services, discusses how improving the payment experience can benefit consumers and healthcare providers.
Scott Schmidt, vice president, Cerner RevWorks, LLC, shares insights on best practices for maximizing a revenue cycle management partnership.
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