Training and research funding cuts also could affect hospitals.

March 20—President Donald Trump’s proposed FY18 budget would double down on revamping federal antifraud efforts in health care to shift away from a so-called pay-and-chase approach and toward prepayment claim review.

The budget proposed a $70 million boost in the Health Care Fraud and Abuse Control (HCFAC) program’s $681 million budget, which the Centers for Medicare & Medicaid Services (CMS) has used to shift from its traditional “pay-and-chase” model to one that prevents payments seen as likely fraudulent or improper.

HCFAC recouped $5 for every $1 it spent in 2014-16, according to the administration.

“The message to providers—particularly hospitals—is that, based on this [ROI], congressional testimony, and based on things [Health and Human Services Secretary] Tom Price has said, the goal is to get to a system that is more like commercial insurers use,” said Emily Evans, managing director of healthcare policy for Hedgeye, an investment research firm.

The federal government has been moving toward the prepayment review approach using analytics to identify “bad actors,” but so far that approach generally has been limited to individual advance reviews by Medicare administrative contractors (MACs).

“When you talk about Medicare, that would scare the heck out of a hospital because the MACs are so slow and they so lack the expertise to make judgements about whether a claim is appropriate,” Evans said in an interview. The budget push “ultimately would be good news because the pre-claim approach that Medicare uses is not one that anybody is satisfied with.”

One possibility is that CMS could use the renewed emphasis on prepayment enforcement to urge recovery audit contractors (RACs) to utilize their optional prepayment-review authority under the newest contracts, which were signed late last year. RACs have collected the large amounts of data over a period of years that would be necessary to launch pre-claim reviews.

“The RACs and CMS would get together and decide how they would do it,” Evans said.

Bad News

The renewed focus on prepayment reviews comes amid steep 18 percent cuts proposed in the budget for the U.S. Department of Health and Human Services (HHS).

“What I’ve been telling my clients who’ve been freaked out by the top-line numbers of an 18 percent decrease in spending for HHS is, ‘Let’s not freak out yet,’” John Williams, managing partner in the Washington, D.C., office of Hall Render, said in an interview. “It’s really tough to tell what it’s going to do just by that.”

Williams is watching for the full budget that the administration plans to release in May, including specific mandatory-spending and tax proposals, but funding may just default to whatever approach Congress wants to take.

Much of the $15.1 billion decrease proposed for HHS would come from a $5.8 billion decrease for the National Institutes of Health (NIH). The budget also would consolidate the Agency for Healthcare Research and Quality within NIH.

“To the extent that they do get research dollars directly, this cut will have an impact” on academic medical centers, said Karen Fisher, chief public policy officer for the Association of American Medical Colleges.

In FY16, independent hospitals received $2.2 billion and medical schools received $12 billion, according to an AAMC analysis of NIH funding.

The budget also would cut $403 million from healthcare-professional and nurse training programs, with the Trump administration citing a lack of evidence that the programs significantly improve the nation’s healthcare workforce. Funding was unaffected for healthcare workforce programs that provide scholarships and loan repayments in exchange for service in healthcare-professional shortage areas.

Some hospital advocates warned that the nurse-training cuts could undercut their efforts to expand state scope-of-practice laws for nurse practitioners to practice at the top of their licenses. Although the cuts could affect funding for medical school students, they are not expected to affect Medicare’s graduate medical education monies.

Many of the cuts were criticized for potentially compounding the negative financial effects expected on providers from implementation of the American Health Care Act (AHCA), which would partially repeal and replace the Affordable Care Act.

“The cumulative effect of this budget and the AHCA could be to undermine the ability of essential hospitals to meet their commitment to patients and communities and weaken efforts to respond to existing and emerging threats to the public health,” Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, said in a written statement.

“If I’m a CFO at a hospital, if you’re having the NIH cut on top of an ACA repeal bill that looks to add on a lot more uninsured, it creates immense pressure on major teaching hospitals and academic medical centers,”  Fisher said in an interview.

Good News

The proposed budget does not address changes to mandatory spending programs, such as Medicare and Medicaid.

The budget would provide $3.5 billion more to the Veterans Choice Program, which pays providers outside of the U.S. Department of Veterans Affairs (VA) to care for VA patients when they face long waits or lengthy travel to a VA facility.

The program was created as a temporary initiative in 2014 and is set to expire in August. VA Secretary David Shulkin urged Congress to extend the program and said he would create a modified version to address problems in the VA healthcare system.

The Choice program was initially funded with $10 billion in 2014, and a VA spokesman said the program has enough money to continue until January 2018 if the scheduled end date is removed or pushed back.

As of the end of 2016, more than 425,000 hospitals, clinics, and providers were in the Choice network. In the face of widespread provider complaints about lagging payments, or even non-payments, VA has formed a provider rapid-response team to address payment issues and is offering provider education to reduce errors with claim submissions.

“All of these actions are necessary, but more needs to be done,” said Terrence Hayes, a VA spokesman. “VA is partnering with Congress to address the root cause of these payment issues—simplifying steps that providers and VA must follow to process and pay a claim and aligning standards with the rest of the healthcare industry.”

The budget also highlights initiatives for which hospitals have urged support in recent months. For instance, the budget provides $500 million to increase opioid-misuse prevention efforts and access to treatment and recovery services.

The budget also would create a new Federal Emergency Response Fund to more quickly respond to public health outbreaks, such as the Zika virus.

The budget also would focus mental health funding on high-performing entities and high-priority areas, such as suicide prevention, serious mental illness, and children’s mental health.

The budget does not address the ongoing FY17 budget, which is operating under a continuing resolution through the spring. Federal funding will expire on April 28, with congressional action needed to provide funding through Sept. 30, which is the end of the federal fiscal year.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


Publication Date: Monday, March 20, 2017