Medicaid Payment and Reimbursement

News Briefs: Medicaid DSH payment cut barely averted in September, still possible in November

As published in the November issue of hfm magazine, a monthly roundup of top news for healthcare finance professionals.

October 31, 2023 2:55 pm

Hospitals received a last-day reprieve from substantial cuts to Medicaid disproportionate share hospital (DSH) payments, with House leaders reversing course Sept. 30 and ushering through a six-week government funding package.

Language in the bill ensured the start of a four-year Medicaid DSH cut amounting to $32 billion was pushed back from Oct. 1 to Nov. 17. The legislation also maintained funding through mid-November for graduate medical education, community health centers and the National Health Service Corps, among other programs.

Questions nonetheless lingered about that funding and about Medicaid DSH payments. House Republicans were looking to pass full-year FY24 appropriations bills in the interim, and they announced plans to cut spending across much of the federal government. A further note of uncertainty was added when Rep. Kevin McCarthy (R-Calif.) was removed as speaker Oct. 3.

If a Medicaid DSH cut becomes a reality, the impact on safety-net hospitals initially would be felt at different times based on variation in state schedules for making payments. Many states make payments quarterly, meaning reduced payments would start going out in 2024 Q1.

HHS sets new administrative fee to be paid by parties in No Surprises Act IDR cases

The administrative fee for taking out-of-network payment disputes to arbitration under the No Surprises Act in 2024 would be significantly lower than it was for much of 2023 — but also triple the current rate, according to proposed regulations.

The U.S. Departments of Health and Human Services (HHS), Labor and Treasury on Sept. 21 issued a proposed rule in which they set next year’s fee for independent dispute resolution (IDR) cases at $150 per party, up from the current $50 fee but down from the $350 charge that was in place this year through early August. That’s when a federal judge ruled the 600% toll hike for 2023 was invalid because the departments had not used a notice-and-comment period when implementing the increase. As a result, the $50 fee was reinstated for the remainder of the year.

In the newly proposed rule, the departments committed to using a notice-and-comment period when setting the fee (the deadline for commenting was Oct. 26). Future changes to the fee could happen more often than annually, the proposed rule states, but likewise would be subject to notice-and-comment procedures.

CMS pressures states to restore Medicaid coverage for some beneficiaries who have been disenrolled

CMS said a recent edict to state Medicaid programs has partially stanched the ongoing wave of disenrollments in the program, with about 500,000 beneficiaries set to regain coverage they had lost amid this year’s end of continuous-enrollment provisions. And “many” others now will be protected from disenrollment going forward, the agency said.

As described in a Sept. 21 summary, 29 states plus Washington, D.C., acknowledged a systemic glitch in which children and some other household members were disenrolled when they should have been automatically renewed. Specifically, the error caused ex parte (i.e., automatic renewal) processes to apply at the family level rather than the individual level.

CMS wrote in a letter: “As a result, while a state may have sufficient information during the ex parte process to renew Medicaid or CHIP coverage for some individuals in a multimember household, states are sending renewal forms requesting information for all household members, and, if the renewal form is not returned, states are disenrolling all individuals in the household, including those who should have been determined to be eligible through the ex parte process.”

Amid signs of improved stability, hospitals continue to grapple with labor costs

Steadying labor costs may be at a level that represents a “new normal” for not-for-profit hospitals, according to one of the three credit-rating agencies.

In its hospital and ambulatory healthcare labor tracker for September, Fitch Ratings reported that year-over-year average hourly earnings had decreased for three consecutive months.

At the same time, hospital payrolls continued to grow — including by 14,100 in August and 8,400 in September, with a year-over-year increase in September of nearly 150,000, per data from the U.S. Bureau of Labor Statistics. In the overall healthcare and social assistance sector, job openings fell from 9.3% in March 2022 to 7% in July 2023.

When looking at the full picture, Fitch stated, “Recruitment and retention efforts are reducing job openings, but with increased baseline staffing rates that likely have become the new normal for the sector.”

Senate report calls out hospitals’ lack of spending on charity care but may miss the bigger picture

Not-for-profit (NFP) hospitals continue to face congressional scrutiny, with the chair of a key Senate committee issuing a report that questions whether their levels of charity care are commensurate with their tax exemption.

The report was released Oct. 10 by Senator Bernie Sanders (I-Vt.), chair of the Senate Health, Education, Labor and Pensions Committee, and includes a listing of 16 large health systems and the amount of charity care they provided as a percentage of revenue in 2021.

Using the IRS 990 forms filed by the health systems, committee analysts concluded that 12 of the 16 organizations dedicated less than 2% of total revenue to charity care, while six dedicated less than 1%.

HFMA’s Rick Gundling, FHFMA, CMA, senior vice president for content and professional practice guidance, countered that NFP hospitals provide uncompensated services to their communities in many ways.

“There is so much more community benefit provided by tax-exempt hospitals than solely charity care,” Gundling said. “Though charity care is of paramount importance, there are many other attributes of service, including medical research, the funding of governmental underpayments and addressing unmet human needs.”

Insurers won’t be penalized in the short term for not updating their QPAs

Providers may not immediately benefit from a favorable court ruling that affects the methodology for determining qualifying payment amounts (QPAs) under the No Surprises Act.

The U.S. Department of Health and Human Services issued guidance Oct. 6 that says the Biden administration will not enforce the court decision until at least May 1. The grace period could extend to Nov. 1, 2024, at the administration’s discretion.

Insurers technically will be expected to abide by the court decision when determining QPAs for items and services. However, they will not face penalties if they retain the QPAs they have calculated using the guidelines that were in place before the ruling.


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