Medicare Payment and Reimbursement

News briefs: In a win for hospitals, CMS removes a rate-reporting requirement from the Medicare FY22 IPPS

June 1, 2021 2:41 pm

The pending requirement for hospitals to disclose privately negotiated Medicare Advantage (MA) payment rates on their Medicare cost reports was withdrawn in the recently issued FY22 proposed rule for the Inpatient Prospective Payment System (IPPS) and long-term care hospitals.

The requirement was established by the Trump administration in the FY21 final rule. Hospitals would have had to report the median MA payer-specific negotiated charge for each MS-DRG.

The idea was to use the data in setting Medicare payment rates, but the requirement would have added an estimated 64,000 hours to hospital administrative workloads.

CMS likewise is proposing to repeal the market-based MS-DRG relative-weight methodology that was supposed to take effect in FY24. Instead, the existing cost-based methodology will remain.

HFMA expressed support for those decisions. “This proposal will avoid imposing additional burden on hospitals,” said Rick Gundling, senior vice president of healthcare financial practices.

In written comments on the FY21 final rule, HFMA said its members “fail to see how transitioning to a system that uses median MA ‘payer-specific negotiated charges’ achieves the stated policy goals or improves the accuracy of the Medicare IPPS.”

HFMA also stated, “[W]e do not see the utility of requiring hospitals to report their ‘payer-specific negotiated charges’ as part of the Medicare cost report and strongly encourage CMS not to finalize a proposal that increases provider administrative burden — contrary to the administration’s ‘Patients Over Paperwork Initiative’ — and collects information that CMS is already requiring hospitals to publicly post.”

Acute care hospitals to get a 2.8% payment increase in FY22

Hospitals paid through the Inpatient Prospective Payment System (IPPS) will see their payments rise by 2.8% if they successfully participate in the Hospital Inpatient Quality Reporting Program and fulfill meaningful-use criteria with respect to electronic health records, according to CMS’s proposed rule for FY22.

The increase is based on a 2.5% update in the projected hospital market basket, with a 0.2-percentage-point reduction as a productivity adjustment and a 0.5-percentage-point statutory increase.

The base update does not include potential payment adjustments via Medicare pay-for-performance programs such as the Readmissions Reduction Program and Hospital-Acquired Condition Reduction Program.

The percentage increase equates to a $3.4 billion payment hike for IPPS hospitals, although that total is projected to decrease by $900 million due to reductions in Medicare disproportionate share hospital (DSH) payments and uncompensated care payments.

On a separate note, the FY21 final rule established that in FY22, uncompensated care funds will be distributed based on a single year of uncompensated care cost data from Worksheet S-10 of hospitals’ FY18 cost reports. 

New HRSA funding is available to providers that administer the COVID-19 vaccine and don’t receive full payment from a health plan

The Health Resources and Services Administration (HRSA) announced a new program to reimburse healthcare providers for administering COVID-19 vaccines to patients whose health plans either do not cover vaccination fees or require cost-sharing.

A HRSA statement noted that because providers are prohibited from billing patients for vaccination fees, the COVID-19 Coverage Assistance Fund (CAF) was instituted to address “an outstanding compensation need for providers on the front lines vaccinating underinsured patients.”

Even though the government has funded the full cost of vaccines, providers incur costs in areas such as training, staffing and storage, HRSA noted in a news release. Federal guidelines prohibit billing patients for vaccine administration. Providers may seek reimbursement from a patient’s health plan, but the plan may deny payment or withhold the patient’s cost-sharing amount.

Going forward, “Providers should submit their COVID-19 vaccine administration fee claims for reimbursement consideration to the CAF. To be eligible for reimbursement, the provider must have first submitted the claim to the individual’s health plan for payment and had the claim denied or only partially paid,” according to the news release.

HRSA notes that claims must be submitted electronically and are subject to available funding, which is sourced from the Provider Relief Fund.

Providers that administer the vaccine to uninsured individuals have been eligible to submit claims to the HRSA COVID-19 Uninsured Program. 

Study finds haphazard hospital compliance with 2019 rule on posting chargemaster prices

In a large study, more than half of hospitals had not posted a machine-readable file with chargemaster information in the first 18 months since they were required to do so.

A federal rule that was implemented in 2019 required hospitals to make charges available in a machine-readable format for all listed services. The rule was a precursor to requirements that took effect Jan. 1, 2021, and required additional information to be posted, including discounted cash prices and payer-specific negotiated charges, along with a “consumer-friendly” display of prices for at least 300 shoppable services.

Among 5,288 hospitals surveyed between June and November 2020 for a study that was published May 14 in JAMA Network Open, 2,723 (51.5%) did not have an online chargemaster in a machine-readable format. That group included 305 hospitals (5.8%) with broken links or incorrectly linked files and 138 (2.6%) that provided only an online cost estimator.

To drill further down into the usability of information, two nonmedical reviewers in the research group analyzed 25 shoppable items in the chargemasters of the 100 largest hospitals by bed number. Among the 2,500 items, 330 prices (13.2%) were identified by both reviewers.

“Even when publicly accessible, chargemasters were frequently buried within websites and difficult to use accurately,” the authors wrote. 

HFMA’s Cost Effectiveness of Health Summit: Why health spending must become more cost-effective

For stakeholders across healthcare, the cost effectiveness of health increasingly is becoming a topic that can’t be ignored.

“It’s a term you’ll hear more and more about in the coming years,” said HFMA President and CEO Joseph J. Fifer, FHFMA, CPA.

For HFMA, in fact, cost effectiveness of health is “so important that you might consider it our new ‘just cause,’” Fifer said. “It’s based on a societal challenge I believe we all have in the world of healthcare.”

The focus should not be specifically on reducing costs or bending the cost curve, Fifer said. Instead, HFMA defines cost effectiveness of health as “minimizing the costs associated with delivering optimal health outcomes.” Achieving that balance will transform the industry to the benefit of all stakeholders.

At HFMA’s inaugural Cost Effectiveness of Health Summit on May 6-7, attendees heard from leading industry experts about both the need and the opportunities for the industry to attain a more sustainable model. The event was sponsored by EY, Strata and Vizient.

Data highlight inefficiencies. Per capita, the U.S. spends nearly twice as much on health as comparable countries: $10,637 to $5,527, according to 2018 data analyzed by the Kaiser Family Foundation. Inpatient and outpatient care amount to $6,624 in the U.S. and $2,718 in comparable countries. Administrative costs are $937 in the U.S. and $201 elsewhere.

As an example of the opportunity cost of excessive healthcare spending, Fifer cited the long-running policy debates about the country’s infrastructure.

“Without getting into politics or opining on the merits of various proposals, could it be that we’re falling behind [on] investment in infrastructure because we spend so much money on healthcare?” Fifer said. “Regardless, there’s a clear frustration about the amount we spend on healthcare, and like it or not, that’s just not going away.”

The central role of payment models. Some gaps in U.S. healthcare stem from the fee-for-service payment system. In response to a poll question on the biggest opportunity to improve the cost effectiveness of health, more than half of summit attendees cited changing the payment system to reward healthy behaviors from among four options.

Of national health expenditures, 90% are on healthcare and 9% are on behavioral and societal factors. That allocation is disproportionate as indicated by epidemiological analyses that have found 60% of health hinges on social, behavioral and environmental factors.

“In the long run, can we afford to overlook what might be the single biggest cost driver?” Fifer said. “Alternatively, we can construct payment models in which stakeholders truly share the risk and responsibility of managing to social determinants and aligning incentives accordingly.”

Only 30% of providers are involved in risk-based payment models, according to a summit presentation, including 5% in capitated models. But organizations should be preparing for those shares to rise, said Blair Bellamy, partner, health consulting with EY.

The impact of the pandemic and broader trends. S&P Global Ratings kept a negative credit outlook for the not-for-profit hospital sector heading into 2021. That decision stemmed in part from pressure on margins and cash flow.

“Really the focus is on the operations. That’s the biggest risk that we see over the next couple of years,” Suzie Desai, senior director with S&P, said during a summit presentation. “The balance sheets are fine.”

As the pandemic subsides, Desai said, a renewed emphasis on costs can be expected in the outlook for the sector and for individual organizations as the government and employers seek to rein in spending.

Looming changes to quality reporting in the MSSP draw strong push back from healthcare providers

CMS’s pending overhaul of quality reporting for accountable care organizations (ACOs) has generated a negative response, with healthcare providers predicting a significant increase in administrative burden and no corresponding quality improvement.

The Medicare Shared Savings Program (MSSP) is undergoing major changes to its quality-related processes after CMS pushed through updates in the 2021 final rule for the Medicare Physician Fee Schedule. The rule was finalized after a comment period during which many stakeholders expressed strong concerns about the proposed modifications.

Starting in 2022, MSSP participants must report on three electronic clinical quality measures (eCQMs)/Merit-based Incentive Payment System (MIPS) CQMs:

  • Diabetes: Hemoglobin A1c poor control (>9%)
  • Preventive Care and Screening: Screening for depression and follow-up plan
  • Controlling High Blood Pressure

That requirement likely would lead to massive costs and increased burden without enhancing care quality, according to a letter from 11 leading provider associations to Xavier Becerra, secretary of the U.S. Department of Health and Human Services.

To share in savings starting in 2022, ACOs will have to collect the three new measures via their electronic health records (EHRs) unless they report MIPS CQMs through a qualified registry.

Because the organizations that comprise an ACO likely use distinct EHRs, ACOs face the prospect of paying additional vendor fees to aggregate data, according to a statement from the National Association of ACOs (NAACOS), one of the signatories of the letter along with the American Hospital Association and American Medical Association. 

Among other changes, the 11 healthcare associations are asking Becerra to delay the mandatory reporting of the three new CQMs for at least three years.

Amid the pandemic, research finds hospitals looking to capitalize on ‘systemness’

Large health systems appear to have significantly outperformed smaller organizations in surgical volume recovery during the COVID-19 pandemic, and the discrepancy may be partially attributable to the advantages gained through “systemness.”

In an Advisory Board survey (log-in required) that was conducted in early February and drew on responses from 83 hospital strategic planners, those who worked at systems with more than five hospitals were substantially more likely to report that their volumes had reached or exceeded pre-COVID-19 levels.

“This is perhaps a factor of being more diversified across markets,” Colin Gelbaugh, a director with Advisory Board, said during an April presentation of the survey data and insights.

Larger organizations “can use the full capacity of their system. If one hospital was nearing capacity, they might perform a surgery somewhere else with excess capacity rather than postponing the procedure,” Gelbaugh added.

Such trends indicate the advantage that larger organizations can derive from implementing a cohesive strategy across their sites of care.

“You’re really talking about leveraging the value of systemness,” said Christopher Kerns, vice president of executive insights with Advisory Board.


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