Tack­ling the wage in­dex

Coali­tion seeks re­vamp of ‘ru­ral floor’ com­po­nent

Modern Healthcare - - THE WEEK IN HEALTHCARE -

When it comes to ad­dress­ing Medi­care’s hospi­tal wage in­dex, hospi­tal as­so­ci­a­tions have a choice: Do they want to fo­cus their ef­forts on one bat­tle or the larger fight? The bat­tle here is over an ad­just­ment to the “ru­ral floor” com­po­nent of the Medi­care hospi­tal wage in­dex, while the cal­cu­la­tion of the in­dex as a whole rep­re­sents the big­ger fight. In cal­cu­lat­ing a state’s hospi­tal wage in­dex, no ur­ban area hospi­tal can have a wage in­dex be­low the state’s ru­ral hos­pi­tals, which cre­ates a ru­ral floor. Crit­i­cal-ac­cess hos­pi­tals, mean­while, are not in­cluded in that cal­cu­la­tion. Un­til the Pa­tient Pro­tec­tion and Af­ford­able Care Act, the CMS had re­quired that any pay­ments through wage-in­dex ad­just­ments must be bud­get-neu­tral (us­ing ex­ist­ing funds) within a state—mean­ing just the hos­pi­tals in a state would be af­fected by pay­ment changes re­sult­ing from wage-in­dex ad­just­ments. Now, wage-in­dex ad­just­ments must be bud­get-neu­tral on a na­tional ba­sis.

Sources at­tribute the change largely to strong sup­port from the Mas­sachusetts dele- gation un­der the lead­er­ship of Sen. John Kerry (D-mass.) be­fore the bill be­came law. In 2008, 19-bed Nan­tucket Cot­tage Hospi­tal con­verted from crit­i­cal-ac­cess hospi­tal sta­tus to a prospec­tive pay­ment sys­tem hospi­tal, which meant that wage data for that hospi­tal would be in­cluded in the wage-in­dex cal­cu­la­tion.

Ac­cord­ing to the Coali­tion of Amer­i­can Hos­pi­tals—a group of 20 hospi­tal and health as­so­ci­a­tions that came to­gether to over­turn the pro­vi­sion—the ru­ral floor there went up con­sid­er­ably, and be­cause no ur­ban hospi­tal can re­ceive less than a ru­ral hospi­tal, all of the cities in Mas­sachusetts were treated, in essence, as the is­land hos­pi­tals that had higher la­bor costs. The is­sue be­comes thorny when bud­get neu­tral­ity is ap­plied na­tion­ally. Pay­ment in­creases to some states will re­sult in re­duc­tions for oth­ers.

In a state-by-state anal­y­sis, the group re­ports that Mas­sachusetts stands to gain about $367 mil­lion an­nu­ally in in­pa­tient and out­pa­tient pay­ments as a re­sult of a change. Other states that will ben­e­fit in­clude New Jer­sey ($68.2 mil­lion) and Con­necti­cut ($38.3 mil­lion), while oth­ers will see con­sid­er­able re­duc­tions, in­clud­ing New York (about $56 mil­lion) and Texas (about $45.8 mil­lion). All told, 43 states could see re­duc­tions to­tal­ing about $3.5 bil­lion over 10 years. The coali­tion wants the pro­vi­sion reversed ei­ther through reg­u­la­tion or leg­is­la­tion.

But Linda Fish­man, se­nior vice pres­i­dent of pol­icy at the Amer­i­can Hospi­tal As­so­ci­a­tion (which is not part of the coali­tion), said the en­tire hospi­tal wage-in­dex is­sue—not just the ru­ral floor com­po­nent—should be ex­am­ined. Last year, the AHA es­tab­lished a task force that Fish­man said might have rec­om­men­da­tions on the is­sue for AHA’S gov­ern­ing board in the fall. A CMS re­port on the hospi­tal wage in­dex that was to be re­leased by late De­cem­ber should be out soon, a CMS of­fi­cial said.

Still, the mem­bers of the coali­tion—which the Na­tional Ru­ral Health As­so­ci­a­tion joined last week—em­pha­size that the ru­ral floor com­po­nent is a se­ri­ous pol­icy flaw that mer­its cor­rec­tion.

“This re­duc­tion is ma­te­rial and will be felt more and more by hos­pi­tals as the ACA pay­ment re­duc­tions kick in the next cou­ple years,” said Herb Kuhn, pres­i­dent and CEO of the Mis­souri Hospi­tal As­so­ci­a­tion and a com­mis­sioner for the Medi­care Pay­ment Ad­vi­sory Com­mis­sion. Kuhn’s as­so­ci­a­tion is part of the coali­tion, and he did not speak on be­half of MEDPAC.

Mas­sachusetts hos­pi­tals, mean­while, con­tend the law just re­stores an ear­lier pol­icy.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.