In­pa­tient rule gives hos­pi­tals a $2.4 bil­lion raise, but may in­flate un­com­pen­sated-care re­port­ing

At is­sue is the new cal­cu­la­tion’s re­liance on the amounts of un­com­pen­sated and char­i­ta­ble care each hos­pi­tal claims on its Medi­care cost re­port.

Modern Healthcare - - NEWS - By Vir­gil Dick­son

A CMS plan to change the way it re­im­burses hos­pi­tals for un­com­pen­sated care could muddy data on such care and limit hos­pi­tals’ abil­ity to pro­vide ser­vices to low in­come pa­tients, ac­cord­ing to the in­dus­try’s big­gest lob­by­ing group, the Amer­i­can Hos­pi­tal As­so­ci­a­tion.

At is­sue is the new cal­cu­la­tion’s re­liance on the amounts of un­com­pen­sated and char­i­ta­ble care each hos­pi­tal claims on its Medi­care cost re­port. Pre­vi­ously, the re­im­burse­ment re­lied mostly on the num­ber of Med­i­caid, dual-el­i­gi­ble and dis­abled pa­tients each hos­pi­tal served.

Hos­pi­tals had op­posed the change out of con­cern the new for­mula would lead to hos­pi­tals in­ac­cu­rately re­port­ing their rates of un­com­pen­sated care.

“We had urged the agency to de­lay its use by one year to fur­ther ed­u­cate hos­pi­tals about how to ac­cu­rately and con­sis­tently com­plete the” re­port re­quired, Tom Nick­els, ex­ec­u­tive vice pres­i­dent at the Amer­i­can Hos­pi­tal As­so­ci­a­tion, said in a state­ment. “We are dis­ap­pointed CMS chose to im­ple­ment its use for FY 2018 and with­out th­ese ad­di­tional pro­tec­tions for hos­pi­tals.”

The agency will dis­trib­ute $6.8 bil­lion in un­com­pen­sated-care funds in fis­cal 2018, up nearly $800 mil­lion from the prior year.

HCA was one of the most vo­cal op­po­nents of the idea. In its com­ment on the pro­posed rule, the chain said it found that the pro­posed for­mula would lead hos­pi­tals to over­es­ti­mate their un­com­pen­sated-care costs. It also es­ti­mated that over 500 hos­pi­tals would see their un­com­pen- sated-care pay­ments cut by more than 50% once the rule is fully im­ple­mented since the fi­nite pool of money for the pro­gram would be drained faster, ac­cord­ing to a com­ment let­ter signed by Vic­tor Camp­bell, se­nior vice pres­i­dent at the hos­pi­tal group.

Be­cause the pool is a fixed amount, changes to the for­mula—ac­cu­rate or not—would di­rectly af­fect all hos­pi­tals, ac­cord­ing to a com­ment let­ter from Al­bert Pirro, an at­tor­ney for the Greater New York Hos- pital As­so­ci­a­tion. He projects a po­ten­tial loss to New York hos­pi­tals of over $730 mil­lion once fully im­ple­mented.

In the fi­nal rule re­leased Aug. 2, the CMS jus­ti­fied mak­ing the change say­ing it felt the new for­mula would more ac­cu­rately con­vey un­com­pen­sated-care costs.

Pre­mier sup­ported the change. “This more ro­bust data source should re­sult in ad­di­tional un­com­pen­sated-care pay­ments for FY 2018,” Blair Childs, se­nior vice pres­i­dent of pub­lic af­fairs at Pre­mier, said in a state­ment.

The CMS also an­nounced it will give a $2.4 bil­lion raise to in­pa­tient hos­pi­tals in fis­cal 2018. The in­crease is less than the $3.1 bil­lion the agency pro­posed in April, but ex­ceeds the $746 mil­lion bump hos­pi­tals re­ceived in fis­cal 2017.

The CMS also projects that pay­ments to long-term care hos­pi­tals would de­crease by ap­prox­i­mately 2.4%, or $110 mil­lion, in fis­cal 2018, based on the changes in­cluded in the fi­nal rule.

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