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.
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.