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New Medicare proposal worries hospitals

Hospitals in some states that have not expanded their Medicaid coverage are concerned that the proposed Medicare and Medicaid Service Centers policy may deprive them of hundreds of millions of dollars in disproportionate hospital payments.

In its most recent hospital payment rule, CMS proposed excluding certain uncompensated care group days from the Medicare Hospital disproportionate fee calculation.

This seemingly technical adjustment has raised alarms at hospitals in a handful of states, including Texas, Florida and Tennessee, that believe the change could eliminate Medicare reimbursements they earn for needy patients.

“We know it’s going to have a pretty substantial negative impact, simply because of the uncompensated volume of care that is being provided in our state,” said Anna Stelter, senior director of policy analysis at the Texas Hospitals Association.

States may use Medicaid Section 1115 demonstration project exemptions to extend eligibility to new categories of people. Exemptions may also offer specific benefit packages to certain groups or may be used to create uncompensated care groups, which pay hospitals to care for uninsured or underinsured patients.

In general, CMS has not allowed uncompensated care exemption days to count toward Medicare DSH payments. But a number of court rulings, most recently in 2020, have confirmed that hospitals have legal permission to do so.

The U.S. District Court of Appeals ruling of the District of Columbia District Court two years ago also allowed hospitals to modify the open cost reports of previous years to include days covered by uncompensated care exemptions and try to appeal. Close closed cost reports for a refund.

Some Tennessee hospitals are looking back to 2010 and expect to be eligible for millions of dollars, said Amanda Newell, vice president of financial policy for the Tennessee Hospitals Association.

CMS now wants hospitals to only count the days of patients paid through Medicaid exemptions to Medicare DSH if patients receive full, CMS-approved health benefits or assistance to pay premiums for non-Medicaid coverage .

CMS maintains that it has the authority to exclude unpaid care reception days from the DSH calculation.

“While these packages may cause hospitals to receive some payment for inpatient hospital services they provide to uninsured or underinsured people, these payments are not a form of health insurance and do not entitle any individual. “No overcompensated payments / Subcompensated care groups work essentially as Medicaid DSH supplemental payments,” says the proposed rule.

But court rulings indicate the interpretation of the CMS law is incorrect, said Mark Polston, a partner in the King & Spalding law firm that represented Florida hospitals in the appeals court case. decide 2020.

“These are benefits, whether it’s packaged as a nice little package of insurance benefits, or if it’s money you’re giving to the hospital on that person’s behalf,” Polston said.

CMS says it cannot estimate the financial impact of the proposal on hospitals because the agency does not know how many additional Medicaid days each hospital could include in its Medicare DSH calculations without the policy, according to the draft regulation.

Polston said hundreds of millions of dollars could be at stake. Both the Texas Hospitals Association and the Florida Hospitals Association are analyzing the financial impact of the proposal.

The policy, if finalized, would have the biggest effect on hospitals in states that have not expanded Medicaid coverage, said Anne Karl, a partner at Manatt Health. While some states that have expanded Medicaid also have uncompensated care groups, states like Texas and Florida in particular have come to rely on groups instead of the additional Medicaid counterpart funds that come with expansion.

Florida can receive up to $ 1.5 billion in funding for its set of uncompensated care each year, although the full allocation has not been used in recent years, and Texas can receive up to $ 3.84 billion. Tennessee and Kansas also have uncompensated care groups and have not expanded Medicaid, but their groups are smaller.

“This is going to be bad for hospitals in these states,” Karl said.

In Texas, the policy would disproportionately harm public safety net hospitals, Stelter said. Excluding these days from DSH calculations would be especially detrimental now, as funding for COVID-19 relief programs is running out.

“It is important that the payments that the court has said are entitled to remain active, because the balancing act between advancing in a post-pandemic and post-supercrisis world will depend on these consistent funding flows,” he said. Stelter.

CMS’s proposal to exclude days of unpaid Medicare DSH care seems like a punishment against non-expanding states, even though state hospital associations have supported the expansion of Medicaid, Stelter said.

Despite the financial implications for hospitals, this policy is more of a course correction on the DSH methodology than an effort to force states resistant to the expansion of Medicaid, according to Eliot Fishman, senior director of Families USA health policy.

“The goal of this specific DSH channel is to target Medicare supplemental reimbursement to hospitals that host many Medicaid patients. [Uncompensated care] swimming pools reimburse patients without insurance, they are not Medicaid coverage, “Fishman wrote in an email.

Regardless, CMS ‘decision to return the proposal after losing it in court and not finalizing it last year is frustrating, said Mary Mayhew, president and CEO of the Florida Hospitals Association.

“It really feels punitive for hospitals that are on the front lines, providing charitable care, meeting the needs of these vulnerable populations,” he said.

The proposal would ultimately mean an unfair reimbursement to state facilities with uncompensated care groups, Newell said. “Tennessee hospitals should receive full credit for the treatment and care of uninsured and underinsured patients,” he said.

CMS looks set to end the policy this year, though there are likely to be litigation if they do, Polston said.

If the agency moves forward with the policy, hospitals will not be able to count the days of uncompensated care from October 1 to Medicare DSH. But they could still get a DSH refund for previous days of uncompensated care, Polston said.

Hospitals should record unpaid care group exemption days in future cost reports if the policy ends to preserve their rights if the new policy is overturned in court, Polston said.

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