The DSH Dilemma
In a letter sent to governors this week, Health and Human Services (“HHS”) Secretary Kathleen Sebelius made clear the Obama Administration still intends to cut Disproportionate Share Hospital (“DSH”) funding despite the Supreme Court’s ruling that allows states to opt out of the Affordable Care Act’s (“ACA”) Medicaid expansion requirement. What is not clear is exactly how HHS will apply the cuts, which could present a significant dilemma for states that choose not to expand their Medicaid roles. HHS could propose larger DSH funding cuts as a penalty (or incentive) for states that don’t participate in the expansion. This means hospitals receiving DSH funds in opt-out states would see bigger cuts than those that choose to opt in, but without the corresponding decrease in uncompensated care. However, this would place HHS in its own dilemma because bigger cuts would also punish DSH hospitals and the patients they care for in the opt-out states. To date, five states have elected not to participate in the Medicaid expansion. Interestingly, two of those states (Texas and Louisiana) were in the top five of states receiving DSH payments in 2011.
CMS Won’t Create Deadline to Opting In to Medicaid Expansion
While HHS won’t say when it will disclose the regulations and methodology that will be used to calculate DSH reductions, CMS Acting Administrator Marilyn Tavenner told Virginia Governor Bob McDonnell in a letter sent today there will be no deadline for states to decide whether to opt in or opt out of the Medicaid expansion requirement. “There is no deadline for a state to tell our department its plans for the Medicaid eligibility expansion,” Tavenner said. “A state can receive extra funding for Medicaid IT costs and exchange implementation costs even if it has not yet decided whether to expand Medicaid eligibility or to run its own exchange.” However, Tavenner also made clear the Supreme Court’s decision will not affect other provisions of the law besides the Medicaid expansion.
CMS Releases Multiple Proposed Payment Rules for CY 13
Late in the day on July 6, CMS issued three proposed payment rules for 2013. The first is a proposed rule that would update payment rates and policies for services provided to Medicare beneficiaries in hospital outpatient departments (“HOPDs”) and ambulatory surgical centers (“ASCs”) effective January 1, 2013. The proposed increase in HOPD payment rates is 2.1% and would affect HOPDs in more than 4,000 hospitals, including general acute care hospitals, inpatient rehab facilities, long-term acute care hospitals and children’s hospitals. The proposed increase to ASC payment rates is 1.3% and would affect approximately 5,000 Medicare-participating ASCs. CMS will accept public comments on the proposed rule until September 4, 2012. This proposed rule will be published in the July 30 Federal Register. The final rule is expected to be released 90 days later.
CMS also issued a proposed rule to update payment rates and policies for Medicare home health providers. The rule proposes to reduce Medicare payments to home health agencies beginning January 1, 2013 by 0.1%. CMS estimates this cut will be a $20 million overall reduction in payments for 2013. This proposed rule also establishes new survey and certification requirements for home health agencies Additional information on the home health PPS rule can be found at the CMS website. CMS is accepting comments on the proposed rule until September 4, 2012. The final rule is expected to be issued on or about November 1, 2012.
Finally, CMS released the proposed physician payment rule for CY 2013. This proposed rule would raise Medicare payments to family physicians by 7.0% in 2013, the largest increase of any group in the fee schedule. Other practitioners providing primary care services, including internal medicine physicians, would receive a 3.0 to 5.0% increase. The doctor payment proposal is set for publication in the federal register on July 30 with public comments due by September 4, 2012.
House Votes to Repeal Affordable Care Act
In a symbolic vote held on Wednesday, the House of Representatives voted, once again, to repeal the Affordable Care Act. The five Democrats who joined 239 Republicans in support of repeal were: Reps. Mike Ross (AR), Mike McIntyre (NC), Larry Kissell (NC), Dan Boren (OK) and Jim Matheson (UT). The Senate’s Democrat Leadership has already made clear it will oppose any attempt to vote on the measure. It is widely believed House Republicans conducted this week’s vote as a way of putting Democrats in swing congressional districts on record as voting for “Obamacare” so the vote can be used against them in the upcoming November elections.
HHS OIG Report Cites Conflicts among Potential Zone Program Integrity Contractors
On Monday, the HHS Office of Inspector General (“OIG”) released a report concluding that CMS had incomplete or inconsistent information on potential conflicts of interest on their Zone Program Integrity Contractors. The report recommended CMS create a formal policy outlining how it would review potential conflicts in the future. The OIG report called for the formal policy to include guidance on what information staff should collect about potential conflicts of interest, when they should collect that information, the use of a standardized checklist to make sure all required information has been submitted and documentation requirements to show a complete review of all potential and actual conflicts and a resolution of those reviews. Sens. Max Baucus (D-MT), Tom Carper (D-DE) and Claire McCaskill (D-MO) requested the report in 2011. In their request letter, the senators called for continued oversight to ensure OIG’s recommendations are implemented by CMS.
Bills Introduced This Week
H.R. 6097: Rep. James Sensenbrenner (R-WI) introduced a bill to exempt employers from any excise tax and penalties in the case of a failure of a group health plan to provide coverage to which an employer objects on the basis of religious belief or moral conviction.
H.R. 6103: Rep. Kathleen Hochul (D-NY) introduced a bill that amends Title XI of the Social Security Act to increase fines and penalties for Medicare fraud. The legislation is intended to augment Medicare fraud enforcement activities such as the Health Care Fraud and Enforcement Action Team (“HEAT”) program.
Next Week in Washington
The House and Senate remain in session. The House Labor-HHS Appropriations subcommittee begins consideration of their annual spending bill, which includes the bulk of funding for HHS, including health research and grant programs. Senate appropriators have already completed their Labor-HHS bill (S 3295). Action on the spending bill or a likely extension of current funding levels is due by September 30. Also at the committee level, the House Energy and Commerce subcommittee on health will hold a hearing on Wednesday to solicit ideas for replacing the Sustainable Growth Rate (“SGR”) formula.
For more information, please contact John F. Williams, III at 317.977.1462 or jwilliams@hallrender.com.
