HHS Issues Rule on DSH Payments
On May 13, CMS released a proposed rule on the health reform law’s reductions to Disproportionate Share Hospital (“DSH”) payments. The rule would temporarily shield states that have decided to expand Medicaid from deeper DSH cuts in fiscal years 2014 and 2015. The rule comes a month after the White House’s fiscal year 2014 budget proposed delaying the cuts until 2015 in order to get a better sense of uncompensated care levels.
Under the Affordable Care Act (“ACA”), Medicaid DSH payments will be cut by $500 million in 2014 and $600 million in 2015. The rule divides states into low DSH states and other DSH states, with cuts based on each of the group’s total unreduced DSH allotment. CMS will take into account whether a state is targeting DSH payment to hospitals with high volumes of Medicaid or the uninsured.
CMS does not plan to incorporate the lower uninsured rates that result from expanding Medicaid in future rulemaking for fiscal year 2016 once the data is available. Comments on the rule are due by June 25, 2013.
CMS Offers $1 Billion in Grants for Health Care Innovation
On May 15, CMS announced a funding opportunity that will award up to $1 billion in grants to applicants that can demonstrate they can improve quality of care and deliver sustainable net savings to CMS within three years.
This announcement marks the second round in grant funding. In 2012, CMS awarded 107 awards out of nearly 3,000 applications. The grantees included collaborations of hospitals, doctors, nurses, pharmacists and technology innovators in urban and rural areas.
In this second round, CMS is seeking proposals for models that:
- Rapidly reduce Medicare, Medicaid and/or CHIP costs in outpatient and/or post-acute settings;
- Improve care for populations with specialized needs;
- Test approaches for providers to transform their financial and clinical models; and
- Improve the health of populations, whether geographically, clinically or by socioeconomic class, through activities focused on engaging beneficiaries, prevention, wellness and comprehensive care that extend beyond the clinical service delivery setting.
CMS will accept letters of intent from June 1 until June 28. Applications will be accepted from June 14 until August 15.
Senate Finance Committee Holds Hearing on Physician Reimbursement
On May 13, the Senate Finance Committee held a hearing on replacing Medicare’s physician payment system. The hearing came just days after Finance Chairman Baucus (D-MT) and Senator Orrin Hatch (R-UT) sent a letter to physician advocates seeking suggestions on a replacement Medicare payment system.
Many view the recent Senate action on payment reform as a positive sign that Congress could enact a replacement for the current payment model. In addition to the recent Senate activity, the House committees with jurisdiction over Medicare have held a number of hearings on physician payment reform.
While neither the Senate Finance Committee nor the House Republicans have introduced legislation to replace the Medicare payment system in the 113th Congress, a bill is expected later this year.
Senate Confirms Tavenner as CMS Administrator
On May 15, Marilyn Tavenner was overwhelmingly confirmed by the Senate to head CMS. Tavenner, who is a former hospital executive and had served for more than a year as acting CMS director, was confirmed by a 91-7 vote. The confirmation makes the first time in nine years that Congress has approved a CMS administrator to head the agency.
Bills Introduced This Week
H.R. 1920: Rep. John Lewis (D-GA) introduced the DSH Reduction Act of 2013. The bill would amend titles XVIII and XIX of the Social Security Act to provide for a delay in the implementation schedule of the reductions in DSH payments.
H.R. 1919: Rep. Robert Latta (R-OH) introduced a prescription drug “track and trace” bill. The bill, which has already been passed through the House Energy and Commerce Committee, would require “lot level” tracing and calls on FDA to propose a rule for a unit-level system in 2027 but does not require the agency to follow through and finalize the regulations.
Next Week in Washington
On Tuesday, the Ways and Means health subcommittee will hold its first in a series of hearings to examine proposals that modify beneficiary cost-sharing within the Medicare program. House Republicans plan to combine Medicare reforms with legislation repealing the Medicare physician pay formula.
For more information, please contact John F. Williams, III at 317-977-1462 or jwilliams@hallrender.com.
