CMS Payment Update

HIDA Government Affairs Update
June 2017

By Linda Rouse O'Neill
Vice President, Government Affairs

HHS ups hospital payments, while MedPAC seeks to Limit extended care payments

In April, the Centers for Medicare and Medicaid Services (CMS) released its first payment update since President Trump took office, increasing payments to hospitals and offering insights into the White House’s priorities. The rule also includes several steps to reduce hospitals’ regulatory burdens.

In the update, CMS will increase payments to hospitals by an average of 2.9 percent for FY2018. Additionally, CMS plans to change how it collects data on uninsured patients, which is expected to boost the funds available for offsetting providers’ bad debt.

CMS is also including a substantial request for information (RFI) as part of its proposed rule. This request seeks to gather feedback from key players in the healthcare industry on how Medicare regulations and transparency can be improved.

CMS Administrator Seema Verma commented that this proposed rule aims to “reduce burdens for hospitals so they can focus on high quality care for patients.” Overall, this new rule appears to be in line with President Trump’s promises to streamline healthcare delivery.

MedPAC recommends against SNF payment increases

Meanwhile, the Medicare Payment Advisory Committee (MedPAC) has delivered its annual recommendation to Congress. The committee recommends against future budget increases for post-acute care providers, contending that current payments do not align with the cost of treatment.

MedPAC’s recommendations include:

  • Eliminating payment increases to skilled nursing facilities for FY 2018 and FY 2019.
  • Reducing the payment rate to inpatient rehabilitation facilities by 5 percent for 2018.
  • Requiring hospitals to add a modifier on claims for services provided by off-campus stand-alone emergency department facilities.

In its report, MedPAC wrote that an ideal solution would be to bring together different post-acute sectors under a unified payment system, contending this could save Medicare $30 billion over the next 10 years.

While Congress is under no obligation to follow these recommendations, lawmakers seriously consider them, especially when looking for ways to cut spending. Bear these recommendations in mind when reaching out to your post-acute customers, as MedPAC’s outlook may shape their strategic planning.

Providers remain cautious amid healthcare policy uncertainty

While payment updates and MedPAC’s recommendations offer some insight into how Medicare will pay for healthcare, there is still a lot of uncertainty about the future of the Affordable Care Act (ACA) and other aspects of U.S. healthcare policy. Because of this, providers are likely to take a cautious approach to future spending.

A recent survey from NEJM Catalyst shows the majority of providers believe Congress will repeal and replace the ACA, though most believe it will take over a year to accomplish this. Additionally, most respondents predict government healthcare agencies will face budget cuts. At the time this was written, the House had just passed an ACA repeal bill that makes significant changes to the Medicaid program.The Senate is expected to make substantial modifications to the legislation when it takes up the issue.

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