Many hospitals are faring better under Medicare’s hospital readmissions reduction program since changes in that program were implemented earlier this fiscal year.

According to a new study, safety-net, academic, and rural hospitals have enjoyed improved performance under the program since Medicare began organizing hospitals into peer groups based on the proportion of low-income patients they serve rather than simply comparing individual hospital performance to that of all other hospitals.

While the current fiscal year is still under way, it appears that safety-net hospitals will enjoy a collective decline of $22 million in Medicare readmissions penalties while 44.1 percent of teaching hospitals and 43.7 percent of rural hospitals will face smaller penalties than last year.

Learn more about the readmissions reduction program and how changes in that program have significantly altered its outcomes in the JAMA Internal Medicine study “Association of Stratification by Dual Enrollment Status With Financial Penalties in the Hospital Readmissions Reduction Program.”

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Medicare would change its wage index system, raise inpatient fees, increase funding for Medicare disproportionate share hospital payments (Medicare DSH), enhance payments for new technologies, and make minor modifications in its hospital readmissions reduction, value-based purchasing, and hospital-acquired condition program if a proposed regulation published this week is ultimately adopted.

The Centers for Medicare & Medicaid Services has published its proposed FY 2020 Medicare inpatient prospective payment system regulation:  its plan for paying acute-care hospitals for Medicare-covered inpatient services in FY 2020.  The 1800-page regulation calls for major changes in Medicare’s wage index system – changes CMS says would “…address the disparities between high and low wage index hospitals…”  It would do so by increasing the wage indexes of many rural hospitals, regardless of their actual wage costs, and pay for those increases by reducing the wage indexes of high-index hospitals, again regardless of their actual wage costs.

The proposed regulation also would raise inpatient payments to hospitals 3.2 percent in the coming year.  In addition, it would add $216 million to its pool of money for Medicare DSH uncompensated care payments – an increase necessitated by this year’s increase in the number of uninsured Americans – while modifying the …

Last week the Medicare Payment Advisory Commission met in Washington, D.C. to discuss a number of Medicare payment issues.

The issues on MedPAC’s April agenda were:

• Expanding the use of value-based payment in Medicare
• Medicare Shared Savings Program performance
• Redesigning the Medicare Advantage quality bonus program
• Increasing the accuracy and completeness of Medicare Advantage encounter data
• Evaluating patient functional assessment data reported by post-acute-care providers
• Options for slowing the growth of Medicare fee-for-service spending for emergency department services
• Options to increase the affordability of specialty drugs and biologics in Medicare Part D
• Improving payment for low-volume and isolated outpatient dialysis facilities

MedPAC is an independent congressional agency that advises Congress on issues involving the Medicare program.  While its recommendations are not binding on either Congress or the administration, MedPAC is highly influential in governing circles and its recommendations often find their way into legislation, regulations, and new public policy.

Go here for links to the policy briefs and presentations that supported MedPAC’s discussion of these issues.

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U.S. Department of Health and Human Services Secretary Alex Azar criticized the current Medicare area wage index system during a hearing of the Senate Finance Committee last week.

Reminding senators that he told them last year that they need to revise the system and warning that HHS’s ability to change it is limited without legislation, Azar referred to the system as an “absurdity” as individual senators pointed out what they view to be inequities in the system that hurt hospitals in their own states.

Medicare’s area wage index system adjusts Medicare payments to hospitals based on geographic differences in the cost of labor.

Learn more about the criticisms that Azar and Senate Finance Committee members registered about Medicare’s area wage index system in the Modern Healthcare article “Azar calls out ‘absurdity’ in Medicare wage index.”…

A proposed regulation published by the Centers for Medicare & Medicaid Services asks stakeholders if they believe hospitals, doctors, and other providers should be required to share with their patients the rates they are paid by insurers for services, medical devices, prescription drugs, and more.

Such transparency, on one hand, would give consumers a better sense of the cost of the services they receive and how their insurers reimburse providers for those costs.  Providers, suppliers, and insurers, on the other hand, might be concerned about the loss of what they have come to regard as confidential, proprietary information.

Hospitals are already required to post their standards charges online.  Since so few people pay actual charges, however, the value of such information has been questioned – and it is not clear what the value would be of knowing more about the financial arrangements between providers, suppliers, and insurers.

The request for comment on such a concept is a minor part of the proposed regulation on health care interoperability published by CMS last month.  Comments are due by May 3.

Learn more from CMS’s news release on the proposed regulation and from the proposed regulation itself.

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