Uncompensated Care

Uncompensated Care / en Fri, 25 Apr 2025 12:34:35 -0500 Wed, 20 Sep 23 14:52:44 -0500 Blog: Uncompensated care increases, Medicare DSH cuts to exacerbate hospitals’ challenges /news/headline/2023-09-20-blog-uncompensated-care-increases-medicare-dsh-cuts-exacerbate-hospitals-challenges As millions of people are losing their Medicaid coverage as a result of the redetermination process, hospitals and health systems are seeing substantial increases in uncompensated care and facing new Medicare cuts that will exacerbate their financial challenges, according to a AHA <a href="/news/blog/2023-09-20-unwise-dsh-cuts-combined-rise-uncompensated-care-due-medicaid-redeterminations-coverage-losses-further">blog post</a>&nbsp;published Sept. 20. The median rate of uncompensated care for hospitals nationally increased by a third from 6.4% in the first quarter of 2023 to 8.7% in July, according to data from Syntellis Performance Solutions. &nbsp; &nbsp; In addition, despite the foreseeable impact the loss of Medicaid coverage would have on hospitals serving a disproportionate share of low-income patients, the Centers for Medicare &amp; Medicaid Services recently finalized nearly $1 billion in Medicare funding cuts to disproportionate share hospitals. These cuts from CMS are predicated on the assumption that the uninsured rate will decline in fiscal year 2024 despite the ongoing redeterminations and recent Congressional Budget Office projections to the contrary. &nbsp; &nbsp; “It is imperative that patients continue to have access to care regardless of their ability to pay,” the blog states. “These payment cuts threaten the financial stability of hospitals across the nation, forcing many to consider shutting down vital service lines or risk closing their doors altogether. At a minimum, the Medicaid eligibility redetermination process should be allowed to finish before these Medicare cuts are enacted.”&nbsp; Wed, 20 Sep 2023 14:52:44 -0500 Uncompensated Care Unwise DSH Cuts Combined with Rise in Uncompensated Care Due to Medicaid Redeterminations Coverage Losses Further Threaten Hospitals’ Financial Stability /news/blog/2023-09-20-unwise-dsh-cuts-combined-rise-uncompensated-care-due-medicaid-redeterminations-coverage-losses-further More than 90 million people had access to health care through Medicaid’s pandemic-related continuous coverage provisions. That coverage ended March 31, 2023, and states have since resumed normal Medicaid eligibility redetermination processes. The Medicaid program now faces the most significant coverage challenge in more than a decade. While the complete impact is still unfolding, these redeterminations have already resulted in <a href="https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-and-unwinding-tracker/" target="_blank" title="KFF: Medicaid Enrollment and Unwinding Tracker">millions of people losing their Medicaid eligibility</a>. Although a portion of those disenrolled from Medicaid may find coverage alternatives, it is expected that a substantial number will unfortunately face a complete loss of coverage. Emerging data suggests that Medicaid disenrollment is already translating to coverage losses and gaps, leaving patients unable to pay for their care. In addition, those who are enrolled in other coverage, such as a plan offered by their employer or through the Health Insurance Marketplaces, may face increased – and sometimes unaffordable – cost-sharing. Consequently, over the past few months, hospitals have started to see a substantial increase in uncompensated care. In the wake of the onset of redeterminations, the median rate of uncompensated care for hospitals nationally increased by a third from 6.4% in the first quarter of 2023 to 8.7% in July (see Figure 1), according to data from Syntellis Performance Solutions. For hospitals in states that have not yet expanded Medicaid, and where rates of uncompensated care were already elevated relative to the field, these existing trends have been amplified. <div class="row"> <div class="col-md-8"> <img alt="Figure 1. Uncompensated Care as a Percentage of Operating Revenue All Hospitals" data-entity-type="file" data-entity-uuid="6f136700-ca7c-4b7b-9383-6e424c78da33" src="/sites/default/files/inline-images/Figure-1-Uncompensated-Care-as-a-Percentage-of-Operating-Revenue-All-Hospitals-9-21-r_0.PNG" width="1697" height="961"> Source: Syntellis Performance Solutions </div> <div class="col-md-4"> In addition to increased uncompensated care, these coverage losses also will likely lead to some patients who cannot pay for care to <a href="https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/" target="_blank" title="KFF: Americans’ Challenges with Health Care Costs">delay seeking necessary medical attention</a>. The deferral of care invariably results in worsening patient health, which frequently requires more complex treatment. If patient health worsens, hospitals must allocate more resources to treat them, which increases in the cost of caring for them. </div> </div> Although it will take time for the impacts of the Medicaid redetermination process on the health care system to be fully realized, these early and alarming trends in uncompensated care have put further financial strain on hospitals as they <a href="/system/files/media/file/2023/04/Cost-of-Caring-2023-The-Financial-Stability-of-Americas-Hospitals-and-Health-Systems-Is-at-Risk.pdf" target="_blank">struggle to combat rising expenses</a>. In 2022, over <a href="https://www.kaufmanhall.com/sites/default/files/2023-01/KH_NHFR_2023-01.pdf" target="_blank" title="Kaufman Hall: January 2023 National Hospital Flash Report">half of hospitals</a> ended the year with negative operating margins. For hospitals serving larger numbers of underserved and historically marginalized populations, these trends in uncompensated care are even more troubling. Coverage losses will have a disproportionate effect on these hospitals. In recent <a href="https://www.medicaid.gov/sites/default/files/2023-08/state-ltr-ensuring-renewal-compliance.pdf" target="_blank" title="CMS: Requirements to Conduct Medicaid and CHIP Renewal at the Individual Level letter">letters to states</a>, the Centers for Medicare &amp; Medicaid Services asked for assurance that their Medicaid eligibility redeterminations processes are not resulting in eligible individuals being improperly disenrolled. We share CMS’ concerns about improper disenrollment, and we support the agency’s efforts to provide states with the tools and technical assistance to guard against loss of eligibility. Despite the foreseeable impact the loss of Medicaid coverage would have on hospitals serving a disproportionate share of low-income patients, CMS recently <a href="/lettercomment/2023-08-09-aha-voices-concern-re-fy-2024-ipps-acute-care-hospitals-disproportionate-share-hospital-payments" target="_blank">finalized nearly $1 billion in Medicare funding cuts to disproportionate share hospitals (DSH)</a>. These cuts from CMS are predicated on the assumption that the uninsured rate will decline in fiscal year 2024 despite the ongoing redeterminations and recent Congressional Budget Office <a href="https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2023.00325" target="_blank" title="Health Affairs: Health Insurance For People Younger Than Age 65: Expiration Of Temporary Policies Projected To Reshuffle Coverage, 2023–33">projections to the contrary</a>. These cuts are happening at a critical time for hospitals and the patients they serve who are struggling to afford care, and we urge CMS to maintain the uninsured rate at FY 2023 levels for FY 2024 in its Medicare DSH calculations. It is imperative that patients continue to have access to care regardless of their ability to pay. These payment cuts threaten the financial stability of hospitals across the nation, forcing many to consider shutting down vital service lines or risk <a href="/system/files/media/file/2022/09/rural-hospital-closures-threaten-access-report.pdf" target="_blank">closing their doors</a> altogether. At a minimum, the Medicaid eligibility redetermination process should be allowed to finish before these Medicare cuts are enacted. Ari Levin is AHA’s director of coverage and state issues forum. John Allison is AHA’s associate director of health analytics policy. Wed, 20 Sep 2023 08:47:02 -0500 Uncompensated Care AHA Summary of Hospital Inpatient PPS Proposed Rule for Fiscal Year 2023 /special-bulletin/2022-04-19-aha-summary-hospital-inpatient-pps-proposed-rule-fiscal-year-2023 <div class="container"> <div class="row"> <div class="col-md-8"> The Centers for Medicare &amp; Medicaid Services (CMS) April 18 issued its hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) PPS <a href="https://public-inspection.federalregister.gov/2022-08268.pdf" target="_blank">proposed rule</a> for fiscal year (FY) 2023. The rule proposes a 3.2% rate increase for inpatient PPS payments in FY 2023. However, when accounting for proposed changes to disproportionate share hospital (DSH) payments, outlier payments, the Medicare-dependent hospital (MDH) and low-volume adjustment (LVA) programs, and other policies, CMS estimates that inpatient PPS hospitals would actually see a net decrease of 0.3% from FY 2022 to FY 2023. Highlights of the proposals related to the LTCH PPS are covered in a separate Special Bulletin. <div class="panel module-typeC"> <div class="panel-body"> <h3>&nbsp; Key Highlights</h3> &nbsp; &nbsp;CMS’ proposed policies would: <ul> <li>Increase inpatient PPS payment rates by 3.2% in FY 2023.</li> <li>Use FY 2018 and 2019 Worksheet S-10 data to determine the distribution of FY 2023 DSH uncompensated care payments. CMS also would use a three-year average of S-10 data for FY 2024 and beyond.</li> <li>Cut DSH payments by about $800 million, due partially to a decrease in the uninsured population.</li> <li>Decrease outlier payments by 1.8 percentage points. CMS states this is necessary to return to the target of paying 5.1% of inpatient PPS funds as outlier payments.</li> <li>End the Medicare-dependent hospital and low-volume adjustment programs, which expire on Sept. 30, 2022 under the law.</li> <li>Permanently apply a 5% cap on any decrease in a hospital’s area wage index.  Implement changes to the graduate medical education (GME) program, related to the calculation of full-time equivalent (FTE) caps.</li> <li>Apply measure suppressions to the Hospital Acquired-Condition (HAC) Reduction Program and most measures in the Hospital Value-based Purchasing (HVBP) program, resulting in neutral payment adjustments for FY 2023.</li> <li>Add 10 new measures to the inpatient quality reporting (IQR) program.</li> <li>Propose several policies intended to advance health equity.</li> <li>Seek several requests for information on measurement policy topics, maternal health, climate change and health equity, and payment adjustments for N95 respirators.</li> </ul> </div> </div> <h2>AHA TAKE</h2> We are extremely concerned with CMS’ proposed payment update of only 3.2%, given the extraordinary inflationary environment and continued labor and supply cost pressures hospitals and health systems face. Even worse, hospitals would actually see a net decrease in payments from 2022 to 2023 under this proposal because of proposed cuts to DSH and other payments. This is simply unacceptable for hospitals and health systems, and their caregivers, that have been on the front lines of the COVID-19 pandemic for over two years now. While we have made great progress in the fight against this virus, our members continue to face a range of challenges that threaten their ability to continue caring for patients and providing essential services for their communities. See AHA’s full statement that was shared with the media <a href="/press-releases/2022-04-18-aha-statement-fy-2023-proposed-ipps-rule" target="_blank">here</a>. Highlights of the inpatient PPS rule follow. <h2>FY 2023 IPPS PROPOSED CHANGES</h2> <h3>Inpatient PPS Payment Update</h3> The proposed rule would increase inpatient PPS rates by a net of 3.2% in FY 2023, compared to FY 2022, after accounting for inflation and other adjustments required by law. Specifically, the update includes an initial market-basket update of 3.1%, less 0.4 percentage points for productivity required by the Affordable Care Act (ACA), and plus 0.5 percentage points to partially restore cuts made as a result of the American Taxpayer Relief Act (ATRA) of 2012. The ACA and ATRA adjustments would be applied to all hospitals. Additionally, hospitals not submitting quality data would be subject to a one-quarter reduction of the initial market basket and, thus, would receive an update of 2.43%. Hospitals that were not meaningful users of electronic health records (EHRs) in FY 2020 would be subject to a three-quarter reduction of the initial market basket and, thus, would receive an update of 0.88%. Hospitals that fail to meet both of these requirements would be subject to a market-basket update of 0.10%. The proposed increase in payment rates is offset by a 1.8 percentage point decrease in outlier payments, as well as other proposed policies and program expirations (e.g. DSH, LVA, MDH) resulting in a net decrease of $0.3 billion in FY 2023 compared to FY 2022. Table 1 below details the impact of proposed policies. <img alt="Table 1L: Impacts of FY 2023 CMS Proposed Policies" data-entity-type="file" data-entity-uuid="3f39eb03-46c7-4386-b052-f4b4a6031e45" height="202" src="/sites/default/files/inline-images/table-1-image-4-19-22-ipps-bulletin.png" width="392" class="align-center"> To approximate expected FY 2022 inpatient hospital utilization for rate-setting purposes, CMS proposes to use FY 2021 MedPAR claims and FY 2020 cost report data, as it ordinarily would have done. However, to account for the potential impact of COVID-19 on hospitalizations, CMS proposes several modifications to its calculations of MS-DRG relative weights and outlier fixed-loss amount. <h3>Disproportionate Share Hospital (DSH) Payment Changes</h3> Under the DSH program, hospitals receive 25% of the Medicare DSH funds they would have received under the former statutory formula (described as “empirically justified” DSH payments). For FY 2023, CMS estimates the empirically justified DSH payments to be $3.32 billion. The remaining 75% flows into a separate funding pool for DSH hospitals. This pool is updated as the percentage of uninsured individuals changes and is distributed based on the proportion of total uncompensated care each Medicare DSH hospital provides. For FY 2023, CMS estimates the 75% pool to be approximately $9.95 billion. After adjusting this pool for the percent of individuals without insurance, CMS estimates the uncompensated care amount to be approximately $6.54 billion. Total DSH payments are expected to decline by roughly $834 million compared to FY 2022. The agency proposes to use the two most recent years of audited data from Worksheet S-10 to determine the distribution of DSH uncompensated care payments for FY 2023. Specifically, CMS proposes using S-10 data from FY 2018 and 2019 cost reports. Additionally, for FY 2024 and beyond, CMS proposes to use a three-year average of the three most recent fiscal years for which audited data is available. In addition, beginning in FY 2023, CMS proposes to discontinue the use of low-income insured days as a proxy for uncompensated care for Indian Health Service and Tribal hospitals and establish a new supplemental payment. Finally, CMS proposes to revise the regulations related to the calculation of the Medicaid fraction of the Medicare DSH calculation. Specifically, CMS proposes to define “regarded as eligible” for Medicaid to include only patients who receive health insurance authorized by a section 1115 demonstration or patients who pay for all or substantially all of the cost of such health insurance with premium assistance authorized by a section 1115 demonstration where state expenditures are matched with federal Medicaid funds. <h3>Area Wage Index</h3> CMS makes several proposals in the rule around the area wage index, which adjusts payments to reflect differences in labor costs across geographic areas. First, the agency proposes to continue its low-wage-index hospital policy as established in the FY 2020 final rule. Specifically, for hospitals with a wage index value below the 25th percentile, the agency would continue to increase the hospital’s wage index by half the difference between the otherwise applicable wage index value for that hospital and the 25th percentile wage index value for all hospitals. As it has done previously, the agency would reduce the FY 2023 standardized amount for all hospitals to make this policy budget neutral. Second, to prevent large year-to-year variations in the wage index, CMS proposes to permanently apply a 5% cap on any decrease to a hospital’s wage index from the prior fiscal year. This would be applied in a budget-neutral manner. <h3>Medicare Graduate Medical Education</h3> Due to a court ruling related to the agency’s method of calculating direct GME payments to teaching hospitals when the weighted full-time equivalent (FTE) counts exceed the cap, CMS proposes to modify its policy related to FTE caps. Specifically, the proposed policy would address situations for applying the FTE cap when a hospital’s weighted FTE count is greater than its FTE cap, but would not reduce the weighting factor of residents that are beyond their initial residency period to an amount less than 0.5. CMS also proposes to allow an urban and a rural hospital participating in the same Rural Training Program (RTP) to enter into a RTP Medicare GME affiliation agreement, which would allow some flexibility to teaching hospitals that cross-train residents. <h3>Medicare-dependent Hospital and Low-volume Adjustment Programs</h3> Under statute, the low-volume hospital policy is set to revert to requirements that were in effect prior to FY 2011. Therefore, beginning in FY 2023, CMS proposes to revert and modify the definition of a low-volume hospital and the methodology for calculating the payment adjustment to statutory requirements. Additionally, the MDH program is set to expire at the end of FY 2022. As such, absent&nbsp;congressional action, hospitals that previously qualified for the MDH status will no longer have MDH status and will be paid based on IPPS federal rates beginning in FY 2023. The AHA is strongly <a href="/lettercomment/2022-04-11-aha-expresses-support-rural-hospital-support-act-s-4009" target="_blank">advocating</a> to make the enhanced low-volume policy and MDH program permanent. <h3>Complication/Comorbidity and Major Complication/Comorbidity Analysis</h3> In the FY 2022 IPPS proposed rule, CMS solicited comments on adopting a change to the severity level designation of the 3,490 “unspecified” diagnosis codes currently designated as either complication/comorbidity (CC) or major complication/comorbidity (MCC), where there are other codes available in that code subcategory that further specify the anatomic site, to a Non-CC for FY 2022. If approved, the change would have affected the severity level assignment for 4.8% of the ICD-10-CM diagnosis codes. Instead, for FY 2022 CMS finalized effective beginning with discharges on or after April 1, 2022, a new Medicare Code Editor (MCE) code edit for “unspecified” codes, to provide additional time for providers to be educated while not affecting the payment the provider is eligible to receive. For FY 2023, CMS is not proposing to change the designation of any ICD-10-CM diagnosis codes, including the unspecified codes that are subject to the “Unspecified Code” edit, as CMS continues its comprehensive CC/MCC analysis to allow stakeholders the time needed to become acclimated to the new edit. <h3>Promoting Interoperability Program</h3> CMS proposes a number of significant changes to the objectives and measures of the Promoting Interoperability Program starting with the calendar year (CY) 2023 reporting period: <ul> <li>Increase the points associated with the Electronic Prescribing objective from 10 to 20 points, and make mandatory the query of prescription drug monitoring program measure, and expand it to include schedule II, III and IV drugs;</li> <li>Increase the points associated with the Public Health and Clinical Data Exchange objective from 10 to 25 points, and add a new required antimicrobial use and resistance surveillance measure;</li> <li>Reduce the points associated with the Health Information Exchange objective from 40 to 30 points, and add an optional attestation measure reflecting whether hospitals enable exchange under the Trusted Exchange Framework and Common Agreement (TEFCA);</li> <li>Reduce the points associated with the Provide Patients with Electronic Access to their Health Information from 40 to 25 points; and</li> <li>Adopt the same changes to the Promoting Interoperability Program’s electronic clinical quality measures (eCQM) measure set and required reporting proposed for the IQR program.</li> </ul> <h3>Hospital Quality Reporting and Value Programs</h3> CMS proposes several significant policy changes intended to account for the impact of the COVID-19 PHE on its hospital quality reporting and value programs. The agency also proposes to add 10 new measures to the inpatient quality reporting (IQR) program, and to adopt several policies intended to advance health equity. <ul> <li>Hospital Acquired-Condition (HAC) Reduction Program. In last year’s inpatient PPS final rule, CMS adopted a COVID-19 measure suppression policy that permits the agency to not use quality measure data the agency believes have been distorted by the pandemic. Using this policy, CMS proposes to suppress all six measures in the HAC Reduction Program for FY 2023. As a result, no hospitals would be penalized under the HAC Reduction Program for FY 2023. However, CMS would continue to publicly report on hospital performance on the program’s healthcare associated infection (HAI) measures. CMS also proposes to suppress the program’s HAI measures for FY 2024, but would retain the claims-based Patient Safety Indicator (PSI) measure with technical changes intended to risk-adjust for COVID-19 diagnoses. &nbsp;</li> <li>Hospital Value-based Purchasing (HVBP) Program. As it did for FY 2022, CMS proposes to suppress most of the HVBP program’s measures for FY 2023, including the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) measures and five health care associated infection measures. As a result, CMS again believes it cannot calculate fair scores for hospitals nationally, and proposes that all hospitals would receive neutral payment adjustments under the VBP for FY 2023. Similar to last year, CMS also proposes to calculate and report HVBP measure scores publicly where feasible and appropriate. &nbsp;</li> <li>Hospital Readmissions Reduction Program (HRRP). For the FY 2024 HRRP, CMS proposes to resume scoring hospitals on the pneumonia readmissions measure that it suppressed for FY 2023. CMS would add the same COVID-19 diagnosis exclusion to the pneumonia measure that it adopted for the other five measures in the program. In addition, for all six measures in the HRRP, CMS proposes to include patient history of COVID-19 in the 12 months prior to the index hospitalization as a co-variate in the measures’ risk adjustment models. &nbsp;</li> <li>Inpatient Quality Reporting (IQR). CMS proposes to add 10 new measures to the IQR program. The measures and the period in which data collection and reporting would begin are listed below: <ul> <li>Hospital Commitment to Health Equity, a measure asking hospitals to attest to whether they are implementing certain health equity-related practices (CY 2023);</li> <li>Two “Social Drivers of Health” measures reflecting whether hospitals screen admitted patients for food insecurity, housing instability, transportation problems, utility needs and interpersonal safety (optional for CY 2023, required starting in CY 2024);</li> <li>Two perinatal care eCQMs reflecting the rates of Cesarean Births (CY 2023) and Severe Obstetric Complications (CY 2024)</li> <li>Two other eCQMs reflecting hospital performance on opioid-related adverse events and malnutrition (CY 2024) ;</li> <li>A patient-reported outcome performance measure (PRO-PM) reflecting functional recovery among elective total hip and knee replacement patients (optional July 1, 2023 – June 30, 2024, required July 1, 2024 – June 30, 2025);</li> <li>Updated versions of the Medicare Spending per Beneficiary and hip/knee complication measures currently used in the hospital VBP program (claims-based, starting with FY 2024 program years)</li> </ul> </li> </ul> CMS also proposes refinements to its elective hip/knee replacement payment measure, and its excess days in acute care following acute myocardial infarction measure. Lastly, CMS proposes to increase the number of eCQMs required for reporting from four to six measures starting with the CY 2024 reporting period, which would affect payment in FY 2026. Hospitals would be required to report the proposed perinatal, and the previously adopted Safe Use of Opioids eCQM, while self-selecting three other eCQMs. <ul> <li>Requests for Information. The proposed rule includes several RFIs on several key measurement policy related topics -- guiding principles for health disparities measurement; approaches to advancing digital quality measurement; and how to use its policies and programs to address maternal health, including both quality measures and Medicare Conditions of Participation (CoPs). &nbsp;</li> <li>Proposed Maternal Quality Designation and Maternal Health RFI. In conjunction with Vice President Harris’s Maternal Health Day of Action announcement in late 2021, CMS proposes to establish a publicly reported designation indicating hospital quality and safety for maternity care. Beginning in the fall of 2023, CMS would award this designation to hospitals that attest positively to both questions in the IQR’s previously adopted Maternal Morbidity Structural Measure. This measure asks whether a hospital (1) is currently participating in a structured state or national Perinatal Quality Improvement Collaborative and (2) implementing patient safety practices or bundles as part of these initiatives. CMS notes that it intends to propose in future rulemaking a more robust set of criteria for this designation, including other maternal health-related measures that may be finalized in the IQR program (such as the two proposed for adoption in this proposed rule).</li> </ul> <h3>Hospital Infectious Disease Data Reporting CoP for COVID-19 and Future PHEs</h3> In 2020, CMS adopted a CoP requiring hospitals and critical access hospitals (CAHs) to submit certain data related to COVID-19 and other acute respiratory illnesses (i.e., influenza) to the Department of Health and Human Services (HHS). While the CoP was written to expire at the conclusion of the COVID-19 public health emergency (PHE), CMS suggests its need to monitor the impact of the pandemic could extend beyond the current PHE. In addition, the agency states that it and its federal partner agencies want a more permanent policy allowing it to collect data in the event of future PHEs involving infectious diseases. As a result, CMS proposes to revise the COVID-19 hospital data reporting CoP it adopted in 2020 so that hospital COVID-19-related reporting would continue after the conclusion of the current PHE through April 30, 2024, unless the HHS Secretary establishes an earlier end date. The broad data reporting categories proposed in the rule align with current reporting requirements. In addition, CMS proposes to establish a new CoP for future PHEs that would require hospitals and CAHs to report certain data to the Centers for Disease Control and Prevention in the event of a PHE declaration for an infectious disease. <h3>Request for Information: Climate Change and Health Equity</h3> As a byproduct of Executive Order 14008 on Tackling the Climate Crisis at Home and Abroad, the proposed rule includes a request for information (RFI) on how hospitals and other health care providers can better prepare for the impact of climate change on beneficiaries and consumers and how CMS can best support that work. The RFI specifically seeks comments on what HHS and CMS can do to help hospitals determine the impacts of climate change on their patients. Further, the agency seeks comment on how it can help providers better understand the threats of climate change on their health care operations, as well as what steps they can take to reduce emissions and track their progress. <h3>Request for Information: Payment Adjustments for N95 Respirators</h3> As a result of Executive Order 13987, “Organizing and Mobilizing the United States Government To Provide a Unified and Effective Response To Combat COVID–19 and To Provide United States Leadership on Global Health and Security,” CMS is seeking comments and feedback on the appropriateness of a payment adjustment to recognize the additional resource costs associated with acquiring NIOSH-approved surgical N95 respirators that are wholly domestically made. The agency is considering the payment adjustment for FY 2023 and beyond. <h2>FURTHER QUESTIONS</h2> CMS will accept comments on the IPPS proposed rule through June 17. The final rule will be published around Aug. 1, and the policies and payment rates will take effect Oct. 1. Watch for a more detailed analysis of the proposed rule in the coming weeks. If you have further questions, contact Shannon Wu, AHA senior associate director of policy, at 202-626-2963 or <a href="mailto:swu@aha.org">swu@aha.org</a>. </div> <div class="col-md-4"> <a class="btn btn-primary btn-wide" href="/system/files/media/file/2022/04/aha-summary-of-hospital-inpatient-pps-proposed-rule-for-fiscal-year-2023-bulletin-4-19-22.pdf">Download the PDF</a> <a href="/system/files/media/file/2022/04/aha-summary-of-hospital-inpatient-pps-proposed-rule-for-fiscal-year-2023-bulletin-4-19-22.pdf" target="_blank"><img src="/sites/default/files/2022-04/image-aha-summary-of-hospital-inpatient-pps-proposed-rule-for-fiscal-year-2023-bulletin-4-19-22-510px.png"></a> &nbsp; </div> </div> </div> Tue, 19 Apr 2022 16:55:54 -0500 Uncompensated Care Lown Institute Report on Hospital Community Benefits Misses Mark /news/blog/2022-04-12-lown-institute-report-hospital-community-benefits-misses-mark All hospitals and health systems, regardless of size, location and type of ownership, are dedicated to caring for their patients and communities in a wide variety of ways. A <a href="/ey-report-community-benefit" target="_blank">2019 report</a> by the respected accounting firm Ernst and Young demonstrates that for every dollar invested in non-profit hospitals and health systems through the federal tax exemption, $11 in benefits is delivered back to communities. Additionally, a <a href="/system/files/media/file/2021/09/aha-2018-schedule-h-reporting.pdf" target="_blank">2021 report from the AHA</a> found that tax-exempt hospitals provided more than $105 billion in total benefits to their communities in 2018 alone, the most recent year for which comprehensive data is available. The Lown Institute’s latest <a href="https://lownhospitalsindex.org/2022-fair-share-spending/" target="_blank">report</a> on hospital community benefits is an obvious example of relying on pre-conceived notions and faulty methodology to draw inaccurate conclusions. The report cherry-picks categories of community investment while simply ignoring others, such as researching life-saving treatments and cures and training and educating the next generation of caregivers. It overlooks many of the essential contributions hospitals make to their communities that are critically important, especially during the pandemic. For example, a number of hospitals invested considerable funds and expertise into developing COVID-19 tests after setbacks from public health agencies. Hospitals also expanded treatment capacity especially as COVID-19 cases surged, established vaccine clinics and launched outreach campaigns to ensure everyone has access to vaccines, to name just a few examples. It is imperative to stress that financial assistance is only one part of a hospital’s total community benefit and does not account for the numerous programs and services that hospitals tailor and provide to meet the many varied needs of their community. In addition, not all the services that hospitals provide to their communities are included as part of community benefit reporting and are not captured in the Lown Institute’s analysis. These include programs that address housing needs, accessing healthy food, educational and wellness programs, health screenings, transportation to ensure patients arrive at medical appointments, and other programs and services to address the needs that affect the community’s health and address the social determinants of health. Hospitals also bear many uncompensated and unreimbursed costs. For instance, hospitals not only provide financial assistance to patients, but also “relieve government burden,” a touchstone of tax exemption, by absorbing underpayments from means-tested government programs such as Medicaid, as well as unreimbursed Medicare expenses. <a href="/fact-sheets/2020-01-07-fact-sheet-underpayment-medicare-and-medicaid" target="_blank">Combined underpayments</a> were $100.4 billion in 2020, up from $75.8 billion in 2019. The 2020 underpayment includes a shortfall of $75.6 billion for Medicare and $24.8 billion for Medicaid. Further, hospitals provide benefits by covering the costs attributable to patients who would have qualified for financial assistance but did not apply. In addition, hospitals subsidize the high cost of the many essential services they provide to their communities, such as burn and neonatal units. And, hospitals continue to provide these services even as the cost of providing care continues to increase significantly due to a range of factors outside of their control including rising inflation as well as massive growth in the costs of drugs, contract labor and supplies and equipment. America’s hospitals and health systems do more than any other part of the health care field to support vulnerable patients and communities: Our doors are always open, regardless of a patient’s ability to pay. In total, hospitals of all types have provided nearly <a href="/fact-sheets/2020-01-06-fact-sheet-uncompensated-hospital-care-cost" target="_blank">$745 billion</a> in uncompensated care to patients since 2000. Tue, 12 Apr 2022 12:22:50 -0500 Uncompensated Care Fact Sheet: Underpayment by Medicare and Medicaid /fact-sheets/2020-01-07-fact-sheet-underpayment-medicare-and-medicaid Each year, the �� Association (AHA) collects aggregate information on the payments and costs associated with care delivered to beneficiaries of Medicare and Medicaid by U.S. hospitals. The data used to generate these numbers come from the AHA’s Annual Survey of Hospitals, which is the nation’s most comprehensive source of hospital financial data. This fact sheet provides the definition of underpayment and technical information on how this figure is calculated on a cost basis for Medicare and Medicaid. Payment rates for Medicare and Medicaid, with the exception of managed care plans, are set by law rather than through a negotiation process, as with private insurers. These payment rates are currently set below the costs of providing care, resulting in underpayment. Payments made by managed care plans contracting with the Medicare and Medicaid programs are generally negotiated with the hospital. Hospital participation in Medicare and Medicaid is voluntary. However, as a condition for receiving federal tax exemption for providing health care to the community, not-for-profit hospitals are required to care for Medicare and Medicaid beneficiaries. Also, Medicare and Medicaid account for more than 60 percent of all care provided by hospitals. Consequently, very few hospitals can elect not to participate in Medicare and Medicaid. Bridging the gaps created by government underpayments from Medicare and Medicaid is only one of the benefits that hospitals provide to their communities. In a separate fact sheet, AHA has calculated the cost of uncompensated hospital care (financial assistance and bad debt), which also are benefits to the community. While these two fact sheets contain important information, they do not account for the many other services and programs that hospitals provide to meet identified community needs. <h2>DEFINING UNDERPAYMENT</h2> Underpayment is the difference between the costs incurred and the reimbursement received for delivering care to patients. Underpayment occurs when the payment received is less than the costs of providing care, i.e., the amount paid by hospitals for the personnel, technology and other goods and services required to provide hospital care is more than the amount paid to them by Medicare or Medicaid for providing that care. Underpayment is not the same as a contractual&nbsp;allowance, which is the difference between hospital charges and government program payments. <h2>CALCULATING UNDERPAYMENTS</h2> Payments received by hospitals for Medicare and Medicaid services are reported for each hospital in the AHA Annual Survey.1 Hospitals also report their gross charges for Medicare and Medicaid services provided. Gross charges for these services are then translated into costs. This is done by multiplying each hospital’s gross charges by each hospital’s overall cost-to-charge ratio, which is the ratio of a hospital’s costs (total expenses exclusive of bad debt) to its charges (gross patient and other operating revenue). § Payment = Amount Received § Cost-to-charge Ratio&nbsp; &nbsp; &nbsp; =&nbsp; &nbsp; &nbsp; &nbsp;Total Expenses Exclusive of Bad Debt&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;__________________________________________&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Gross Patient Revenue + Other Operating Revenue § Costs = Gross Charges x Cost-to-Charge Ratio The resulting payment and cost figures are aggregated across all hospitals for Medicare and Medicaid. Payments are then compared to costs. Underpayment occurs when aggregate payments are less than costs. § Underpayment = Amount by Which Payment is Less than Costs <h2>FINDINGS</h2> In the aggregate, both Medicare and Medicaid payments fell below costs in 2020: § Combined underpayments were $100.4 billion in 2020, up from $75.8 billion in 2019. The &nbsp; &nbsp; &nbsp; 2020 underpayment includes a shortfall of $75.6 billion for Medicare and $24.8 billion for &nbsp; &nbsp; &nbsp; Medicaid. § For Medicare, hospitals received payment of only 84 cents for every dollar spent by hospitals &nbsp; &nbsp; &nbsp; caring for Medicare patients in 2020. § For Medicaid, hospitals received payment of only 88 cents for every dollar spent by hospitals&nbsp; &nbsp; &nbsp; &nbsp; caring for Medicaid patients in 2020. § In 2020, 67 percent of hospitals received Medicare payments less than&nbsp; &nbsp; &nbsp; &nbsp; cost, while 62 percent of hospitals received Medicaid payments less than cost. ____________________ 1&nbsp;Medicare and Medicaid payments include all applicable payment adjustments (Disproportionate Share, Indirect Medical Education, etc.). Payments include both fee-for-service and managed care payments. Thu, 24 Feb 2022 08:05:40 -0600 Uncompensated Care Urge Congress to Remove Hospital Cuts, Advance Other Priorities in Legislative Packages Congress is back in Washington, D.C. this week with a number of major priorities to tackle before the end of the year. Congress could act as soon as this week on some of these year-end items so it is important that you weigh in now. These include funding the government – current funding is set to expire Dec. 3, although a short-term extension is likely – and raising the nation's debt limit. At the same time, Democrats are trying to enact the Build Back Better Act (H.R. 5376), a roughly $1.75 trillion social spending package that includes many health care provisions. The<a href="/special-bulletin/2021-11-18-house-passes-build-back-better-act-significant-health-care-provisions"> bill</a>, which passed the House Nov. 19, will undergo changes as the Senate tries to pass it under reconciliation procedures. There are a number of advocacy priorities we are working to get included in a year-end legislative package. In addition, we continue to seek changes to the Build Back Better Act. More details and resources that you can use in conversations with your senators and representatives follow. <h2>PRIORITIES FOR YEAR-END LEGISLATIVE PACKAGE</h2> <h3>Prevent Medicare Sequester and PAYGO Cuts. Congress should extend the moratorium on Medicare sequester cuts and prevent the Statutory Pay-As-You-Go (PAYGO) sequester from taking effect.</h3> The moratorium on the 2% Medicare sequester cuts is currently scheduled to expire Dec. 31. In addition, a statutory PAYGO sequester requires that mandatory spending and revenue legislation not increase the federal budget; unless it is waived, this would result in an additional $9.4 billion in cuts to hospital providers in fee-for-service Medicare next year. AHA resources to assist your efforts include: <ul> <li>Coalition to Protect America’s Healthcare <a href="https://protecthealthcare.org/landing/protect-hospitals">TV and digital ads</a> are running now urging Congress to halt the cuts. “These cuts would hit hospitals at the worst possible time, with COVID-19 cases and hospitalizations on the rise again, and with hospitals facing workforce shortages, increased costs for supplies and equipment and rising inflation,” the ad states.</li> <li>Nov. 29 <a href="/lettercomment/2021-11-29-aha-others-urge-congress-prevent-sequester-paygo-cuts">letter</a> from AHA and other groups representing hospitals and health systems.</li> <li>AHA factsheets on the <a href="/fact-sheets/2021-03-09-fact-sheet-medicare-sequester-relief-needed-health-providers-during-covid-19">Medicare sequester</a> and <a href="/fact-sheets/2021-03-19-fact-sheet-statutory-paygo-sequester-relief-needed-health-providers">PAYGO sequester cuts</a> that you can share with your lawmakers.</li> </ul> <h3>Improve the Provider Relief Fund (PRF)</h3> Congress should pass the Provider Relief Fund Improvement Act (H.R. 5963), bipartisan legislation introduced in the House that would allow hospitals and health systems to access quickly the remaining funds from the PRF and give them more flexibility in how and when the funds can be used. AHA resources to assist your efforts include: <ul> <li>Nov. 17&nbsp;<a href="/action-alert/2021-11-17-urge-your-representatives-cosponsor-bill-would-make-important-changes-covid">Action Alert</a> that includes more details about the bill.</li> <li>A <a href="/fact-sheets/2021-11-17-fact-sheet-hospitals-need-remaining-provider-relief-funds-overcome-ongoing">fact sheet</a> that can be shared with your lawmakers.</li> </ul> <h3>Reset the IMPACT Act</h3> Congress should reset the Improving Medicare Post-Acute Care Transformation (IMPACT) Act to reflect both new insights from the pandemic and the effect of recent transformative reforms of the existing post-acute care payment systems. See the <a href="/fact-sheets/2021-11-22-fact-sheet-viable-unified-post-acute-care-payment-model-not-possible-under">fact sheet</a> for more details, and it can be shared with your lawmakers. <h3>Strengthen Telehealth</h3> Congress should pass legislation that would make permanent flexibilities granted under the public health emergency including expanding the types of providers that can offer telehealth services; permanently removing the geographic and originating site restrictions that currently limit where patients can access telehealth services; making permanent the ability of Federally Qualified Health Centers and Rural Health Clinics to provide all telehealth services; and allowing critical access hospitals the same ability to offer and bill for telehealth services. <h3>Protect Hospitals in the 340B Program</h3> Congress should pass legislation (S. 773/H.R. 3203) ensuring 340B hospitals that may have experienced changes to their Medicare disproportionate share hospital (DSH) adjustment percentage in fiscal year 2020 or FY 2021 due to the COVID-19 pandemic retain their 340B eligibility. See the <a href="/system/files/media/file/2021/09/fact-sheet-340b-related-payer-mix-changes-9-2021.pdf">fact sheet</a> for more details, and it can be shared with your lawmakers. View the <a href="/2020-10-07-get-involved?vvsrc=%2fcampaigns%2f89880%2frespond">sample message</a> that you can customize and send to your lawmakers. <h2>CHANGES TO THE BUILD BACK BETTER ACT</h2> <h3>Eliminate Medicaid DSH and Uncompensated Care Cuts.</h3> The Senate should eliminate punitive Medicaid DSH and uncompensated care cuts that are included in the Build Back Better Act. States that have yet to expand their Medicaid program face reductions in federal Medicaid DSH allotments and federal funding for uncompensated care pools. The AHA estimates that the Medicaid DSH cuts would be $4.7 billion over 10 years (2023-2032). In addition, if a state that currently has expanded its Medicaid program chooses to discontinue expansion, its federal DSH allotment also would be&nbsp;reduced. Even if your state is not impacted, these types of cuts set a dangerous precedent for other payment reductions that could be enacted in the future. See the recent <a href="/action-alert/2021-11-15-urge-your-representatives-remove-hospital-cuts-house-social-spending-bill">Action Alert</a> for more details, talking points and other AHA efforts on this issue. <h3>Remove Excessive CMPs for Labor Violations</h3> Congress should eliminate excessive and unwarranted civil monetary penalties for various violations of the Occupational Safety and Health Act and National Labor Relations Act, provisions originally included as part of the Protecting the Right to Organize Act. In addition, provisions included in the bill that subject officers and directors to personal liability should be removed. <h3>Restore Hospital Infrastructure Funding Under the Hill-Burton Act.</h3> Congress should provide direct capital investment through grants to hospitals by updating the Hill-Burton Act. A previous version of the reconciliation bill included $10 billion for this provision, and it should be added back into the bill. View the <a href="/2020-10-07-get-involved?vvsrc=/campaigns/89878/respond">sample message</a> that you can customize and send to your lawmakers. <h2>FURTHER QUESTIONS</h2> If you have questions, please contact AHA at 800-424-4301. &nbsp; Mon, 29 Nov 2021 13:36:59 -0600 Uncompensated Care AHA blog: Charity care only part of hospital’s community benefit /news/headline/2021-04-21-aha-blog-charity-care-only-part-hospitals-community-benefit A study published this month in Health Affairs on the charity care provided by tax-exempt hospitals fails to recognize that charity care is only one part of a hospital’s total community benefit, <a href="/news/blog/2021-04-21-analysis-fails-recognize-charity-care-only-part-hospitals-total-community">writes</a>&nbsp;AHA General Counsel Melinda Hatton. “In fact, an <a href="/news/headline/2017-10-10-study-hospital-community-benefits-exceed-federal-tax-exemption-11-1">Ernst and Young report</a>&nbsp;from 2017 demonstrates that for every dollar invested in non-profit hospitals and health systems through the federal tax exemption, $11 in benefits is delivered back to communities,” Hatton notes.&nbsp; Wed, 21 Apr 2021 14:27:46 -0500 Uncompensated Care Analysis Fails to Recognize Charity Care is Only Part of a Hospital’s Total Community Benefit /news/blog/2021-04-21-analysis-fails-recognize-charity-care-only-part-hospitals-total-community The mission of all hospitals and health systems, regardless of size and type of ownership, is to care for their communities and patients. In fact, an <a href="/news/headline/2017-10-10-study-hospital-community-benefits-exceed-federal-tax-exemption-11-1">Ernst and Young report</a> from 2017 demonstrates that for every dollar invested in non-profit hospitals and health systems through the federal tax exemption, $11 in benefits is delivered back to communities. The authors of the new <a href="https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2020.01627">Health Affairs analysis</a> fail to recognize that charity care is only one part of a hospital’s total community benefit. Looking only at charity care does not account for the numerous programs and services that hospitals provide to meet the varied needs of their community, such as help accessing healthy food, educational programs and health screenings, transportation to ensure patients arrive at needed medical appointments, and assistance with housing and other efforts to address the social determinants of health, among many others. Hospitals not only provide financial assistance to those unable to pay for their own care, but absorb underpayments from means-tested government programs such as Medicaid. In addition, hospitals also provide benefits by bearing unreimbursed Medicare expenses and bad debt expenses attributable to patients who would have qualified for financial assistance but did not apply. Hospitals also subsidize the high cost of the essential services they provide, such as burn and neonatal units.&nbsp; In all, hospitals and health systems do more than any other part of the health care field to support vulnerable patients and communities: Our doors are always open, 24/7, regardless of a patient’s ability to pay. In fact, since 2000, hospitals and health systems have provided more than $620 billion in care for which no payment was received for patients in need. &nbsp; Melinda Hatton is AHA's general counsel.&nbsp; Wed, 21 Apr 2021 10:08:29 -0500 Uncompensated Care AHA blog: PhRMA report misleads on drug costs /news/headline/2021-02-12-aha-blog-phrma-report-misleads-drug-costs Instead of attacking hospitals and health systems caring for patients during the COVID-19 pandemic, PhRMA should instead focus on lowering the costs of drugs for Americans, <a href="/news/blog/2021-02-11-phrma-report-misleads-drug-costs">writes</a> AHA Executive Vice President Tom Nickels. Fri, 12 Feb 2021 14:35:38 -0600 Uncompensated Care PhRMA report misleads on drug costs /news/blog/2021-02-11-phrma-report-misleads-drug-costs America’s hospitals and health systems, and our heroic caregivers, have been on the front lines of the battle against COVID-19 for the past year, working tirelessly to provide needed care to patients and communities. Along the way, the hospital field has incurred deep financial losses, which the <a href="/system/files/media/file/2020/06/aha-covid19-financial-impact-report.pdf">AHA projected</a> to be $323 billion in 2020 alone, due to the cancelation and delay of non-emergent care and the costs associated with treating COVID-19 patients. Meanwhile, COVID hospitalization rates surged over the last several months, and in many states, hospital intensive care unit bed utilization rates are near capacity. Hospitals have never before experienced such a widespread, national health crisis. Amidst this crisis, PhRMA recently released a misleading report about the costs associated with drug administration in hospital outpatient departments. The PhRMA report conveniently focuses only on patients with commercial health insurance, while ignoring patients with Medicare, Medicaid or no insurance at all. Hospitals treat all who come through their doors, 24/7 and regardless of ability to care. However, Medicare and Medicaid pay far less than the costs hospitals incur for delivering care, while accounting for approximately 60% of all payments for care provided by hospitals. In fact, in 2019 alone, <a href="/system/files/media/file/2020/01/2020-Uncompensated-Care-Fact-Sheet.pdf">hospitals provided $41.6 billion in uncompensated care</a> while <a href="/system/files/media/file/2020/01/2020-Medicare-Medicaid-Underpayment-Fact-Sheet.pdf">incurring $75.8 billion in underpayments from Medicare and Medicaid</a>. The report also makes a misguided attack on the 340B drug savings program. 340B hospitals have continuously demonstrated their commitment to using their savings to provide important services and programs to vulnerable communities that they otherwise would not be able to provide. 340B hospitals use their savings on medication management programs, diabetes education programs and mental health services, to name just a few examples. Meanwhile, this PhRMA report fails to acknowledge immense drug company profits that have been highlighted by many respected organizations, including the <a href="https://www.gao.gov/assets/690/688472.pdf">U.S. Government Accountability Office</a> (GAO) and the <a href="https://jamanetwork.com/journals/jama/fullarticle/2762308#:~:text=Results%20From%202000%20to%202018,%2442.1%20trillion%2C%20EBITDA%20of%20%2422.8">Journal of the American Medical Association</a> (JAMA). It is also a fact that it is the drug companies that are solely responsible for setting list prices for their drugs as well as determining subsequent price increases. While continuing to provide all levels of care to their patients and communities, hospitals and health systems are playing a leading role in vaccination efforts across the country as our country strives for the goal of herd immunity. They are working closely with other stakeholders – including drug companies – in this critical effort. Instead of attacking hospitals and health systems caring for patients during the pandemic, PhRMA should instead focus on lowering the costs of drugs for Americans. &nbsp; Tom Nickels is&nbsp;AHA’s executive vice president for government relations and public policy. Thu, 11 Feb 2021 13:18:24 -0600 Uncompensated Care