DCMedical News: Wednesday, December 12, 2018
DCMedical News-DCMN
Washington, D.C.
Wednesday, December 12, 2018
DCMedical News is published every day either the House or the Senate is in session.
THE BIG STORY TODAY IN HEALTH CARE
Year End “Clean-Up” Legislative Efforts Underway: The House passed HR 7217 (bill text here) which would increase the federal Medicaid matching rate to cover the costs of home health services for coordination of care for children with complex medical needs. The bill instructs the Department of Health and Human Services (HHS) to establish “best practices” for the care of such children, a provision of concern to Medicaid “managed care” organizations. Also passed: two bills (HR 1318, text here; S3029, text here) involving maternal mortality, the former for grants to study and review causes, the latter funding CDC and HRSA research on preterm births. A “two-fer” on the “payfor”: the cost of the complex needs bill will be paid for through a Senate initiative to give HHS authority to recoup rebates when a manufacturer deliberately misclassifies a drug in order to pay lower rebates (Mylan and EpiPen were the exemplars).
HOSPITALS AND OTHER HEALTH CARE FACILITIES
Skilled Nursing Facility (SNF) Payment Update: At its December 6 – 7 meeting, the Medicare Payment Advisory Commission discussed the state of the skilled nursing facility industry in 2017 (slides here, full meeting transcript here). About 15,000 providers house roughly 1.6 Medicare beneficiaries, with Medicare fee-for-service absorbing 11% of the skilled nursing days, and providing 19% of the revenues. Among fee-for-service beneficiaries, admissions decreased in 2017 (compared to 2016) 2%, length of stay decreased 2.3%, days decreased 4.1%, but “marginal profit” was 19.1%. (MedPAC and CMS generally estimate profit by using “allowable costs” and “marginal income,” rather than traditional profitability measures.)
In nursing homes there appears to be “therapy creep.” The share of days assigned to “intensive therapy case mix groups” has increased from 27% in 2002 to 83% in 2017. “Payments [are] driven by amount of therapy furnished…and as more therapy is furnished, providers’ costs increase but payments increase even more, creating an incentive to furnish therapy.”
An entirely new prospective payment system for SNFs will be implemented in Fiscal Year 2020 (beginning October 1, 2019). It will (according to this presentation) be based on patient characteristics, will “redistribute payments from high therapy patients to medically complex patients,” and will bring CMS practice into long-delayed conformity to MedPAC’s recommended reforms in the year 2008.
Overall, the industry is characterized by low total margins (.6%), declining use, and a growing share of payments from lower paying payers. Within their definition of profit, the staff finds Medicare margins for SNFs to be 1.7% for non-profits, 13.7% for for-profits, attributing the difference to case mix, economies of scale, cost per day and cost growth, but with no discussion of staffing shortfalls. The “high Medicare margin” (18%) for the most efficient SNFs indicates that “The level of Medicare payments is too high,” and are “considerably higher than MA [Medicare Advantage] managed care rates.”
MEDICARE, MEDICAID, COMMERCIAL HEALTH INSURANCE
Medicare Quality Incentive Programs: At its meeting December 6 – 7, MedPAC (the Medicare Payment Advisory Commission) received a report on redesigning Medicare’s Hospital Quality Incentive Program (here). Problems with the program: many of the hospital “quality payment programs” are “inconsistent with the Commission’s quality measurement principles.” Also, there are too many, overlapping programs, which rely on “condition-specific readmission and mortality measures as opposed to all condition measures which are more stable.” Another problem, “process measures” that are not tied to outcomes (remember Donabedian!) and “provider-reported measures that may be inconsistently reported” (politely stated). The circus atmosphere of hospital quality reports is partially captured in the description of “tournament models” (hospitals scored relatively one to another) and not “clear, absolute and prospectively set performance targets.” What to do? In what appears to ‘doubling down,’ the staff recommended including hospital-acquired infection rates as a measure domain; scoring ten “patient experience measures”; using a 2% and a 5% withhold, transitioning to the larger number over time; and merging three of the programs (readmissions reduction, value-based purchasing, hospital-acquired condition reduction) into one (Hospital Value Incentive Program, HVIP), eliminating only the inpatient quality reporting program. Funds for awards to higher rated hospitals would come from withholds from the laggards.
Home Health Care Services: Presentation was made to the Medicare Payment Advisory Commission meeting December 7th concerning the adequacy of payment for home health care services (here). Fee-for-service Medicare paid nearly $18 billion in 2017 to nearly 12,000 home health agencies (HHAs) for 3.4 million fee-for-service Medicare beneficiaries, about 3% of total Medicare spending. As with skilled nursing, MedPAC believes that Medicare payments for home health are too high, with margins that have “exceeded 10% since 2001.” The number of therapy visits provided during an episode of care is a factor in payment; “providing more therapy visits increases payments significantly,” and “episodes receiving additional payments for therapy account for an increasing share of total episodes.” MedPAC had recommended removal of therapy as a factor in payment seven years ago. This will now be the case with the passage of the “Bipartisan Budget Act of 2018” which eliminates therapy as a payment factor in 2020. MedPAC staff noted that the new “case mix” system plan for 2020 will raise payments for non-profit, hospital-based and rural agencies, and lower payments for for-profit, free-standing and urban home health care agencies. In 2017 the number of HHAs has declined slightly (episodes down 3.1%, users declined 1.7%, 2017 v. 2016), primarily in areas with rapid growth “targeted by recent counter-fraud efforts.” Overall, however, episodes have increased 58% since 2002, and spending is up 89%.
In an interesting side-by-side comparison, MedPAC staff profile “provider reported” measures of patient function, and “claims-based measures” of hospitalization and emergency department use, showing a divergence. Inferentially, improvement in walking should be accompanied by a mitigation in hospitalization and emergency department use, but is not. Although the Patient Protection and Affordable Care Act (PPACA) mandated some payment reductions 2014 -2017, annual payment updates have continued, with the average payment per episode in 2017 5% higher than 2013 (the last year prior to the PPACA “rebasing”).
READING AND REFERENCE
Trump Administration Essay on Markets and Competition: Worth a review, many potential policy issues of 2019 presaged. The 120-page document (a joint issue of HHS, Labor and Treasury Departments, here) addresses, among other issues, the potential use of Section 1332 Waivers as a means to induce states to eliminate their certificate of need laws. Modern Healthcare (here), describes the “powerful bully pulpit and leverage” to spur such repeals. The waivers, in turn, are used by the states to financially support their health insurance markets, through reinsurance pools and other measures intended to bolster the integrity of the exchange programs in the face of uncertainty concerning Cost-Sharing Reductions and premium support. The MH story cited a “White House official” who said that they had given guidance to states that “their efforts to deregulate could help them secure the pass-through funding to finance insurance market reforms.”
“No End in Sight”: Modern Healthcare (here) provides another collection of operational and financial headaches associated with electronic health records, “while benefits are slow to materialize.” One more collection of glitches (data entry requirements, inefficiently designed user interfaces, information overload, interference with physician-patient relationships), but with this promise: when the “problem” of data, workflow and interoperability is solved, “all heck’s going to break loose because innovation’s just going to run wild.”
EVENTS & MEETINGS (Events Newly Added to This List Noted in Bold)
Dec. 12
8:00 a.m., HHS Secretary Azar participates in a discussion on the future of accessibility and affordability in health care. Senate Health, Education, Labor and Pensions Chairman Lamar Alexander and two other Members participate. AJAX, 1011 4th Street NW, Washington, D.C.
9:00 a.m., Center for American Progress, Sen. Harris and full panel, “Eliminating Racial Disparities in Maternal and Infant Mortality,” 1333 H St., 10th floor, http://www.americanprogress.org.
Dec. 13
9:30-4:45 p.m., The December 2018 meeting of the Medicaid and CHIP Payment and Access
Commission (MACPAC) is on Thursday, December 13 from 9:30am–4:45pm and Friday, December 14 from 9:00am–12:00pm at the Ronald Reagan Building and International Trade Center’s Horizon Ballroom. This month’s Commission meeting covers a broad array of issues, including state innovations in drug spending, Medicaid managed care network adequacy, proposed rules on Medicaid managed care and care for dually eligible beneficiaries, and Medicaid in Puerto Rico. The Commission will also review potential 2019 recommendations on hospital payment. Complete agenda here, December MACPAC data book here.
Dec. 18
First meeting, the HHS Deputy Secretary’s Innovation and Investment Summit. Program announced, here; participants selected, list here; FAQs here.
FOR REFERENCE
Members of the Senate (here) and Members of Senate Committees (here), Senate Calendar (here).
Members of the House with their House Committees (here), House Calendar (here), 2019 House Calendar (here).
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
December publication dates: 13, 14
Notes to: Fred Hyde, MD, JD, MBA; fredhyde@aol.com