Uncompensated hospital care falls in Medicaid expansion states, but hospitals still worry

Medicaid expansion and other changes related to Medicaid payments are very important to the financial viability of hospitals. For example, according to a Kaiser Family Foundation (KFF) analysis, the expansion of Medicaid coverage under section 2001 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) helped hospitals by producing a nationwide decline in uncompensated care from $34.9 billion in 2013 to $28.9 billion in 2014, the year the expansion took place. At the same time, however, KFF found that despite the financial gains from declining uncompensated care, hospitals fear that these gains may be offset by a higher volume of Medicaid payments that may be lower than the actual hospital costs.

The KFF analysis confirms that most of the reduction in uncompensated care occurred in Medicaid expansion states. Specifically, in expansion states uncompensated care declined from $16.7 billion in 2013, to $11 billion in 2014, a 35 percent reduction. In non-expansion states, uncompensated care dropped from $18.1 billion in 2013, to $17.9 billion in 2014, a reduction of less than one percent.

KFF points out that the federal disproportionate share hospital (DSH) allotments, totaling $11.7 billion in 2014, will drop by $2 billion in fiscal year (FY) 2018 and by a total of $43 billion between FY’s 2018 and 2025. As a result, KFF’s survey of hospitals and their associations found a growing concern that the increase in revenue from Medicaid expansion will not fully offset the reduction in federal Medicaid DSH payments.

KFF notes that the coming reduction in DSH payments may affect safety net hospitals, in particular, due to their (1) high dependence on Medicaid DSH funds, (2) high numbers of uninsured patients, (2) few privately-insured or Medicare patients, and (4) generally weaker financial condition.

In addition to the effect of reduced DSH payments, KFF warns that hospitals may also be hurt if CMS limits Medicaid supplemental payments to hospitals in the future. This is because many hospitals rely on supplemental payments to increase payments above their actual costs. KFF believes that the impact of reductions in supplemental payments will ultimately depend on whether states will offset reductions with increases to their Medicaid base rates paid to hospitals.

DME supplier sentenced to 37 months in $2.6M health care fraud scheme

A Cuban national was sentenced to 37 months in prison for his role in a health care fraud scheme in the greater Tampa, Florida, area. The 47-year-old man was charged by indictment, returned on July 31, 2013, with 14 counts of health care fraud. He had been a fugitive since his 2013 indictment until his arrest on October 9, 2015, when he arrived in Miami on a flight from Cuba. 

The president and owner of G.R. Services Equipment & Supplies Inc., a Largo, Florida, company that purported to provide durable medical equipment (DME) to Medicare beneficiaries pleaded guilty to conspiracy to commit health care fraud in March 2016 and was sentenced on June 13, 2016. In his plea agreement, the DME company owner admitted that from May 2013 through July 2013, his company submitted approximately $2,579,695 in false and fraudulent claims to Medicare seeking reimbursement for DME not legitimately prescribed by doctors and not provided to beneficiaries.

In addition to his sentence the judge also ordered the owner to pay $918,402 in restitution and to forfeit the same amount. federal law enforcement agents previously executed a seizure warrant on the company’s bank account, resulting in the seizure of approximately $243,339 in proceeds of the health care fraud scheme.

Specifically, the company sought reimbursement for thousands of dollars of negative pressure wound therapy electrical pumps and sterile collagen dressings purportedly provided to Medicare beneficiaries in May and June 2013 that were not legitimately prescribed by doctors or provided to beneficiaries.

Examining the role of data and analytics in fighting fraud, waste, and abuse

On June 7, 2016, a podcast interview of Dr. Caryl Brzymialkiewicz, Chief Data Officer for the HHS Office of Inspector General (OIG) was made available by the OIG. In the podcast, Brzymialkiewicz provided insight into how the OIG uses data and analytics to reduce healthcare fraud, waste and abuse.

The Chief Data Office officially came into existence last year, but the OIG’s advanced analytic team has been around for several years. Brzymialkiewicz indicated that her office is currently focusing on: (1) how to accelerate the work of the advanced analytic team; (2) how to help the OIG to become even more effective and efficient; (3)  improving access to data; (4) supporting OIG investigators in their cases, with audits and evaluations, and in determining what other datasets they need; and (5) making sure the data the OIG has is high quality data. One current example of the office’s focus is its work with CMS as it creates a new nationwide Medicaid data set. According to Brzymialkiewicz, “we’re working closely with [CMS] to understand, as they’re implementing their new system, what does [it] mean, [and] how can we potentially tap into that environment.”

Brzymialkiewicz defined advanced analytics as “having high quality lead-generation for either our investigators, our auditors, our evaluators or for compliance oversight.” According to Brzymialkiewicz, advanced analytics data can either lead to someone that is potentially committing fraudulent activity or OIG investigators can bounce information from a hotline call or from a whistleblower  against the data to help make a case of fraud.

Brzymialkiewicz described her office’s predictive analytics space, where they use statistical models to generate risk scores. These scores can result in a pharmacy or provider being designated low, medium, or high risk. She opined that for high risk entities the OIG might want to apply a little more scrutiny. She indicated that her office plans to accelerate their predictive analytic work.

With regard to internal support at OIG, Brzymialkiewicz stated that her office is working to support senior leadership, to help inform their decisions, to facilitate the right conversations about where to allocate resources, and to help position the OIG to compete for increasingly scarce resources across the entire government.

Her office is heavily invested in developing additional tools to fight fraud, waste and abuse. She described the development process as one of trying to democratize data, so that rather than requiring the whole organization to understand programing language, investigators will instead have easy-to-use tools in their hands to accomplish their goals.

Finally, she described the need for link analysis to determine the possible connectedness between providers. According to Brzymialkiewicz, this would allow the OIG to look at providers that have high risk scores to see how they are connected to other entities that may also be committing fraud.

Highlight on Nevada: Grants received for summer food and combating Rx drug abuse

Nevada has been granted $2.4 million from the U.S. Department of Agriculture for summer food purchases for children and almost a million dollars from the Centers for Disease Control and Prevention (CDC) to implement data and surveillance components of the state’s strategic action plan to reduce prescription drug abuse.

The Summer Electronic Benefit Transfer for Children (Summer EBT) Program provides a monthly benefit on a debit-type card that can be used throughout the summer for food purchases at authorized stores. The Summer EBT Program helps cover a critical gap in food security for children who otherwise receive free meals during the school year. Nevada was one of eight grantees. The following Nevada counties will be served by the grant: Douglas, Lyon, Washoe, Elko, Humboldt, Lander, Lincoln, Nye, Pershing, and White Pine.

Nevada’s Division of Public and Behavioral Health (DPBH) received funding from CDC’s Prescription Drug Overdose: Prevention for States program to be used through 2019 to implement data and surveillance components of the strategic action plan of the State of Nevada’s Plan to Reduce Prescription Drug Abuse. The data will be used to “tell the story,” direct interventions, and track performance. The project will also allow the implementation of a Prescriber Score Card program to assist in the identification of high-risk prescribing activity by geographic area and provider specialty. The Prescriber Score Card Program will help to inform and educate prescribers on their habits and ultimately serve to support policy and resource decisions by the state.

According to Prescription Drug Abuse: Strategies to Stop the Epidemic, Nevada has the fourth highest drug overdose mortality rate in the United States, with 20.7 per 100,000 people suffering drug overdose fatalities.  The same report indicates that the number of drug overdose deaths in Nevada increased by 80 percent since 1999 when the rate was 11.5 per 100,000.  In addition, the 2013 Nevada Youth Risk Behavior Survey (YRBS) found that 19.4 percent of high school respondents reported that they have taken prescription drugs without a doctor’s prescription. Nevada also ranks very high among the states in prescribing patterns for highly addictive opioid drugs:

  • second highest for hydrocodone;
  • second highest for oxycodone;
  • fourth highest for methadone; and
  • seventh highest for codeine.

Nevada’s participation in the CDC’s Prescription Drug Overdose: Prevention for States program is part of the CDC’s efforts to scale up prevention activities as part of a national response to the opioid overdose epidemic. A total of 29 states participate in the program.