CMS extends temporary moratoriums for some HHAs and ambulance suppliers

CMS has released a notice that its temporary moratorium on the enrollment of ambulance suppliers and home health agencies (HHAs) in designated geographic locations is being extended to combat fraud, waste, and abuse. CMS made the announcement in an advance release that covers metropolitan areas in Florida, Illinois, Michigan, Texas, Pennsylvania, and New Jersey.


Section 6401(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provided the HHS Secretary with the authority to impose a temporary moratorium on providers and suppliers in Medicare, Medicaid, or CHIP if it is determined that a moratorium is necessary to “prevent or combat fraud, waste, or abuse” in the programs.


In 2013, CMS imposed moratoriums on the enrollment of new HHAs in Miami-Dade County, Florida and in Cook County, Illinois and their surrounding counties. It also imposed moratoria on Part B ambulance suppliers in Harris County, Texas and its surrounding counties. The moratoriums were extended for another six months in 2014 and expanded to include HHAs located in Broward County, Florida; Dallas County, Texas; Harris County, Texas; and Wayne County, Michigan and their surrounding counties. The ambulance supplier moratoriums were also expanded to include Philadelphia, Pennsylvania and its surrounding counties.


CMS consulted with the HHS Office of Inspector General (OIG) and the Department of Justice (DOJ) in identifying two types of providers and suppliers in nine geographic areas that warranted temporary moratoriums. CMS also consulted with appropriate state Medicaid agencies and state departments of emergency medical services and determined that the moratoriums would not create access care issues for Medicaid or CHIP beneficiaries.


Under 42 C.F.R. Sec. 424.570(b), temporary moratoriums will remain in effect for six months, and may be extended in six-month increments. CMS consulted with HHS OIG and determined that there remains a significant potential for fraud, waste, and abuse in the identified geographic areas and the circumstances that warranted the moratoriums have not abated. Additionally, CMS has determined that the moratoriums are needed to allow it to continue to monitor and proceed with administrative actions against providers and suppliers. As a result, CMS is extending the temporary moratoriums for the enrollment of HHAs and ground ambulance suppliers in Medicare, Medicaid, and CHIP.

MedPAC proposes cure for what’s ailing hospital payment policies

According to Mark Miller, Executive Director of the Medicare Payment Advisory Commission (MedPAC), as a result of health care reform and changing trends in care settings, several areas of the fee-for-service (FFS) hospital payment policies need to be improved to ensure that payments are accurate. Miller provided testimony before the House of Representatives Committee on Ways and Means that summarized the MedPAC’s findings relating to hospital payment trends and its recommendations for improving the accuracy of FFS payment rates.


Inpatient discharges for Medicare patients declined 4.4 percent between 2012 and 2013. Notably, the use of outpatient services increased 33 percent for Medicare FFS Part B beneficiaries over the past seven years, which according to MedPAC, represents an increasing trend in providing care in outpatient settings. It also reflects the increasing number of hospitals that are purchasing and converting freestanding physician practices into hospital outpatient departments (HOPDs). This has resulted in a market shift away from freestanding practices and higher Medicare spending because the program pays higher rates in such settings than in freestanding offices.

Payment adequacy

Private insurers pay at higher rates, which allow hospitals to have higher costs that make Medicare payments appear inadequate. Hospital consolidation has allowed hospitals to gain a greater market power than private insurers. Therefore, hospitals do not receive pressure from private insurers to contain their costs.

Recommended payment changes

MedPAC recommended a number of changes to hospital payment policies, including outpatient rates should be equal or made closer to physician office rates for similar set of services. Similarly, standard payment rates for long-term care hospitals (LTCHs) should be paid only for patients who are truly chronically, critically ill (CCI). Services provided to LTCH patients who are not CCI should be paid based on inpatient prospective payment system (IPPS) rates.

IME and DSH payments

MedPAC has determined that only 40 to 45 percent of indirect medical education (IME) payments can be justified as covering the higher costs of Medicare inpatient care, which leaves $3.5 billion paid to teaching hospitals with little accountability.

Additionally, the disproportionate share hospital (DSH) payment policy does not relate to the cost of treating low-income patients. Section 2551 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) revised the DSH system by requiring that Medicare payments be divided between one pool for traditional DSH and another pool for non-Medicare uncompensated care costs. While MedPAC has raised concerns about how the uncompensated payments are allocated, the amount of such payments will decline as the uninsured rate decreases.


According to MedPAC, the graduate medical education (GME) system is not aligned with delivery system reforms. Medicare payments for GME should be decoupled from the inpatient FFS payment system and GME resources should be devoted solely to programs that meet high educational standards. Medicare payments to teaching hospitals should be more transparent, and there should be studies of workforce needs, specialty residency programs, and medical school diversity.

Readmissions penalty

MedPAC recommends that the hospital readmissions penalty established by Section 3025 of the ACA should be continued, but recommends expanding the penalty to cover certain post-acute care providers. It recommended setting a fixed target for readmission rates and the readmission rates of hospitals that treat a large share of low-income patients should be compared based on peers serving a similar amount of Medicare beneficiaries.

Two-Midnight Rule

In response to the highly controversial, “Two-Midnight Rule,” MedPAC recommended that Recovery Audit Contractor (RAC) audits be focused on hospitals with the highest inpatient stay rates. The RAC contingency fees should be adjusted to make them more accountable for claims denials, and the RAC look-back period and rebilling window should be better aligned. MedPAC recommended withdrawing the Two-Midnight Rule completely because it will eliminate RAC oversight of a large number of inpatient claims.

Eliminate beneficiary liability

In order to address issues of beneficiary liability for short hospital stays, legislators should revise the three-inpatient-day hospital eligibility requirements for SNF care coverage so as to allow up to two outpatient observation days to count toward the requirement. Acute care hospitals should also be required to timely notify beneficiaries that they are in observation status and that it may affect their financial responsibility.

Lastly, MedPAC suggested that Medicare should create severity diagnosis-related groups that are specifically designed for one-day hospital stays. Alternatively, Medicare could adopt a site neutral payment policy that makes payments equal for similar short inpatient and outpatient stays.

Highlight on Minnesota: Funding and coverage for many in jeopardy

Minnesota has a large backlog of renewals for Medical Assistance and MinnesotaCare, and 60,000 people stand to lose subsidized coverage if they do not submit more information. According to the state Department of Human Services (DHS), those who have received notices need to respond in 30 days. Assistant Commissioner Chuck Johnson stated that although the department wants to preserve coverage for those who are eligible, it needs to ensure that only the eligible non-responders are receiving coverage. An additional 120,000 people are in various stages of the process for renewing coverage.

MNsure, or unsure?

This large backlog is attributed to problems with MNsure, the state’s health insurance exchange, which handles renewals for Medicaid and MinnesotaCare. The technical problems were first announced in May, and 55,000 renewals were reportedly delayed. Specifically, MNsure had issues exchanging income information with a federal data hub. The hub checks both financial and immigration data. Due to these issues, the state has had a hard time collecting MinnesotaCare premiums and ensuring that citizens are meeting the proper qualifications for coverage. The exchange was created using $189 million in federal dollars, and the state received about $50 million in both state and federal Medicaid funding to improve the system. According to DHS, there were problems with both MNsure and the federal hub, and the problems with the hub have been resolved. Although the state has failed to send bills for premiums for 2015 coverage to 55,000 Minnesotans, DHS encourages enrollees to continue paying premiums.  The state hopes to handle all renewals by August 31, 2015.

These issues have prompted state Republican legislators to call for the establishment of a legislative oversight committee. Some have even discussed dumping MNsure and using the federal exchange instead. State Senator Tony Lourey believes that this wouldn’t solve the Medicaid and MinnesotatCare issues. Lourey also said that it is time for a meeting of an oversight committee, but that suggestions for fundamental changes should come from a task force already established for the job.

Mental health funding

Also on the line is coverage for mental health services for children. CMS had previously questioned Minnesota’s regulatory compliance for psychiatric residential treatment facilities (PRTFs). This statement expressed the possibility of cutting off federal financial participation (FFP) immediately. The state responded and asked CMS to allow DHS to maintain its current practices regarding mental health care, retroactive to 2001. The letter to CMS, signed by several state legislators, pointed out that Minnesota’s “services have been developed over many years to effectively meet the individual and unique needs of children, adolescents and their families in the state.” The efforts to protect the nearly $5 million in federal funding are led by Senator Al Franken (D) and Representative Erik Paulsen (R).

Federal Medicaid funding was originally excluded for institutions for mental diseases, which are facilities with over 16 beds. A later exception was established for enrollees under 21 years in larger settings, including PRTFs. HHS determines what settings qualify for the exception to the exclusion. With CMS input, Minnesota developed its rehabilitation model in 2001, which “allows for any medical service that has been recommended by a physician or other licensed practitioner for maximum reduction of a disability to be provided in a residential treatment center.”

The program in question is known as the Children’s Residential Bed program, which has 830 beds across the state. For federal funding purposes, a facility that has more than 50 percent of residents admitted for mental health reasons is considered a mental health institution, which cannot accept federal funds. Last year, providers raised concerns about participating facilities’ qualifications for federal funds, which prompted evaluation and inspection of the Children’s Residential Beds facilities that is currently ongoing. The state is urging CMS to stick by the state plan it originally approved and continue providing funding.

Satisfaction with Medicare, Medicaid going strong after 50 years

The majority of the public—and a vast majority of program beneficiaries—view the Medicare and Medicaid programs positively, according to a report by the Kaiser Family Foundation, and prefer the status quo over major changes to the programs that would dramatically alter the way beneficiaries are served. Despite the aversion to change, more than half of the survey’s respondents say that changes are needed to keep the Medicare program sustainable.


Medicare and Medicaid were created on July 30, 1965 by President Lyndon Johnson with the goal of providing health insurance coverage for the low-income, disabled, and elderly. Medicare, which provides coverage for Americans 65 and older regardless of income and those under 65 with permanent disabilities, and Medicaid, which provides coverage for medical care and long-term services to low-income individuals and is one of the primary ways coverage was expanded under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), cover a total of 111 million Americans at an estimated cost of $1,035 billion in 2015.


A large majority (77 percent) responded that Medicare is a very important government program, ranking similarly to federal aid to public schools (75 percent) and defense and the military (73 percent), but lower than Social Security (83 percent). Sixty percent of respondents said Medicare is working well for most seniors, with those who are covered by the program more likely to say so (75 percent for Medicare), and 91 percent of those currently covered reported positive experiences.

Seventy percent of respondents said that Medicare should continue to provide all seniors with the same defined set of benefits, and 26 percent said the program should guarantee each senior premium support, a fixed contribution to the cost of health insurance. However, 54 percent believe that Medicare will not be able to offer the same level of benefits to future enrollees, and 68 percent believe that changes are needed to keep Medicare sustainable.

According to the survey’s responses, the potential change to Medicare that would be most popular is allowing the federal government to negotiate with drug companies. Other popular changes are increasing Medicare premiums for wealthy seniors and reducing payments to Medicare Advantage Plans. Changes such as raising the age of eligibility from 65 to 67, raising premiums for all Medicare beneficiaries, and increasing cost-sharing for future Medicare beneficiaries were not as popular.


Sixty-three percent of respondents said that Medicaid is very important, ranking similarly to loans for college students (64 percent). Half of the survey’s respondents said that Medicaid is working well for most low-income people covered by the program, with 65 percent of those covered by Medicaid responding that it is working well. A large majority (86 percent) of those covered by Medicaid reported positive experiences. The public largely opposes changes to Medicaid that would change the program into a block grant to states, with 62 percent opposed.