Highlight on Missouri: hospital challenges readmission formula, says socioeconomics should factor in

Missouri-based Christian Hospital is challenging the way that Medicare calculates penalties for hospital readmissions. With the backing of the Missouri Hospital Association, the hospital asserts that Medicare’s Hospital Readmissions Reduction Program (HRRP) does not adequately account for the socioeconomic status of the patients that a hospital treats. The hospital and the hospital association argue that the methodology unfairly penalizes safety-net hospitals.

HRRP

The HRRP, created by Section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), requires CMS to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions. CMS defines readmission as “an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.” CMS was obligated, under the program, to develop a formula to calculate an excessive readmission ratio based upon a national average of hospital performance. Medicare bases readmission penalties on the care of Medicare patients who were originally hospitalized for one of five conditions—heart attacks, heart failure, pneumonia, chronic lung problems, and elective hip or knee replacements. In 2015, the fourth year of the program, 2,592 hospitals were penalized due to high rates of readmissions. Overall, hospitals were penalized a total of $420 million last year.

Socioeconomics

Under current reimbursement rules, Christian Hospital is expecting to lose $600,000 in reimbursement due to what CMS deems “excessive readmissions.” However, the hospital believes the reimbursement penalty is improper because the formula used to derive the $600,000 figure does not factor in relevant socioeconomic disadvantages of certain patients. For example, the hospital believes that high numbers of patients with low-incomes, poor health habits, and chronic illnesses increased its readmission numbers. If CMS used readmission criteria that factored in those socioeconomic factors, Christian Hospital says its HRRP penalty would have been $140,000.

Missouri Hospital Association

The Missouri Hospital Association is putting its support behind Christian Hospital. The organization revamped its consumer-focused website, Focus on Hospitals, to include readmissions statistics that conform to the methodology Christian Hospital is asking CMS to use. The Focus on Hospitals website adjusts hospital readmission statistics in accordance with patients’ Medicaid status and neighborhood poverty rates. In support of its readmission statistic methodology, the hospital association says there is research that suggests “poverty and other community factors” increase the likelihood readmission to a hospital. The alternative data arises from a study commissioned by the Missouri Hospital Association. That study found that hospital readmission rates improved by between 44 and 88 percent when patients’ poverty levels were factored in.

Legislation

In addition to avoiding penalties, together with the Missouri Hospital Association, Christian Hospital is hoping that its efforts will lead to changes in Medicare law. Specifically, Christina Hospital is seeking the kind of change envisioned by a piece of legislation known as “The Helping Hospitals Improve Patient Care Act.” The bill would alter the way socioeconomic status is considered under the HRRP. Specifically, the legislation would require a transitional risk-adjustment methodology to serve as a proxy of socio-economic status until a more refined methodology can be developed.

Balance

The concerns over the methodology echo similar complaints that hospitals have made about Medicare’s five-star rating system. Whether the issue is readmissions or ratings, interests are in conflict—CMS struggles to find a way to incentivize quality care while hospitals worry that they may be unfairly punished or penalized for treating certain populations. From the perspective of Christian Hospital in Missouri, the current balance is unfavorable.  But the question isn’t whether someone should be held accountable for unnecessary readmissions. The question is whether the scales are tipped unfairly.

HHS provides funding for training small practices in Quality Payment Program

HHS will provide $20 million in funding that will be used to train Medicare clinicians in small practices on the Quality Payment Program. These funds will be primarily directed toward clinicians practicing in underserved areas, including rural areas and health professional shortage areas. This amount of funding will be provided annually for the next five years.

Quality Payment Program

The proposed Quality Payment Program would implement the changes created by Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which reformed clinician payment for serving Medicare patients. The proposal streamlined various value and quality programs into two paths. Under the program, physicians would be able to choose from the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (APMs) (see Physician reporting streamlined, less burdensome under flexible Quality Payment Program, Health Law Daily, April 28, 2016).

Under MIPS, physicians would submit information about four performance categories. Then, a composite performance score is generated and compared against a threshold. This threshold determines the payment adjustment. Under APMs, physicians would receive a lump sum payment that could grow annually.

Small practices

Secretary Burwell emphasized the administration’s commitment to providing resources to small and rural practices that will allow them to provide quality care. Organizations must show that they are able to provide training to individual clinicians or small group practices of no more than 15 clinicians to become eligible for funding. The training would include creating a strategy for Quality Payment Program participation, such as adding electronic health record (EHR) capability, joining an APM, and evaluating practice workflow.

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.

House passes bill to raise some off-campus hospital outpatient department rates

Some off-campus hospital outpatient departments (HOPDs) could be grandfathered into receiving outpatient payment rates under a piece of legislation passed by the House. The legislation—known as “The Helping Hospitals Improve Patient Care Act” (HHIPCA) (H.R. 5273)—would provide an exception to new off-campus HOPD payment rules for off-campus facilities that were “mid-build” when the Bipartisan Budget Act of 2015 (BBA) (P.L.114-74) was enacted. According to the Congressional Budget Office (CBO), the legislation, which also seeks to modify other Medicare payment rules, would increase direct spending by $50 million over the 2017 to 2021 period and decrease direct spending by $14 million over the 2017 to 2026 period.

HOPDs

The BBA’s HOPD payment rules require that Medicare pay for services furnished in new off-campus facilities as though those they were performed in an office or ambulatory surgical center. The new legislation would exempt mid-build HOPDs—facilities that were under construction on November 2, 2015—from the BBA rule and allow them to continue to receive outpatient rates at those facilities (see Lawmakers lend hospitals helping hand to improve patient care, Health Law Daily, May 19, 2016). The CBO estimates that the payment exception for mid-build HOPDs would be the most costly part of the legislation, increasing net Medicare spending by $750 million over the 2017-2026 period. The bill would also cut direct spending by $750 million over that same period by reducing the inpatient prospective payment system (IPPS) payment rate by 0.04 percent in fiscal year (FY) 2018.

Cancer hospitals

The legislation would also provide an exemption to the HOPD payment rules for cancer hospitals. Under the proposed law, cancer hospitals at new off-campus locations would continue to be paid at cancer hospital rates. The law would implement an attestation requirement for cancer hospitals seeking the higher payment rates and give HHS $2 million to audit those attestations. Overall, the CBO estimates, the cancer hospital provisions of the HHIPCA would increase direct spending by $20 million over the 2017 to 2021 period but have no net budgetary effect over the 2017 to 2026.

EHRs

The law would also exempt eligible professionals based in ambulatory surgical centers (ASCs) from punishment under the electronic health record (EHR) meaningful use program. The exemption from compliance with EHR standards would apply to payments made in calendar years 2017 and 2018 and continue with the Merit-Based Incentive Payment System (MIPS) beginning in 2019. The CBO estimates that the exemption would exempt approximately 2000 ASC-based professionals from penalties related to EHR use—penalties that the CBO expects to average about $3000 per professional. The CBO estimates that the EHR provision would increase direct spending by $17 million over the 2017 to 2026 period.