Medicare Payment Reform Bill for Hospitals Moves to Senate
The House has approved a Medicare payment reform bill that would change reimbursement and penalty programs for HOPDs, hospitals with excessive readmissions, and rural hospitals.
By - The House of Representatives recently passed the Helping Hospitals Improve Patient Care Act, which proposes Medicare payment reform for off-campus hospital outpatient departments, hospitals with excessive readmissions, and rural hospitals.
The bill responds to criticisms from the healthcare community regarding the recent 2015 Bipartisan Budget Act, which intended to cut Medicare spending by modifying Medicare reimbursement models. Many industry groups voiced that specific hospitals could not operate under the lower payment structures in the legislation.
“This bipartisan legislation supports delivering high-quality, affordable care to families and seniors throughout the country,” said Representative Kevin Brady (R-TX), Chairman of House Ways and Means Committee in a public statement. “The commonsense, fiscally responsible solutions in this bill will make a real difference when it comes to improving and expanding care while also preserving and strengthening Medicare for the long term.”
A part of the approved act would modify Section 603 of the 2015 Bipartisan Budget Act by moving the grandfather date for developing off-campus hospital outpatient departments from November 2, 2015 to December 31, 2016, or 60 days after enactment.
Under the current legislation, eligible off-campus site projects that were completed by the November deadline are reimbursed at the hospital outpatient department rate and new facilities are paid under the lower Physician Fee Schedule Rate. The budget act was designed to provide site-neutral payments to off-campus facilities and reduce overall domestic spending.
In a letter to the House subcommittee, the American Hospital Association (AHA) argued that the legislation did not account for healthcare organizations that had already spent millions of dollars to build new hospital outpatient departments based on previous Medicare reimbursement amounts.
The Helping Hospitals Improve Patient Care Act responds to industry groups that argued the current legislation would negatively impact healthcare organizations. Although, the AHA reported that the new deadline still does not account for long completion times that accompany most construction projects.
Additionally, the proposed act would adjust readmissions penalties for hospitals based on socioeconomic and other social risk determinants.
The current Hospitals Readmissions Reduction Program decreases Medicare reimbursements for hospitals that experience excessive readmissions. These hospitals can receive up to a three percent reduction in payments if 30-day readmission rates are higher than expected for heart attack, heart failure, pneumonia, chronic obstructive pulmonary disease, and hip and knee replacement.
Through the new act, readmission penalties would be calculated using comparisons between hospitals with similar Medicare and Medicaid patient populations. The methodology would eventually become “more refined” based on federal analysis.
Some researchers have found that socioeconomic and demographic factors, such as income or access to community resources, influence hospital readmissions rates. One study revealed that 80 percent of disparities in patient outcomes and risk were caused by socioeconomic determinants and dual eligible patients experienced more readmissions.
The act is designed to factor in vulnerable patients and help hospitals improve patient care without facing hefty reimbursement penalties.
Rural hospitals would also see an extension of the Rural Community Hospital Demonstration Program under the proposed act. The program aims to help rural hospitals in sparsely-populated states maintain quality care under Medicare’s prospective payment system. While these healthcare facilities are too large to benefit from critical access status, many rural hospitals have struggled with Medicare’s prospective reimbursement program.
The act would extend the program, which is scheduled to terminate at the end of this year, for another five years.
“This program has become vital to participating hospitals and is providing valuable data on potential new models for these vulnerable hospitals,” stated the AHA in its letter last month.
Several industry groups have applauded the House subcommittee for passing the proposed changes to Medicare reimbursement programs.
According to a statement on their website, the National Coalition on Healthcare expressed support for the act, especially how it addresses “disproportionate and biased penalties against providers serving lower-income populations.”
The AHA also announced its support of the proposed bill’s provisions, which could help care facilities preserve quality care under new payment models.
“This legislation will help patients by mitigating some of the negative impact of the 2015 Budget Bill and will improve access to care,” said Rick Pollack, American Hospital Association’s (AHA) President and CEO, in a press release on its website. “It also will ease penalties experienced by hospitals and health systems who treat the most vulnerable patients.”
The Helping Hospitals Improve Patient Care Act will move to the Senate for another vote.
Dig Deeper:
• CMS Payment Reforms Mean Big Bucks for Medicare, Medicaid
• How to Reduce Wasteful Spending in the Medicare Program
