What else we’re watching
Stakeholders should also pay attention to the following issues.
Traditional Medicare: Fee-for service
Don’t ignore traditional Medicare FFS regardless of the shift to Medicare-managed care. Over the next few years, providers can expect significant changes to traditional Medicare payment rates, refinements refocusing current reimbursement payments, and additional financial reporting requirements that could challenge hospitals to capture all available reimbursement.
Based on recent proposals, MedPAC recommendations, and the state of hospital financing, Medicare Disproportionate Share Hospitals (DSH) payments and wage index reporting may receive additional attention from policymakers.
Social determinants of health
The financial impact of SDOH measures is becoming more significant in Medicare FFS as well.
For example, under the 2024 proposed IPPS rule, CMS is proposing to change the severity designation of ICD-10 diagnosis codes indicating a patient is homeless to complication or comorbidity, recognizing greater resource use for this population, and resulting in increased claims payment.
Further, health equity measures will be introduced into the VBC payment determinations. Gathering SDOH data is challenging, and hospitals should develop the supporting infrastructure, as this is likely to increase in number of metrics and financial impact in the coming years.
With the influx of these changes, ensure you have people to keep track of the many moving pieces and break through departmental silos.
Site neutral payments
While more care continues to shift from the inpatient settings to outpatient settings and ambulatory facilities, Congress and CMS continue to review proposals that move toward site-neutrality payment methodologies for outpatient services.
The overall impact could mean significant reduction to hospital Medicare reimbursement. Hospitals should consider these potential changes in their long-term strategic planning.
Medicare cost reporting
More complexity has also been introduced in Medicare cost reporting recently, a trend likely to continue as the focus remains on transparency. CMS released updates over the past months that greatly expand upon current reporting requirements and require immediate focus to ensure providers can report appropriately.
Acute care hospitals will face additional reporting requirements starting as early as next year that could impact reimbursement in a number of areas, including Medicare bad debts, Medicare DSH, Medicare DSH uncompensated care, and organ transplant reimbursement.
Medicaid reimbursement
While CMS evaluates reimbursement for safety net hospitals and the care for underserved populations within the Medicare program, state Medicaid programs have also made these areas a priority.
The potential is there for alignment between the two programs. One potential change could involve Medicaid Disproportionate Share payments, which have been at risk since the passage of the Affordable Care Act. The deep cuts outlined in the legislation have been postponed, but not eliminated.
Current DSH hospitals should consider the potential for the reduction or even elimination of these funds in the future, while also staying abreast of other potential hospital financing opportunities available for providers addressing underserved populations.
Medicaid supplemental payments
Other Medicaid supplemental payments are already addressing health equity issues in some states. Medicaid provider fee programs have introduced millions of dollars in additional reimbursement to supplement Medicaid payments.
Yet, in recent years, CMS has increased scrutiny of these programs, and the result has been uncertainty, reduced payments, and additional complexity. The underlying data used to determine payments in these programs has routinely been found incorrect or incomplete.
Providers need to understand what drives these payments, identify ability to obtain additional reimbursement dollars within these programs, and ensure the data being collected is complete.
Prepare for changes from commercial payers
Implementation of the No surprises act and price transparency is driving significant change in the dynamic between payers and providers. Because payment rate information is now publicly available, payers can benchmark their current rates against the lowest rates for a given provider, with the potential to create a race to the bottom for providers.
Because the No Surprises Act protects patients when seeing out-of-network providers, payers are much more prepared to terminate contracts than they were previously, with network adequacy requirements one of the few sticks left to encourage payers to negotiate rates that allow providers to offset losses on providing care to uninsured, Medicaid, and Medicare patients.
Providers are approaching negotiations cautiously after enforcement actions from state attorneys general (AGs) and the Federal Trade Commission (FTC) as well as private lawsuits.
The landmark $575 million 2019 California AG settlement with Sutter Health put restrictions on their ability to negotiate with payers. More recently, four hospital mergers were blocked by the FTC because they could increase commercial reimbursement rates for those hospitals.
