Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.
Despite changes in the laws, some hospitals may have been receiving supplemental payments from states for uncompensated costs of care for uninsured and Medicaid patients—better known as disproportionate share hospital (DSH) payments—that was far higher than what they should be paid, according to a new General Accountability Office (GAO) report.
During the early 2000s, the Department of Health and Human Services' Office of the Inspector General (HHS OIG) reported significant overpayments to hospitals resulting from states not using accurate methods or data for calculating hospitals' DSH payment limits. Specifically, the OIG found that if states had updated hospital DSH payment limits with cost and payment data for the year the payments were made, the states' hospital DSH payment limits and DSH payments would have been significantly lower.
In 2003, Congress mandated improved accountability for DSH payments under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. In 2005, the Centers for Medicare and Medicaid Services issued a proposed rule in response to those DSH auditing and reporting requirements. However, this rule was not finalized until December 2008.
In the meantime, concerns had been raised about the accuracy of DSH payment limits—particularly if states were estimating limits using data that was not audited in an up-to-date fashion. GAO was asked to examine both how state DSH payments in 2006 compared to DSH payment limits, and how states' calculated 2006 DSH payment limits.
GAO looked at 682 hospitals in four states: California, Michigan, New York, and Texas. It found that DSH limits for 2006 were not calculated appropriately for 91 hospitals in California and 88 hospitals in Texas—specifically, that the states did not take into account all Medicaid payments the hospitals received. However, California, Michigan, and New York had processes to update their DSH payment limits to reflect actual costs and used data from sources subject to an audit for some hospitals.
GAO noted that California's experience alone indicates that implementing the requirements of CMS' 2008 final rule could have "a substantial effect on hospital-specific DSH payment limits" in the future. In 2006, the state reduced DSH payment limits for 22 hospitals by more than 49% after applying a methodology based on audited and updated data.
Although the 2008 DSH rule set a December 2009 deadline for states' 2005 and 2006 DSH audits and reports, CMS is providing states a transition period—through payment year 2010. According to CMS, the transition period was created because of concerns from states regarding budget cycles, planning complications, and the economic downturn. The transition period is intended to ensure states are not adversely affected, GAO said.
Hospital and provider groups are leveling criticism against the two long-awaited proposed regulations released last week by the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Improvement Technology to fund expansion of health information technology.
Hospitals have "serious concerns that the new health information technology rules severely limit hospitals' ability to access federal financing for health information technology that is used to improve patient care," American Hospital Association (AHA) Executive Vice President Rick Pollack said in a statement.
While moving toward broader adoption of electronic health records (EHRs) is "an important goal and helping hospitals, doctors, nurses, and other caregivers is essential in getting us there," widespread efforts toward adoption "will be hindered unless key provisions in these rules are addressed," he said.
In particular, AHA said that while the proposed definition of "meaningful use"—which was brought forward under the stimulus legislation, the American Recovery and Reinvestment Act of 2009—is "a worthy goal," the term "should be a destination point, not a starting point," Pollack said. "Only hospitals that are considered 'meaningful users' of EHRs can receive much needed financial assistance."
The intent behind the legislation was to "recognize the important efforts hospitals and physicians have undertaken to improve care and to stimulate greater use of health information technology and EHRs," he said.
But the rules released last week create a definition of "meaningful use" that doesn’t recognize efforts by hospitals in using clinical systems to reduce medication errors, track quality and outcomes measures, and collect basic patient health information, he added. Instead, the AHA is proposing that hospitals and physicians be rewarded for progress that already has been made toward adopting EHRs.
Meanwhile, the Medical Group Management Association (MGMA) said that the proposed rules are "overly complex and that medical groups will confront significant challenges trying to meet the program requirements."
"The Medicare and Medicaid incentive programs must be designed to facilitate the rapid deployment of health information technology," said MGMA President and CEO William Jessee, MD. He added that "burdensome requirements and needlessly complex administration" will discourage physician participation in the program and the implementation of EHRs.
In particular, the rules include many requirements that will create barriers to physician efforts to achieve the designation of meaningful use, including:
Meeting thresholds for some of the meaningful use criteria (i.e., computerized prescription order entry, electronic claim submission, and electronic insurance eligibility verification).
Addressing "potentially difficult" meaningful use attestations after the first year.
Meeting a requirement that physician offices provide patients and others with electronic copies of medical records.
While the CMS and ONC rules include "some flexibility," especially in the areas of escalating stages of meaningful use requirements and reasonable 90 day reporting windows, the government "should make additional changes to achieve widespread adoption by professionals in all types of clinical settings," Jessee said.
The American Medical Association (AMA) said it will carefully review the proposed rules on standards for EHR use and incentives and provide formal comments before the 60 day comment period ends.
AMA said it is looking at the importance of realistic timeframes for adoption and at the removal of “extraneous requirements that would delay successful adoption and reasonable reporting requirements," said AMA board member Steven Stack, MD. "We want physicians in all practice sizes and specialties to be able to take advantage of the stimulus incentives and adopt new technologies that can improve patient care and physician workflow."
