The Centers for Medicare & Medicaid Services (CMS) recently released a few Fact Sheets on how they anticipate funding changes on a few of their programs that were implemented (or sustained) under the Affordable Care Act. As a background, CMS pays most acute-care hospitals by prospectively determining payment based on a patient’s diagnosis and the severity of illness within that diagnosis (e.g. “MS-DRG”). These payment amounts are updated annually after evaluating several factors, including the costs associated with the delivery of care.
One of the most major changes described in the Fact Sheet that will affect hospitalists is how CMS will review inpatient stays based on the number of nights in the hospital. CMS has proposed that any patient who stays in the hospital for two or more “midnights” should be appropriate for payment under Medicare Part A. For those who stay in the hospital for only one (or zero) midnights, payment under Medicare Part A will only be appropriate if:
- There is sufficient documentation at the time of admission that the anticipated length of stay is two or more nights; and.
- Further documentation that circumstances changed, and the hospital stay ended prematurely because of those changes.
Overall for hospitalists, this should substantially simplify the admitting process, whereby most inpatients being admitted with the anticipation of two or more nights should qualify for an inpatient stay. This also reduces the administrative burden of correcting the “inpatient” versus “observation” designation, which keeps many hospital staffs entirely too busy. This change also should relieve a significant burden from the patients and their families, who if kept in observation for a period of time, may have to pay substantially out of pocket to make up for the difference between the cost of the stay and the reimbursement from CMS for observation status. So this is one of the moves that CMS is making to simplify (and not complicate) an already too-complicated payment system. This should go into effect October 2013 and will be a sigh of much relief from many of us.
A few other anticipated changes that will affect hospitalists include:
Payments for Unfunded Care
Another major change that will go into affect October 2013 is the amount of monies received by hospitals that care for unfunded patients. These payments historically have been made to “Disproportionate Share Hospitals” (DSH), which are hospitals that care for a higher percentage of unfunded patients. Under the Affordable Care Act, only 25% of these payments will be distributed to DSH hospitals; the remaining 75% will be reduced based on the number of uninsured in the U.S., then redistributed to DSH hospitals based on their portion of uninsured care delivered.
Most DSH hospitals should expect a decrease in DSH payments, the amount of which will depend on their share of unfunded patients.
Any reduction in the “bottom line” to the hospital can affect hospitalists, especially those who are directly employed by the hospital.
CMS has long had the Hospital-Acquired Condition (HAC) program in effect, which has the ability to reduce the amount of payment for inpatients who acquire a HAC during their hospital stay. Starting in October 2014, CMS will impose additional financial penalties for hospitals with high HAC rates.
Specifically, those hospitals in the highest 25th percentile of HAC rates will be penalized 1% of their overall CMS payments. Another proposed change is that the following be included in the HAC reduction plan (two “domains” of measures):