Medicare Archives

FFY 2024 IPPS Proposed Rule – Empirical DSH

May 15, 2023

On April 10, the Centers for Medicare & Medicaid Services (CMS) published the FFY 2024 IPPS Proposed Rule (effective for discharges on or after October 1, 2023).” Toyon is pleased to provide our summary of: Topic 4 – FFY 2024 IPPS Proposed Rule – Empirical DSH

Section 1115 Demonstration Days

Although not in the FFY 2024 IPPS Proposed Rule, earlier this year CMS proposed⁴ changes to regulations on the inclusion of certain Section 1115 demonstration days in the Medicaid fraction of the empirical DSH calculation. If adopted, CMS’s changes would be effective for discharges occurring on or after October 1, 2023 (FFY 2024).

CMS proposes allowable 1115 demonstration days include patient days from:

Patients who receive health insurance authorized by a section 1115 demonstration, or
Patients who buy health insurance with premium assistance provided to them under a section 1115 demonstration, where State expenditures to provide the health insurance or premium assistance is matched with funds from title XIX.

Section 1115 demonstration days are allowable whereby a patient is not entitled to Medicare Part A benefits and 1) their health insurance covers inpatient hospital services; or (2) premium assistance covers 100 percent of the premium cost to the patient, which the patient uses to buy health insurance that covers inpatient hospital services.

CMS also proposes that days are to be excluded for patients whose inpatient hospital costs are paid for with funds from an uncompensated/undercompensated care pool authorized by a Section 1115 demonstration. CMS states these patients are not regarded as “eligible for Medicaid.”

Capital DSH for Rural Reclassified Providers

Due to recent court decisions (Toledo Hospital v. Becerra, the U.S. District Court), CMS proposes DSH hospitals reclassified as rural under 42 CFR § 412.103 will be eligible to receive capital DSH payments. This proposal is effective for discharges on or after October 1, 2023 (FFY 2024).

Toyon’s Take

Providers are encouraged to review their respective State’s section 1115 demonstration program to determine if any cohort of beneficiaries meet CMS’s new proposed criteria for inclusion in the Medicaid fraction of the empirical DSH calculation. CMS notes the following seven states whereby patient days would qualify in the DSH calculation (as these states provide benefits that are 100% of the premium cost to the patients):

Arkansas
Massachusetts
Oklahoma
Rhode Island
Tennessee
Utah
Vermont

For more information, please contact Dylan Chinea at dylan.chinea@toyonassociates.com.

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⁴ Federal Register /Vol. 88, No. 39 /Tuesday, February 28, 2023 / Proposed Rules Medicare Program; Medicare Disproportionate Share Hospital (DSH) Payments: Counting Certain Days Associated With Section 1115 Demonstrations in the Medicaid Fraction (42 CFR Part 412).

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Comments are due to CMS by Friday, June 9 via https://www.regulations.gov/ (see instructions under the “submit a comment” tab and reference file code “CMS-1785-P”). Toyon will share our comment letter in the coming weeks.

FFY 2024 IPPS Proposed Rule – Safety Net Hospitals

May 15, 2023

On April 10, the Centers for Medicare & Medicaid Services (CMS) published the FFY 2024 IPPS Proposed Rule (effective for discharges on or after October 1, 2023).” Toyon is pleased to provide our summary of: Topic 5 – FFY 2024 IPPS Proposed Rule – Safety Net Hospitals

Request for Information on Safety-Net Hospitals

CMS is requesting providers respond to 17 questions concerning challenges faced by safety-net hospitals and potential approaches to help safety-net hospitals meet those challenges. CMS highlights the importance of identifying safety-net hospitals for policy purposes. Notably, CMS cites recent MedPAC recommendations to Congress⁵ to establish a hospital Medicare Safety-Net Index (MSNI) that measures the following three variables:

Medicare Low-Income Subsidy (LIS) Enrollment Ratio – Medicare dually eligible discharges (full or partial Medicaid benefits) + Part D LIS⁶ recipients. This population is then compared to the total number of Medicare inpatient discharges for the LIS ratio.
Ratio of Uncompensated Care Costs to Total Operating Revenue.
Medicare Share of Total Inpatient Days.

For FFY 2024, MedPAC recommends Congress should:

Begin a transition to redistribute empirical DSH and UC DSH payments through the MSNI.
Add $2 billion to the MSNI pool.
Scale fee-for-service MSNI payments in proportion to each hospital’s MSNI and distribute the funds through a percentage add-on to payments under the inpatient and outpatient prospective payment systems.
Pay commensurate MSNI amounts for services furnished to Medicare Advantage (MA) enrollees directly to hospitals and exclude them from MA benchmarks.

MedPAC’s report simulates a linear redistribution of DSH and UC DSH payments qualifying hospitals with a MSNI in the 10th percentile and above. MedPAC also considers using the 5th percentile as a qualifying threshold.

As a potential alternative, CMS also provides an “Area-level Index Approach,” based on recommendations from the Assistant Secretary for Planning and Evaluation (ASPE). The ASPE states the Area Deprivation Index (ADI) or the Social Deprivation Index (SDI) are “the best available choices when selecting an index for addressing health related social needs or social determinants of health.”

Toyon’s Take

Although MedPAC recommends CMS transition DSH (and UC DSH) payments in FFY 2024, it is very unlikely CMS will apply any changes for this upcoming federal year. Any significant changes to DSH methodologies and reimbursement would need to first go through a proper rule-making process. Toyon will continue to monitor this MedPAC recommendation and provide updates as more information is available.

For more information, please contact Fred Fisher at fred.fisher@toyonassociates.com.

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⁵MedPAC Report to Congress March 2023, MedPAC Report to Congress June 2022

⁶ Limited assets and an income below 150 percent of the Federal poverty level

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Comments are due to CMS by Friday, June 9 via https://www.regulations.gov/ (see instructions under the “submit a comment” tab and reference file code “CMS-1785-P”). Toyon will share our comment letter in the coming weeks.

FFY 2024 IPPS Proposed Rule – Graduate Medical Education (GME)

May 15, 2023

On April 10, the Centers for Medicare & Medicaid Services (CMS) published the FFY 2024 IPPS Proposed Rule (effective for discharges on or after October 1, 2023).” Toyon is pleased to provide our summary of: Topic 7 – FFY 2024 IPPS Proposed Rule – Graduate Medical Education (GME) for CYs 2010-2019

Medicare Advantage Allied Health Payments

In response to Section 4143 of the Consolidated Appropriations Act, 2023 (CAA, 2023), CMS published the recalculated Nursing and Allied Health Education Payment Pools for Medicare Advantage (MA) funding for calendar years 2010 through 2019 only (see Table 6 below). MACs are instructed to initiate the revised payments for hospitals’ eligible cost reporting years. The eligibility criteria include that 1) a hospital’s cost report is within the three-year reopening period as of 12/29/2022⁸ and 2) the Allied Health program(s) were in operation as of 12/29/2022. In addition, this change does not affect the percent reduction to MA GME funding (i.e., there are no changes to the DGME MA percent reduction amounts⁹). For CY 2020 and subsequent years, the MA Nursing and Allied Health Education Payment pool reverts back to the original $60 million.

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⁸ Transmittal 11904 – Implementation of Consolidated Appropriations Act (CAA) of 2023, Section 4143: Waiver of Cap on Annual Payments for Nursing and Allied Health Education Payments

⁹ As specified in Change Request (CR) 11642 for CYs 2010 through 2017, CR 11642 for CY 2018, and CR 12407 for CY 2019.

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Comments are due to CMS by Friday, June 9 via https://www.regulations.gov/ (see instructions under the “submit a comment” tab and reference file code “CMS-1785-P”). Toyon will share our comment letter in the coming weeks.

Category: Medicare

FFY 2024 IPPS Proposed Rule – Empirical DSH

FFY 2024 IPPS Proposed Rule – Safety Net Hospitals

FFY 2024 IPPS Proposed Rule – Graduate Medical Education (GME)

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