Tag: OIG

From: GAO Website – Released 11/18/14

Report Highlights Summary:

Results obtained from two selected private consumer transparency tools GAO reviewed—websites with health cost or quality information comparing different health care providers—show that some providers are paid thousands of dollars more than others for the same service in the same geographic area, regardless of the quality of such services. For example, the cost for maternity care at selected acute care hospitals in Boston, all of which rated highly on several quality indicators, ranged between $6,834 and $21,554 in July 2014.

Transparency tools are most effective if they provide information relevant to consumers and convey information in a way that consumers can readily understand. GAO identified key characteristics of effective transparency tools through a literature review and interviews with experts. The information that is most relevant to consumers relates directly to their personal circumstances, such as information on specific procedures they are considering, and allows them to make meaningful distinctions among providers based on their performance. Characteristics of such relevant information include describing key differences in quality of care and costs, particularly for what consumers are likely to pay out of pocket based on their specific circumstances. In addition, effective transparency tools must take specific steps to make the information they present understandable by consumers. For example, tools must enable consumers to discern patterns by summarizing related information and allowing consumers to customize information to focus on what is most relevant to them.

The Centers for Medicare & Medicaid Services (CMS) operates five transparency tools—Nursing Home Compare, Dialysis Facility Compare, Home Health Compare, Hospital Compare and Physician Compare—that are limited in their provision of relevant and understandable cost and quality information for consumers. In particular, GAO found that the tools lack relevant information on cost and provide limited information on key differences in quality of care, which hinders consumers’ ability to make meaningful distinctions among providers based on their performance. Because none of the tools contain information on patients’ out-of-pocket costs, they do not allow consumers to combine cost and quality information to assess the value of health care services or anticipate the cost of such services in advance. Additionally, GAO found substantial limitations in how the CMS tools present information, such as, in general, not using clear language and symbols, not summarizing and organizing information to highlight patterns, and not enabling consumers to customize how information is presented.

CMS, part of the Department of Health and Human Services (HHS), has taken some steps to expand access to cost and quality information for consumers, but has not established procedures or metrics to ensure the information it collects and reports meets consumer needs. Both HHS and CMS have set goals to report on measures that meet consumer needs. However, CMS’s process for developing and selecting cost and quality measures for its tools has been heavily influenced by the concerns of providers rather than consumers. Without procedures or metrics focusing on consumer needs, CMS cannot ensure that these efforts will produce cost and quality information that is relevant and understandable to consumers seeking to make meaningful distinctions.

Why GAO Did This Study

The cost and quality of health care services can vary significantly, with high cost not necessarily indicating high quality. As consumers pay for a growing proportion of their care, they have an increased need for cost and quality information before they receive care, so they can plan and make informed decisions. Transparency tools can provide such information to consumers and others.

GAO was asked to study cost and quality information for consumers. This report examines (1) information on cost and quality available to consumers from selected transparency tools, (2) characteristics of effective transparency tools, (3) limitations, if any, in the effectiveness of CMS transparency tools, and (4) CMS efforts to expand cost and quality information available through transparency tools. GAO analyzed information from two private tools—selected because they had both cost and quality information—and CMS’s five transparency tools, reviewed research to identify best practices for conveying information to consumers, interviewed CMS and HHS officials and subject matter expects, and reviewed CMS and HHS planning documents and relevant criteria for effective planning in the federal government.

What GAO Recommends

GAO recommends that HHS’s CMS take steps to improve the information in its transparency tools and develop procedures and metrics to ensure that tools address consumers’ needs. HHS concurred with the recommendations and provided technical comments that were incorporated as appropriate.

For more information, contact Linda T. Kohn at (202) 512-7114 or kohnl@gao.gov.

Click here to view full report.

Health Care Transparency: Actions Needed to Improve Cost and Quality Information for Consumers

From: Office of Inspector General – 10/7/14

OIG Summary:

WHY WE DID THIS STUDY 

The Critical Access Hospital (CAH) certification was created to ensure that rural beneficiaries would have access to hospital services. Medicare reimburses CAHs at 101 percent of their “reasonable costs,” rather than at the predetermined rates set by the Outpatient Prospective Payment System (OPPS). The system that Medicare uses to calculate outpatient coinsurance amounts for beneficiaries who receive services at CAHs differs from that used for beneficiaries who receive services at acute care hospitals. Beneficiaries who receive services at CAHs pay coinsurance amounts based on CAH charges, whereas beneficiaries who receive services at acute care hospitals pay coinsurance amounts based on OPPS rates. CAH charges are typically higher than the reasonable costs associated with CAH services or the OPPS rates that acute-care hospitals receive.

HOW WE DID THIS STUDY

We used 2009 and 2012 claims data to calculate the percentages and amounts of coinsurance that Medicare beneficiaries paid toward the costs for outpatient services at CAHs. Additionally, we calculated the percentages and amounts of coinsurance that beneficiaries would have paid at acute-care hospitals for 10 outpatient services that were frequently provided at CAHs.

WHAT WE FOUND

Because coinsurance amounts were based on charges, Medicare beneficiaries paid nearly half the costs for outpatient services at CAHs. In 2012, beneficiaries paid approximately $1.5 billion of the estimated $3.2 billion cost for CAH outpatient services. Additionally, the average percentage of costs that beneficiaries paid in coinsurance for these services increased 2 percentage points between 2009 and 2012. Finally, for 10 frequently provided outpatient services at CAHs, beneficiaries paid between 2 and 6 times the amount in coinsurance that they would have for the same services at acute-care hospitals.

WHAT WE RECOMMEND 

Because coinsurance amounts were based on charges, Medicare beneficiaries paid a higher percentage of the costs in coinsurance for outpatient services received at CAHs than they would have paid at hospitals under OPPS. Further, the percentage of costs that Medicare beneficiaries paid in coinsurance for outpatient services at CAHs has increased in recent years. To reduce the percentage of costs that Medicare beneficiaries pay in coinsurance, we recommend that the Centers for Medicare & Medicaid Services (CMS) seek legislative authority to modify how coinsurance is calculated for outpatient services received at CAHs. Some ways in which CMS could modify how coinsurance is calculated for such services include (1) computing coinsurance so that it is based on interim payment rates rather than charges and (2) processing claims for outpatient services at CAHs as if they were paid under OPPS for the purpose of calculating an OPPS equivalent coinsurance. CMS responded to the report, but neither concurred nor nonconcurred with our recommendation

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Medicare Beneficiaries Paid Nearly Half of the Costs for Outpatient Services at CAHs

From: HFMA Healthcare News – 8/15/13

Article Excerpt:

More than 800 rural hospitals could lose supplemental Medicare payments under proposals from a federal watchdog agency. The proposed changes alarmed hospital advocates, who urged caution to avoid serious impacts on rural providers. 

The Office of Inspector General (OIG) issued an Aug. 15 report urging the Centers for Medicare & Medicaid Services (CMS) to tighten access to Medicare’s critical access hospital (CAH) designation. The proposed restrictions could cut off 849, or 64 percent, of the 1,329 CAH designated facilities. 

Taking a Closer Look

The CAH program, which reimburses hospitals for 101 percent of their “reasonable inpatient and outpatient costs,” was created in 1997 in response to a wave of rural hospital closures. Hospitals could qualify only if they were rural and located 15 to 35 miles from another hospital. But governors had the discretion—up until 2006—to expand access to the program to more closely concentrated hospitals designated as a “necessary provider.”

At least 40 states have utilized the special designation to qualify more than 75 percent of CAH designated facilities, according to the OIG. And given the higher cost of CAH payments, officials at the watchdog agency think CMS should scrap the state-provided designation.

“Because the designation means increased spending for both Medicare and beneficiaries, we recommend that CMS periodically check if each critical access hospital still provides services that rural beneficiaries can’t easily get somewhere else, and therefore deserves the increased financial support from Medicare and beneficiaries,” Brian Jordan, an analyst at OIG, said in an agency podcast. “We also recommend that necessary providers be required to meet the distance requirement.”

For example, returning half of the hospitals with CAH designations to the traditional Medicare rates set by prospective payment systems and fee schedules would have saved $373 million in 2011, the OIG report estimated.

To keep all 849 hospitals from losing their CAH designation, the agency recommended that CMS create alternative eligibility criteria, such as locations with high poverty rates.

Legislation is needed to tighten access to the CAH program, wrote CMS Administrator Marilyn Tavenner. But CMS favored a more limited restriction eliminating CAH designations for hospitals within 10 miles of each other and cutting payments to 100 percent of costs, as proposed by President Barack Obama since 2011. Such changes would reduce the program’s cost by an estimated $1.4 billion over 10 years.

“The CMS believes this proposal preserves beneficiary access to care while promoting payment efficiency,” Tavenner wrote to the OIG.

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