Fiscal Watch – April 17, 2024

In response to concerns voiced by WSHA and member hospitals to state agency staff about the ongoing impacts of the Change Healthcare cyber-attack, the Office of the Insurance Commissioner (OIC) released guidance to insurance carriers regarding expected carrier flexibilities until the issue is resolved.  OIC is monitoring Change Healthcare as part of its health care benefit manager (HCBM) oversight. WSHA is pleased with OIC’s response in providing this guidance. The guidance document includes:

• Prior Authorization: OIC affirmed that the Change Healthcare disruption qualifies as  an extenuating circumstance and carriers should review and process claims that are subject to prior authorization under their extenuating circumstances policy until Change Healthcare is operational or the carrier establishes an operational alternative prior authorization process.
• Timely claims billing: OIC urged carriers to waive timely filing requirements for impacted health care providers and hospitals. Some primary and secondary payors have requirements as short as sixty days, making it impossible for providers and hospitals to receive payment for impacted services.
• Medical claims clearinghouse services: Some carriers have been reported to be unwilling or unable to waive requirements that limit providers to Change Healthcare as the exclusive clearinghouse, leaving providers with no opportunity for claims submission and payment. OIC affirmed it expects carriers to authorize an alternative clearinghouse in an expedited manner for impacted providers.  

WSHA will continue it advocacy efforts and asks members to keep us informed of payment challenges related to disruptions to Change Healthcare. WSHA created and will continually update a resource page with links to updates from federal and state agencies and from individual health insurers. (Caitlin Safford, caitlins@wsha.org)

The Centers for Medicare & Medicaid Services (CMS) April 10 issued its hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) PPS proposed rule for fiscal year (FY) 2025.

WSHA is preparing a detailed summary of the proposed rule and hospital-specific impact analyses, which will be sent within the next few weeks to hospital chief financial officers and finance staff. CMS will accept comments on the proposed rule through June 10. WSHA plans to submit comments and share its draft with member hospitals in advance of the comment deadline.

The proposed rule includes a net 2.6% increase for inpatient PPS payments in FY 2025. This update reflects a hospital market basket increase of 3.0% as well as a productivity cut of 0.4%. WSHA plans to comment that payment update fails to account for inflation and persistent labor, supply and drug costs hospitals are experiencing.

The proposed rule increases net long-term care hospital payments by 1.6% in FY 2025, relative to FY 2024, including both standard rate payments and site-neutral payments.  The increase is again well short of increases to the cost of providing care.  

Other provisions in the proposed rule:

• TEAM model: CMS proposes a global payment initiative Transforming Episode Accountability Model (TEAM) for lower extremity joint replacement, surgical hip femur fracture treatment, spinal fusion, coronary artery bypass graft, and major bowel procedure. It is proposed as a mandatory 5-year model that would be effective 1/1/2026 if finalized in the rule this fall.  The proposal is similar to the previous Medicare joint replacement model and would make the treating hospital financially responsible for global costs, including rehabilitation incurred during the episode of care.
• Essential medicines: CMS is proposing a separate payment to small, independent prospective payment hospitals for establishing and maintaining access to a buffer stock of essential medicines. 
• Maternal health: In an effort to improve access to quality care during pregnancy, childbirth and postpartum, CMS is seeking public comment on potential solutions that can be implemented through the hospital Conditions of Participation. WSHA has concerns about addressing this issue through additional regulation rather than provision of funding and resources. CMS is also reviewing the MSDRG weights for OB services under Medicare, particularly since the same weights are often used by commercial plans. There is concern that given the low volume of obstetrical cases paid under Medicare, the MSDRG weights may not be reflective of costs of care for the broader population.
  (Andrew Busz, andrewb@wsha.org).