Fiscal Watch – August 14, 2024

The Centers for Medicare & Medicaid Services (CMS) Aug. 1 issued a final rule to increase Medicare inpatient prospective payment system rates by a net 2.9% in fiscal year 2025, compared with FY 2024. To be eligible for the full increase, hospitals must be meaningful users of electronic health records and submit quality measure data. This 2.9% payment update reflects a hospital market basket increase of 3.4% and a minus productivity cut of 0.5%.  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. 

Additionally, the agency finalized many of its proposed provisions in the new Transforming Episode Accountability Model (TEAM). This includes finalizing mandatory participation for inpatient PPS hospitals in certain areas, a model term of five years beginning Jan. 1, 2026, and including five different surgical episode categories. CMS did finalize a lower discount factor than proposed and a longer glidepath to downside risk for safety net hospitals. 

The net market basket increase is slightly higher than the 2.6% in the proposed rule but still far less than actual increases to the costs of providing care to Medicare patients. In its comments on the proposed rule, WSHA encouraged CMS to increase the market basket increase and reduce or eliminate the productivity reduction. WSHA also commented that the TEAM model should be voluntary rather than mandatory and significant changes, including a reduced discount factor were needed for the program to be workable for hospitals. Provisions of the final rule generally take effect Oct. 1. (Andrew Busz, andrewb@wsha.org)

The annual 340B hospital recertification period will run August 12 through September 9, 2024. 340B covered entities must annually recertify their eligibility to stay in the 340B Program and to continue purchasing covered outpatient drugs at discounted 340B prices. Hospitals that do not complete the recertification process will be removed from the 340B program.

Recertification is through the covered entity’s user account in the 340B Office of Pharmacy Affairs Information System (340B OPAIS). Changes to the Primary Contact (PC) or Authorizing Official (AO) can be made through the same site. The PC and AO for each covered entity should receive an email with information about the recertification process from the federal Health Resources and Services Administration. HRSA has recently provided a webinar on the recertification process. (Andrew Busz, andrewb@wsha.org)

A federal appeals court has upheld a lower court decision that struck down a key part of CMS instructions to Independent Dispute Resolution entities under the No Surprises Act. Under CMS’ framework, the independent entities would first consider the qualified payment amount, or QPA, which is determined by payers. The court affirmed that this required the independent entities to put greater weight on the QPA as a measure compared to other factors and unfairly favored payers.

In response to the ruling, the CMS has temporarily suspended the dispute resolution process, including the ability to initiate new disputes until CMS can issue revised instructions to conform to the ruling. 

As a reminder, Washington state’s Balanced Billing Protection Act (BBPA) dispute resolution process applies to state-regulated carriers (individual and small group) as well as self-funded groups that have elected to participate in the BBPA. The BBPA uses a “commercially reasonable” payment standard and median payment amounts established through the state’s all payer claims database for its dispute resolution process. Hospitals and providers may want to consider if some disputed out of network claims, including those for ERISA self-funded groups that may have elected to participate under the BBPA can be resolved through the state’s process rather than the federal  process. More information is on the OIC Website. (Andrew Busz, andrewb@wsha.org)