Promises of Improvements Met with Skepticism as CMS Issues New Rules

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Original story posted on: August 21, 2019

The CMS Administrator could have chosen a better example to highlight plans for lower costs during recent remarks.

With the release of the 2020 Inpatient Prospective Payment System (IPPS) Final Rule and the 2020 Outpatient Prospective Payment System (OPPS) and Medicare Physician Fee Schedule rules, Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma was quite active last week, providing some introductory comments for the listening session CMS held on the OPPS while stressing CMS’s commitment to lower costs for beneficiaries.

She went on to discuss how CMS is proposing to allow more surgeries at surgery centers as an example. But unfortunately, that was a bad choice to illustrate the agency’s goals, since the same service at a surgery center may actually cost a patient significantly more than if it were performed at the hospital.

Why is that?

“Well, let’s look at total knee replacement,” Ronald Hirsch, MD, told Monitor Mondays listeners recently. “If a patient has the surgery at the hospital, either as inpatient or outpatient, their out-of-pocket cost would be limited to $1,364, which is the Part A deductible.”

But, as Hirsch pointed out, “there is no such limit on surgery center out-of-pocket costs, so based on the proposed ASC (Ambulatory Surgical Center) rate of $8,640, the patient would owe (far) more.”

Hirsch said he submitted a comment asking CMS to require that surgery centers inform their patients in writing that their out-of-pocket costs may be higher so they can make an informed choice – and he urges you to do the same.

According to Hirsch, the majority of the comments during the call centered on the price transparency proposal. Hirsch encouraged listeners to read Duane Abbey’s RACmonitor article published last week, in which he described the present situation as “really a mess.”

“The CMS requirement is to post negotiated charges, but as was pointed out (in the Abbey article), hospitals do not negotiate charges, they negotiate payment,” Hirsch explained. “In fact, part of that negotiation is that the hospital will continue to charge their usual high charges, and the insurer’s system will adjust them down to the negotiated payment rate.”

Taken very literally, as Hirsch explained, the new proposal simply requires the posting of chargemaster prices, which clearly was not CMS’s intent. It will be interesting to see how CMS cleans this up.

Hirsch also noted during the call that there was brief mention of the proposal to remove total hip arthroplasty from the inpatient-only list, and a CMS representative referred to the option to admit the patient if they met the two-midnight benchmark.

“You can all imagine, I screamed at my phone, but it did no good, so I sent in another comment reminding CMS that there is more to the two-midnight rule than the two-midnight benchmark,” Hirsch said. “That’s all we need is the QIOs (Quality Improvement Organizations) to hear that.” 

Hirsch reminded listeners that the CMS payment system has many edits that will automatically reject a claim it interprets as medically unlikely. For example, if a patient had a hysterectomy in the past and a new claim is submitted for another hysterectomy, the claim will be rejected.

“Well, CMS has an edit for maternity,” Hirsch explained. “They don’t pay a lot of these claims, but there are some. And they are proposing to change that edit to allow maternity claims for patients age 9 to 64, from ages 12 to 55. I don’t know what this says about us, but I am not sure I like it.”

Programming Note:
Listen to Ronald Hirsch, MD, every Monday, 10-10:30 a.m. EST, on Monitor Mondays.

Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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