The proposed rule would adjust the wage index to improve care quality at rural hospitals and improve patient access to care.
The Centers for Medicare & Medicaid Services has proposed updates to the Inpatient Prospective Payment System and the Long-Term Care Hospital Prospective Payment System that would improve patient access care in rural settings.
Specifically, CMS is increasing the wage index for low-wage hospitals. The agency’s current wage index model disadvantages rural hospitals, which treat a complex and diverse patient panel and that need more financial support from CMS.
Currently, CMS uses a wage index to determine whether a hospital will receive a higher or lower Medicare payment. Hospitals that pay lower wages will receive a lower Medicare payment, while those that pay higher wages will receive a higher Medicare payment.
There are geographic disparities between the types of hospitals that receive these payments. Primarily, rural hospitals receive lower reimbursements from Medicare compared to urban or suburban hospitals.
This means that a rural, low-wage hospital could treat a pneumonia patient and receive $4,000 in Medicare reimbursement, while an urban, high-wage hospital would receive $6,000 for the same services.
In theory, CMS makes these payments because the lower-paying hospital does not need as much money from Medicare because it saves by paying lower wages.
But that logic doesn’t play out in practice, many industry stakeholders have told CMS. Rural hospitals pay their employees less because they do not initially have the Medicare payments that could enable higher wages. Conversely, urban hospitals receive enough in Medicare payments and can therefore afford higher wages.
This payment system considerably hinders rural healthcare organizations, which treat complex patient panels and that often struggle to make ends meet, according to CMS Administrator Seema Verma.
“One in five Americans are living in rural areas and the hospitals that serve them are the backbone of our nation’s healthcare system,” Verma explained in a statement.
“Rural Americans face many obstacles as the result of our fragmented healthcare system, including living in communities with disproportionally higher poverty rates, more chronic conditions, and more uninsured or underinsured individuals,” the continued. “The Trump Administration is committed to addressing inequities in health care, which is why we are proposing historic Medicare payment changes that will help bring stability to rural hospitals and improve patients’ access to quality healthcare.”
Adjusting the wage index for low wage hospitals will ideally result in larger Medicare reimbursements for rural healthcare organizations, CMS stated. The agency does not currently have a plan for how it will increase the wage index but it is accepting public comments on the matter.
CMS also proposed Medicare reimbursement changes that would increase patient access to care that involves innovative technologies.
“Transformative technologies are coming to the private market, but Medicare’s antiquated payment systems have not contemplated these technologies,” Verma stated. “I am particularly concerned about cases that have been reported to the agency in which Medicare’s inadequate payment has led hospitals to curtail access to needed therapies. We must continually update our policies in response to the rapid pace of advancement in medical science.”
CMS proposed to increase the technology add-on payment, which would provide greater reimbursements for providers treating patients using sophisticated or innovative technologies. This payment increase will apply to all treatments leveraging technology starting on October 1 of this year.
The agency has also proposed change in how it pays for therapies using medical technology that meets the FDA Breakthrough Devices designation, such as CAR-T gene therapy. This will help healthcare organizations that are using CAR-T therapy for cancer care as CMS continues its work to ensure these types of medical innovations are paid for adequately.
Date: April 26, 2019