News briefs September 2020: Trends in hospital volumes and margins, and other forces shaping healthcare finance

OPPS proposed rule would eliminate inpatient-only list of procedures

Medicare has proposed to eliminate the list of procedures that providers are required to perform in inpatient hospital settings and instead allow those services to be performed on an outpatient basis. 

Eliminating the inpatient-only (IPO) list over three years, as outlined in the outpatient prospective payment system (OPPS) proposed rule for CY21, would give clinicians the option to perform 1,700 more types of procedures in the hospital outpatient setting.

The phased-in elimination would start in 2021, allowing outpatient procedures for about 300 musculoskeletal services, such as certain joint replacement procedures.

CMS would boost OPPS payment rates by 2.6% for 2021, representing a $7.5 billion increase.

The proposed rule also would allow ambulatory surgical centers (ASCs) to perform 11 more procedures, including total hip arthroplasty, that previously were limited to hospital settings but weren’t on the IPO list. Those would add to 28 procedures that Medicare has made ASC-eligible since 2018. 

Senate’s COVID-19 bill disappoints hospitals

Hospital finances would remain imperiled if a new Senate COVID-19 relief package is enacted, hospital advocates said.

A package of bills, collectively known as the HEALS Act, was introduced in July by Senate Republicans. The bills follow House Democrats’ passage in May along party lines of a very different COVID-19 relief package and portend extended negotiations to reach a compromise.

Hospital advocates, having called for as much as $100 billion in additional funding for the provider fund, responded that the financing provisions were insufficient.

Major finance provisions of the healthcare bills that constitute the HEALS Act:

• Adding $25 billion to the Provider Relief Fund, bringing the total allocation to $200 billion
• Easing some requirements of the Medicare Accelerated and Advance Payment Program
• Extending Medicare telehealth waivers until Dec. 31, 2021
• Extending telehealth flexibilities for rural health clinics and federally qualified health centers for five years after termination of the public health emergency
• Allocating $225 million for rural health clinics
• Allocating $7.6 billion for community health centers 

Hospitals decry court decision upholding 340B cuts

After an appeals court recently upheld Trump administration payment cuts to the 340B discount drug program, hospitals worried about the effects of the lost revenue.

On July 31, the U.S. Court of Appeals for the District of Columbia reversed a lower-court decision in The American Hospital Association, et al v. Azar by a 2-1 ruling, allowing nearly 30% cuts to the 340B drug discount program to continue.

The decision revolves around a 2017 policy change to the program, which requires drugmakers to provide discounted drugs to safety net hospitals in exchange for participating in Medicaid. Qualifying 340B hospitals generally pay between 20% and 50% less than the average sales price for the covered drugs but are then paid the full price by health plans.

The U.S. Department of Health and Human Services (HHS) amended the program by cutting Medicare outpatient drug payments to 340B hospitals by 28.5%, seeking to close a gap between those prices and Medicare Part B payments.

The majority’s ruling that the changes were legal because they were not “unambiguously barred” by the statute sets a new standard that will allow further HHS payment changes to fit unrelated policy goals, as CMS has done thus far, said Andrew Ruskin, JD, a partner at K&L Gates.

Ruskin said site-neutrality policy changes, which were upheld recently in court, were driven by CMS’s general concerns about physician practice acquisitions. Likewise, the 340B policy changes were driven, in part, by a desire to reduce the cost of drugs. Although such a goal is politically popular, there is little reason to believe the payment change has that effect. Regardless, policy decisions shouldn’t drive payment decisions, he said. 

The appeals court decision “is essentially delivering a body blow against the payment system that Congress thought through very carefully and which CMS participated in,” Ruskin says. 

Trump administration extends public health emergency to October

Following weeks of requests from hospitals and other healthcare providers, the Trump administration in July extended the federal public health emergency to Oct. 23.

The 90-day extension of the emergency, first implemented Jan. 31, stemmed from “the continued consequences of [the] Coronavirus Disease 2019 (COVID-19) pandemic,” Alex Azar, secretary of the U.S. Department of Health and Human Services, wrote in the declaration announcement. 

The renewed public health emergency period started July 25 and followed a first renewal on April 21.

“Given the increasing caseloads facing hospitals in many parts of the country and the need for social distancing everywhere, providers need the flexibility from onerous regulations afforded to them by CMS’s various waivers, payment provisions as a result of the CARES Act, and the ability to use HHS’s Provider Relief Fund grants to cover increased expenses and lost revenue related to COVID-19,” said Chad Mulvany, FHFMA, director of healthcare finance policy, strategy and development, with HFMA. 

Hospital groups urge court rejection of ‘unlawful’ charge transparency rule

A growing number of hospital groups urged an appeals court to reject a looming requirement for their members to publicly post, starting Jan. 1, the charges they privately negotiate with health plans.

Hospitals and national advocacy groups are appealing a June 23 federal district court decision in The American Hospital Association, et al. v. Azar to allow a January start of new requirements for hospitals to post negotiated charges.

The plaintiffs were recently joined through amicus briefs by other hospital groups, including state hospital associations and HFMA.

Although the groups supported providing patients with clear price information, they objected that the Trump administration lacked the legal authority to issue the specific transparency approach in question.

Previously, 37 state hospital associations filed a friend-of-the-court brief at the district- 
court level during the initial case. The new filing followed increased attention and scrutiny of the transparency requirements as the start date approaches.

The looming requirements also took on increased importance as Medicare moved to build on them with recently issued additional requirements as part of the FY21 Inpatient Prospective Payment System proposed rule. 

Elective surgery volume near normal in late July, analysis finds

Elective procedures returned to their January volumes by late July, despite a recent resurgence of COVID-19 cases that led to some voluntary and involuntary suspensions of such procedures, according to a national analysis.

By July 20, scheduled surgeries for about 1,500 surgeons reached about the same number that were scheduled in January, before the pandemic, according to data provided exclusively to HFMA by surgical scheduling company Surgimate.

Surgery cancellation and rescheduling rates fell from 88% in April to pre-COVID-19 type rates of about 28% in late July. Cancellation rates fell to 46% in May and 35% in June as states lifted bans on elective procedures.

Recent data examined by Fitch Ratings showed hospital admissions and surgery volumes returned to 89% of pre-COVID-19 levels in states that opened back up following the first wave.

A similar volume recovery in elective surgeries was seen in some ambulatory surgery centers (ASCs), Bill Prentice, CEO of the Ambulatory Surgery Center Association, said.

New infection-control measures are still limiting volumes at some ASCs, Prentice said.

Some southern and western states affected by the latest spike in COVID-19 cases have sought to reimpose elective surgery restrictions, including four in July.