Posts Tagged ‘CMS’

Reporter: Aviva Lev-Ari, PhD, RN


Medicare Reveals Hospital Charge Information

By David Pittman, Washington Correspondent, MedPage Today

Published: May 08, 2013


WASHINGTON — The Obama administration made public on Wednesday previously unpublished hospital charges for the 100 most common inpatient treatments in 2011, saying a similar release of physician data is on the horizon.

The massive data file reveals wide variation in charges for these 100 services listed in hospitals’ “chargemasters” — industry jargon for what hospitals charge. The data set represents added transparency the administration hopes will influence consumer behavior.

“Making this available for free for the first time will save consumers money by arming them with information that can help them make better choices,” Health and Human Services Secretary Kathleen Sebelius said in a call with reporters Wednesday.

The data only include inpatient hospital services, but when asked about physician fees and other inpatient services, a top Centers for Medicare & Medicaid Services (CMS) official said those data could come later as the agency expands its price transparency initiative.

“We don’t have a set timetable for expansion for this data release,” Jonathan Blum, PhD, acting principal deputy administrator at CMS, said on the same call as Sebelius. “I think it is fair to say we intend to build upon this data release.”

Blum said multiple times in his call with reporters that CMS will study the impact this information has on consumer behavior and what value the public places on it.

Journalist Steven Brill — who wrote a March 4 Time magazine cover story on healthcare-pricing practices largely credited for CMS’ action Wednesday — said in a blog that Sebelius and CMS should next focus on outpatient services.

“The Feds need to publish chargemaster and Medicare pricing for the most frequent outpatient procedures and diagnostic tests at clinics — two huge profit venues in the medical world,” Brill wrote. “This will be harder — the government doesn’t collect that data as comprehensively — but those outpatient centers and clinics provide a huge portion of American medical care.”

A quick scan of the hospital data released Wednesday reveals wide variation for the same procedure in the same town.

For example, St. Dominic Hospital in Jackson, Miss., charged nearly $26,000 to implant a pacemaker while the University of Mississippi Medical Center across town charged more than $57,000 for the same procedure.

In Washington, the George Washington University Hospital charged nearly $69,000 for a lower-leg joint replacement without major complications. That same procedure cost just under $30,000 at Sibley Memorial Hospital — a nonprofit community hospital 5 miles away.

A joint replacement ranged from $5,300 at a hospital in Ada, Okla., to $223,000 at a hospital in Monterey Park, Calif., CMS said.

“Hospitals that charge two or three times the going rate rightfully face greater scrutiny,” Sebelius said.

Said Blum, “We’re really trying to help elevate the conversation and continue the conversation and to ask questions why there is so much variation.”

Common explanations for the varying costs — patients’ health status, hospital payer mix, teaching status — don’t seem accurate or clear from data CMS released, Blum said, adding that making such information public will help researchers, consumers, and others better ask questions and engage in debate over costs.

Opponents to such transparency note that chargemaster prices are irrelevant to most patients. Private insurance companies and Medicare negotiate their own prices with hospitals.

Instead, it’s only the uninsured who face the prices on the chargemaster.

“Most perniciously, uninsured people are the ones who usually pay the highest prices for their hospital care,” Ron Pollack, executive director of the liberal patient rights group Families USA here,said in a statement. “It is absurd – and, indeed, unconscionable – that the people least capable of paying for their hospital care bear the largest, and often unaffordable, cost burdens.”

The American Hospital Association (AHA) said healthcare’s “charge” system is a matter of financing that urgently needs updating.

“The complex and bewildering interplay among ‘charges,’ ‘rates,’ ‘bills’ and ‘payments’ across dozens of payers, public and private, does not serve any stakeholder well, including hospitals,”AHA president and chief executive Rich Umbdenstock said in a statement. “This is especially true when what is most important to a patient is knowing what his or her financial responsibility will be.”

The Federation of American Hospitals declined to comment.


David Pittman


David Pittman is MedPage Today’s Washington Correspondent, following the intersection of policy and healthcare. He covers Congress, FDA, and other health agencies in Washington, as well as major healthcare events. David holds bachelors’ degrees in journalism and chemistry from the University of Georgia and previously worked at the Amarillo Globe-News in Texas,Chemical & Engineering News and most recently FDAnews.


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Reporter: Alan F. Kaul, Pharm.D., M.S., M.B.A., FCCP


Centers for Medicare and Medicaid (CMS) Targets Hospital Readmissions – Update on Practices and Policy


An earlier post on June 8, 2012 in Pharmaceutical Intelligence presented an overview of the Hospital Readmissions Reduction Program (HRRP) and its requirement to reduce payments under the Inpatient Prospective Payment System (IPPS) to hospitals reporting excess readmissions commencing with discharges on October 1, 2012.  As CMS moved forward with HRRP, hospitals readiness for population based accountable care seemed questionable based on a 34 percent survey response or 1,672 hospitals.



According to Medicare Payment Advisory Commission (MedPAC) report, approximately two-thirds of hospitals will be penalized (capped at 1 percent) for above average readmissions commencing October 1, 2012. This penalty will escalate to 2% in 2014 and 3 percent in 2015.  Looking at the hospital readmission measures for Acute Myocardial Infarction (AMI), Heart Failure (HF), and Pneumonia (PN), this penalty will average $125,000 per hospital. Overall, the CMS payment to all hospitals will be reduced by 0.24 percent.  A preliminary analysis indicated little variation by hospital type (i.e., urban, rural, teaching, non-teaching, profit, non-profit).


MedPAC pointed out several long-term issues with the readmission reduction program including:


  • Computing the penalty multiple – Penalty increases as readmission rate decreases and the penalty multiplier differs for each condition. Solutions could include using a fixed multiplier, using all-condition readmissions, and eliminating the multiplier and setting a lower target readmission rate to maintain budget neutrality
  • Random variation and small number of observations – Solutions could include using all-condition readmissions, using more than the 3 years of data currently used, and allowing hospitals to aggregate performance within a system for penalty purposed while continuing to report individual hospital performance
  • Unrelated and planned readmissions – Solutions could include switching to a-condition measures that have exceptions for planned and unrelated readmissions such as the Yale all condition model or the 3M all-condition model.
  • Socio-economic status and risk-reduction- Possible situations may include allow current incentives to close the gap, comparing hospitals against similar hospitals to compute the penalty, and providing financial assistance to hospitals with a disproportionate share of low-income patients


Moving forward in refining the policy several objectives were noted: maintaining or increasing average hospitals’ incentive to reduce readmissions; increasing the share of hospitals with an incentive to reduce readmissions; making any penalty a consistent multiple of the cost of readmissions; being at least budget neutral to current policy, with a preference for lower readmission rates rather than higher penalties. Any policy refinements will require a change in law and must proceed carefully.

http://www.medpac.gov/transcripts/readmissions Sept 12 presentation.pdf


On October 3, 2012, CMS issues a notice indicating that errors were discovered in its initial calculation for readmissions penalties under the Inpatient Prospective Payment Systems (IPPS) that went into effect the beginning of October. The revisions were in part to implement capital and operating related costs to acute care hospitals arising from CMS’s continued experience with the systems. Also updated were payment policies and rate of increase limits for certain hospitals excluded from IPPS and paid under Medicare’s Prospective Payment System such as Long Term Acute Care Hospitals (LTACHs).


Based on a Kaiser analysis of the miscalculation, 1,422 hospitals will lose more and 55 hospitals will lose less than originally projected. The changes were tiny averaging 0.002 percent of a hospital’s regular Medicare reimbursement. A total of 2,217 hospitals are being punished in the first year of the program which began on October 1, 2012. Of those punished, 307 (14%) will be penalized the maximum 1% of their regular Medicare reimbursement.





As reported in the Napa Valley Register on October 14, 2012, variations in local practices patterns are already being noticed. For example in Napa Valley, Queen of Valley Medical Center has a 18 percent readmission rate, St. Helena Hospital a 13 percent readmission rate, and Kaiser Permanente Vallejo Medical Center a 7 percent readmission rate. Local hospital officials are claiming that reduced readmissions incorrectly assumes better care and that not making exceptions for unavoidable readmissions are policy flaws.  While officials at Kaiser Permanente of Northern California indicated that they had no concerns about the policy change because “it promotes co-ordianation of care, individuals at Queen of Valley Medical Center and St Helena’s Hospital expressed a variety of concerns from the fragile natur of patients in certain of the included diagnoses and the 30-day time fram to evaluate readmissions.  Moving forward to lower readmission rates at Queen and St. Helena indicated that they will pay more attention as patients are discharged from the hospitals during transitions of care, Professionals will coach patients in self-management through home visits and phone-calls after they have been discharged from the hospital.










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Reporter: Alan F. Kaul, PharmD. MS. MBA, FCCP

As a part of the Accountable Care Act (ACA) added to the Social Security Act, CMS under the Hospital Readmissions Reduction Program (HRRP) is required to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals reporting excess readmissions commencing with discharges on October 1, 2012.

In the FY2012 IPPS final rule, readmission measures for Acute Myocardial Infarction (AMI), Heart Failure (HF), and Pneumonia (PN) and the calculated excess readmission ratio will be used, in part, to calculate the readmission payment adjustment under the HRRP. CMS using risk adjustment endorsed by the National Quality Forum (NQF) and adjustments for clinically relevant factors such as patient comorbidity, frailty, and demographics will use a national dataset to compare to each hospital’s set of patients. CMS will look-back at three years worth of each hospital’s discharges and a minimum of 25 cases to calculate a hospital’s excess readmission rate for each condition. Beginning FY 2013, each excess readmission ratio will look at discharges occurring from July 1, 2008 through June 30, 2011.

In its FY2013 proposed rules making cycle, CMS proposed to continue the process and which hospitals will be subject to the HRRP, the methodologies used in its calculations, and a process for hospitals to review the information and submit proposed corrections before the information is publically released.

While CMS moves forward with its HRRP, hospitals readiness for population-base accountable care is questionable. A national survey of all hospitals was undertaken in 2011 to assess the current state of hospital readiness in the development of Accountable Care Organizations (ACOs). There were 1,672 responses to the survey or a 34% response rate. Several major themes were identified such as:

1. Only a small percentage of hospitals (3%) participate in ACOs and only 10% were preparing to do so.
2. Hospitals expect their revenue sources fro risk-based financial reimbursement to double from 9% to 18% over the next two years.
3. Most hospitals were engaged in numerous care co-ordination methods, though there was variation in specific practices.
4. There are several perceived barriers between hospitals preparing to participate an ACO and hospitals participating in ACOs. Of note, the greatest challenges of those hospitals participating in ACOS were perceived to be reducing clinical variation and reducing costs. Those planning participation, the greatest challenge was perceived to be increasing the size of the covered patient population.
5. ACO hospitals are significantly more involved in population health management services including coordination across the continuum of care.
6. There are significant gaps in care coordination functionalities. For example, there is a low-use of risk stratification and other care coordination activities. As an example, only 38% of hospitals participating in ACOs, 33% planning their participating, and 24% of hospitals not exploring an ACO model assign case managers to patients at risk for hospital readmission for out-patient follow-up. Less than 25% of hospitals in each group have nurse case managers who work with patients with chronic diseases. Similarly, 23%, 21%, and 11% respectively of those hospitals participating, planning participation, or with no plans to participate in an ACO have a post-hospital discharge continuity of care program with scaled intensiveness. Approximately one-third of hospitals participating in or preparing to participate in an ACO have no chronic-care registry. About 20% have a registry for one condition and 40% for two conditions.
7. ACOs are striving to improve the quality of their services by using valid performance measures and making results available to the public and participating providers.



Hospital Readiness for Population-based Accountable Care. Health Research and Educational Trust, Chicago:April 2012. Accessed at http://www.hope.org

Accessible at: http://www.hpoe.org/accointable-care

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