Enhanced FMAP Funding Moving Through the Senate
On December 31st of this year, enhancements made to the Medicaid FMAP (Federal matching dollars) via the ARRA (Stimulus or American Recovery and Reinvestment Act) are set to evaporate. In a series of bills and other legislative initiatives throughout the spring and early summer, Congress has failed to extend funding to prevent the evaporation of the additional FMAP funding. See my related posts below for more information on Medicaid, the FMAP provisions, and the legislative activity to extend the enhanced match provided under the ARRA.
Yesterday, on a procedural vote to end debate in the Senate, another version of a “jobs” bill containing a slimmed down extension of the enhanced FMAP crept forward. The vote to end debate and send the bill forward for a final vote was 61-38. With such a definitive margin in support of a vote, it is all but certain the bill will pass on a final vote. The measure then must go to the House, presently in recess, where it will be either voted upon “as is” or modified and returned to the Senate. Speaker Pelosi has indicated that she will call the House back to session in order to produce a final bill for President Obama’s signature, prior to the re-opening of schools in late August/early September.
The bill provides $26 billion in additional funding with $10 billion targeted toward education and public service employment and $16 billion for extension of the enhanced FMAP. The $10 billion is designed to prevent the lay-offs of teachers, firefighters, police and other municipal service worker jobs that are purportedly “at-risk” once continued funding provided in the ARRA evaporates. Communities, states, and civil service employee unions have been pressuring Congress to extend some levels of Stimulus funding, claiming that without additional dollars, budget cuts would cause lay-offs of key positions such as teachers. Republicans have effectively stalled previous legislative attempts to extend additional funding claiming that the dollars will add to the deficit and are effectively federal bail-outs for the teacher’s union and other municipal service employee unions. In this round, Senate Majority Leader Reid brought forth additional cuts in other programs plus tax increases to generate a revenue offset to the new spending. The resultant funding shift caused Republicans Snowe and Collins to vote in favor of ending debate (a show of support for the bill).
The $16 billion targeted toward additional Medicaid funding was heavily lobbied for by states and health care trade associations as critical to prevent reimbursement cuts and benefit reductions for seniors, the poor and the disabled. With 48 out of 50 states having moderate to severe budget deficits and current Medicaid structural deficits, loss of the enhanced match would necessitate programmatic cuts. In some cases, states that were in a July 1 fiscal year budget process and/or December 31 fiscal year budget process already installed programmatic cuts and reimbursement changes as the timing of their budgets required an assumption of lost Medicaid funding coming at the end of the year.
While the probability of an extension to the additional FMAP provided under the ARRA appears strong, the House must still approve the bill prior to the funding becoming an actuality. The timing will clearly assist most states but in some cases, a portion of the cuts already enacted in certain states will remain. Additionally, the added funding is not without an early 2011 sunset date or in other words, the $16 billion is only a temporary “stay” of execution for state Medicaid budget problems. In all likelihood, unless Congress consistently re-ups with more funding for continued FMAP support, states will need to significantly restructure their Medicaid programs over the next twelve to eighteen months in order to maintain basic solvency. With the economy still in a very slow recovery mode, most states won’t see economic growth and resulting revenues from taxes sufficient over the next year to avoid cuts in their Medicaid programs.
Medicaid Expansion and the PPACA
Article I wrote for the National Healthcare Reform Magazine on the implications for Medicaid as a result of the expansion provisions under the health care reform law. Click on the link below (or copy and paste) to view the article.
http://healthcarereformmagazine.com/article/health-reform-and-medicaid-expansion.html
Doc Fix Survives, Medicaid Ehanced Match Doesn’t
In another procedural vote on the revamped Jobs bill in the Senate, Democrats fell short of mustering 60 votes to end a Republican filibuster, effectively ending for now, legislative efforts to extend unemployment benefits. The vote count was 57 to 41 to continue debate. Dying with the extension of unemployment benefits are a series of pro-business tax cuts, tax increases on domestically produced oil and on investment fund managers as well as the extension of the enhanced Medicaid match provided in the Stimulus bill, set to end December 31 of this year.
In an attempt to keep the bill alive, Senate democrats removed the provision related to Part B/physician fee schedule cuts and crafted a smaller, temporary fix (see my posts from last week on this same subject). This separate “temporary” patch provides for a 2.2% increase in the Part B fee schedule and delays any cuts to physician fees until November 30. Prior legislative efforts deferred the fee schedule cuts, pegged at 21%, until June 1 of this year. This past week, CMS began paying claims incurred after June 1 at the reduced fee schedule rate. In response to an enormous push-back from physicians and the health care community in general, the House passed this temporary Senate measure, sending the bill to the President for signature. Assuming the President signs the bill, providers that have submitted claims for services provided after June 1, will have to re-submit their claims to assure correct payment, including the modest increase of 2.2%.
What’s next (as I have been asked routinely over the past two-weeks)? Is the enhanced Medicaid match extension dead? Legitimate questions, no doubt. In brief, here’s my take or EWAG (educated, wild-assed guess).
- Typically, when legislation such as this stalls, there is a single, two-ton elephant that needs to be circumnavigated or removed from the room in order for things to proceed. In this case, there are three elephants in the room. First, and larger in size than the other two, is the upcoming mid-term elections. The current “tone” in electoral politics is not good for Democrats and decidedly, anti-incumbent, anti-big government, and bail-out weary. Any legislation that looks-like and feels-like a bail-out is perceived as poisonous by incumbents headed toward a November election date. Even seats once believed safe, are up for grabs and some, such as Sen. Boxer in California and Sen. Reid in Nevada, are considered bell-weather contests marking a shift in electorate sentiment (assuming losses on the part of Boxer and Reid). The second elephant is the rising federal debt, now at $13 trillion and climbing. This elephant is a cousin of the first and the Democrats are beginning to feel ownership, correctly or incorrectly, of this elephant. With the EU struggling with an enormous debt load, principally due to burgeoning social welfare programs and a slow economy, economists, the Fed, and investment rating agencies such as Moody’s, are warning that the U.S. debt load could pose the same level of risk to the economy as is present across much of the EU. In fact, the U.S. debt load is perilously close to the value of the GDP; an indicator of a level of negative economic wealth (more debt than assets). Saving an economic lesson for later, the rising debt load is potentially crippling in so many ways to a recovering economy (enough said for now). The third elephant is the moribund U.S. economy, incapable of soaking up large additional amounts of debt and virtually non-responsive to the government’s deficit spending in the form of targeted stimulus. Simply put: The Stimulus and the continued bail-out packages coming from Washington have done virtually nothing to stimulate recovery while adding billions to the debt level. Arguably, the instability and the spending levels have hurt the recovery more than helped. With these three elephants present today in the House and in the Senate chambers, very little prior to November (mid-term elections) can get done and what will get done will be temporary in nature (the doc-fix for example).
- I’m not sure that the enhanced or extension of the enhanced Medicaid match is dead but it is definitely, on life-support in its current form. It seems that the tone of this Congress now is to avoid issues that include big price tags unless such an issue is immediately pressing (the doc-fix) and can be pushed every so slightly, down the road, but just by a bit. The problem here is that many states are stuck with June 30 fiscal years and/or balanced budget requirements. For these states, the uncertainty of additional Medicaid match dollars from the Feds requires establishing a plan that includes cuts, reimbursement and benefit levels combined. The real devil in some cases, is for states that have expanded their Medicaid programs via the use of added match funds through the Stimulus, as the expansion components cannot be cut by law. The additional funds via the Stimulus bill came with “golden handcuffs”, requiring states that used the funds via expansion, to maintain these services. In short, Medicaid is a real mess but frankly, that is nothing new given how ridiculous its financing provisions are and how “federal” money hungry the states have become, selling their fiscal stability souls for additional federal funds and then shifting budget problems elsewhere, hoping new or additional federal money would continue, bailing out their current spending sins.
- The logic of once again deferring the Part B cuts, now to November, is to buy Congress time to craft a permanent solution. Anyone who buys this rhetoric needs professional counseling. This issue is nowhere close to a permanent fix as such a fix requires political willpower (non-existent today), a revisit to the recently passed PPACA where the budget numbers are already out of whack, and finally, a commitment to spend new money as part of the solution. Fixing the problem means abandoning the flawed sustainable growth formula, recasting the actual costs associated with the PPACA (estimates of deficit reduction relied heavily on unsustainable and impractical Medicare cuts), and finding new money within the budget, deficit or not, to create parity and stability within the Part B fee “world”.
Senate Doubles Back on “Doc Fix” Legislation
After a mid-week roadblock was established on a procedural vote all but derailing the American Jobs and Closing Tax Loopholes Act and the integrated provisions that included a “doc fix”, the Senate doubled-back on Friday and passed a separate measure that patches the pending cuts (21%) in the physician fee schedule set for June 1. The latest temporary measure stalling cuts as required by the sustainable growth formula underpinning the current Medicare reimbursement calculations for Part B services (physician fees, therapy rates, etc.) expired on June 1. In the interim, in anticipation of another patch to the cuts, CMS directed its fiscal intermediaries to “hold” or pend claims after June 1. The Senate legislation now must return to the House where as of today, reception as indicated by Speaker Pelosi is not likely to be “warm”.
The Senate’s fix calls for a 2.2% increase to the current fees (non-cut) through November 30 at a price tag of $6.4 billion. Integral within this temporary measure are funds to not only augment the physician fee schedule but to also impute the same increase to other health care services tied to Medicare Part B such as outpatient therapies. Come November 30, Congress will have to either have a more permanent solution in-place or additional temporary measures will be required.
Physician reaction was as expected; frustration and mixed anger. Physicians continue to grow more hostile toward Congress’ strategy of temporary payment fixes, calling for a revamp of the convoluted and antiquated formula known as the “sustainable growth formula”, tying Medicare reimbursements under Part B to economic growth in proportion to overall Medicare outlays. During health care reform discussions and in the initial Senate version and subsequent House version of the Jobs and Closing Tax Loopholes Act, longer term fixes to the fee schedule were integrated with larger costs. Politicians from both parties, worried about rapidly increasing deficit levels, systematically gutted these longer-term measures to the point where no legislation addressing the pending cuts was in place until late Friday.
The lengthy delay in addressing the pending cuts of June 1 caused CMS to extend a “hold” on claim adjudication, effectively stalling claims from June 1. On Friday however, CMS directed its fiscal intermediaries to begin adjudicating claims using the discounted fee schedule. In short, claims from June 1 will now be processed with a 21% reduction. CMS’ reasons for starting to pay claims at the discounted level are two-fold: First, longer delays in adjudicating claims will produce a significant back-log in claims, headed into the 4th of July holiday period; and second, the Senate legislation must return to the House for passage and preliminary indications from the House are that passage in its current version is unlikely. Claims can ultimately be re-processed once a permanent (or more lengthy temporary) fix is reached however, such re-processing is neither quick nor without additional work on the part of providers and CMS’ intermediaries.
There is no question that physicians as well as other provider groups are growing tired of Congress’ inability to resolve the Part B fee schedule issues. With health care reform a less than fully embraced law and policy analysts and economists pushing Congress on rising deficits, the political willpower to address Medicare issues involving “new” deficit spending is almost gone. In fact, many policy analysts and economists, including myself, have consistently pointed out that Congress lacks the political will to pass along the steep Medicare cuts imbedded in the PPACA and integral to its claim of “deficit reduction”. The “doc fix” saga is clear evidence of Congress’ inability to live up to the spending cuts it created under the PPACA.
Senate Sets Roadblock on Jobs Bill: Impact is Felt for Doc Fix and Medicaid Funding
Yesterday the Senate, via a procedural vote, set a roadblock on the continued track toward passage for the American Jobs and Closing Tax Loopholes Act. The original version, re-crafted by the House to lower the price tag and then sent to the Senate, found limited traction on Wednesday. Oddly enough, the House version effectively trimmed the original Senate version and yet, even when fiscally re-shaped, it could not garner support in the Senate, the source from which it originated. My read is that Senators, since the shaping of the original bill, have watched political winds shifting away from support for government bailouts, subsidies, and deficit spending initiatives.
What happened is a bit confusing for people unfamiliar with the parliamentarian rules and procedural machinations of the Senate. In order for the Bill to come to the floor for a vote, sufficient votes (60) are required to close debate on the legislation. Without the 60 vote total, debate can continue endlessly and lead into filibuster, effectively killing the Bill as it stands. Yesterday’s vote showed a suprising lack of support among key Democrats such as Wisconsin Senators Feingold and Kohl. Republicans were effectively unified in opposition. As of late yesterday, Senate Democrats scrambled to re-craft yet another, scaled down version that at a minimum, would contain an extension of unemployment benefits and certain key tax measures.
Analyzing the issues, the Bill in its present shape has significant fiscal problems. First, the diversity of the issues and spending priorities within the legislation create a lack of transparency which today, is politically repugnant to voters. Second, much of the Bill appears politically as a continuation of federal bail-out spending. Third, health care reform remains unpopular politically and Senators, wary of the “doc fix” price tag and its ties to an unresolved health care reform matter, don’t want to get any more negative fall-out regarding the costs of health care reform.
The implications for health care at this point are a bit unnerving. Many states have already laid budgets assuming a continuation of the Medicaid stimulus support, set to end December 31. Without continuation of the expanded Medicaid match, many states will need to recast budgets, integrating major spending reductions. Second, the “doc fix” issue also impacts a number of other health care services such as Part B therapy rates which are tied to the physician fee schedule. (See my related posts regarding Part B cuts and the American Jobs and Closing Tax Loopholes Act). Without a fix or another delay of the pending cut (21%), physician fees and other Part B services such as therapy will be cut.
My impression is that Congress will scramble for the next week, attempting to unravel the bill and take on certain issues ala carte. For example, I believe that unemployment benefits will get extended as in Washington, especially for Democrats and their union supporters, failing to do so is political suicide. I believe Medicaid and the states will get their extended match but perhaps, more incrementally, maybe with an initial extension end date of March 30, 2011. Finally, I think the “doc fix” issue will get delayed once again; another temporary stay of execution. The doc fix may be the most politically difficult issue to deal with as its price tag is large and nearly every policy analyst and health care economist point to the need to address the underlying problem of the sustainable growth formula versus the current approach of pushing the inevitable to future dates via current infusions of new deficit dollars.
RUGS-IV Still In Limbo
As the Senate is set this week to take a vote on the American Jobs and Closing Tax Loopholes Act (see my related posts), a key provision within the legislation having to do with implementation of the SNF payment system known as RUGs-IV remains in limbo. The PPACA (health care reform bill) required implementation of a new standard resident assessment instrument known as MDS 3.0, effective October 1. Under Medicare, the resident assessment triggers the PPS payment category corollary to Resource Utilization Group or RUG for short. A provision within the American Jobs and Closing Tax Loopholes Act would require CMS to implement an updated PPS payment system, RUGs-IV concurrent with the changeover to the new assessment instrument, effective October 1.
The difficulty that occurs without simultaneous implementation of RUGs-IV is that CMS has to create a “bridge” payment methodology, ultimately phasing-in the new payment system. This bridge payment system effectively changes in certain provisions unique to RUGs-IV such as concurrent therapy and look-back periods to model a hybrid payment for MDS 3.0. As the Senate has not yet acted on the Jobs and Closing Tax Loopholes Act, CMS is preparing for an interim period and thus, a bridge payment strategy. The full-phase in of RUGs-IV would not occur potentially until October of 2011. During the interim year under the bridge payment, CMS will use modified payments and then, re-process claims once RUGs-IV is implemented. The modified payments are effectively RUGs-IV payments that are processed using the RUGs-III system, as modified under the PPACA. Of course the peril for SNFs during this interim period lies in the possibility of carrying a receivable to Medicare (payments are less than what they actually would be under RUGs-IV) that ultimately is re-processed correctly, without interest. Alternatively, a facility could have a balance due once re-processing occurred but this situation is less likely.
At this point, the “ball” is in the court of the House and the Senate. CMS has indicated that it might take as long as six months to establish a hybrid payment system that correlates RUGs-IV categories to an interim payment system suitable for use under MDS 3.0. The alternative of course is to have Congress legislate the full implementation of RUGs-IV by October 1. Oddly enough, it was Congress that caused this confusion by delaying the implementation of RUGs-IV for a full year under the PPACA.
CMS is holding a series of three national conference calls regarding MDS 3.0 transitions and the RUGs-IV/RUGs-III interim payment issues. The first is set for June 24th at 1:30 P.M. Eastern time. Feel free to e-mail me for registration information.
American Jobs and Closing Tax Loopholes Update
Prior to the Memorial Day recess (holiday), the House passed its re-shaped version of the bill. The re-shaping primarily involved spending constraints; reaction to wide-spread criticism (public) of current (and recent) Congressional deficit spending binges as well as a realization that fall elections draw ever closer. Specifically, what the House did was:
- Abandoned any additional extension of the added FMAP (Medicaid match) from the Stimulus Bill – deadline remains December 31, 2010.
- Took up the “doc-fix” issue separately, passing a two-year fix to the pending cuts (still set for June 1 as the Senate has yet to reconvene and address this issue).
- Made the effective date of the RUGs IV implementation October 1, 2010.
What now occurs is the revised legislation heads to the Senate for review, modification, approval, etc. As the Senate is not set to reconvene until June 7 (another week), the issue (once again) of physician fee schedule cuts and corresponding Part B cuts in therapy, etc. heads into limbo. Congress has taken repeated temporary measures to stave-off these cuts while it works to a more permanent fix and it is likely, another emergency, temporary “stay” to the cuts will be forthcoming (I doubt the Senate and House will come to agreement on final legislation during the ensuing two to four-week period). As in the last go around on a “cuts deadline”, CMS has instructed its intermediaries to hold claims open for the first ten days of the month in anticipation of some direction from Congress.
Regardless of the legislative machinations yet to occur between the House and the Senate, real fiscal issues are at play. The states are in desperate need of continued financial assistance for their Medicaid programs albeit, even a six-month extension of the FMAP will only result in a bandage change applied to a gaping flesh wound. State budgets are predominantly in a horrible stay of disarray, awash in deficits and limited in their options for additional revenue via taxation. The slow recovering economy does not foretell an anytime soon switch in fortunes for the states; revenues will continue to lag until jobs and thus, corporate and personal income fortunes reverse. Medicaid, as I have written before, is an awful shell game. To garner additional FMAP that the states desperately need requires additional program expansion and spending – funding that the states cannot afford to continue without more federal dollars. At some point, with the national deficit now over $13 trillion and rising, the Feds will need to pull the plug on all of the deficit spending, “bail-out” programs that are unsustainable (like added FMAP) and the recipients will have to “face the concessionary music”.
The “doc-fix” is and has been, a major policy issue and boondoggle. The problem is the underlying sustainable growth formula that is used to set physician (and other Part B) reimbursement rates. Fixing the formulaic issue is what needs to occur but for the time being, adrift in a sea of health policy debacles courtesy of a misguided reform bill that is now law, Congress is effectively hamstrung. The political peril of allowing physician fees to plummet by 21% is balanced opposite the political peril of additional deficit spending, especially on health care, immediately prior to a fall election cycle. Health care today is a major political issue and front and center in this issue are claims made that the PPACA (reform bill) would reduce the deficit, primarily by making Medicare more efficient (cuts). Adding back new monies to physicians and other providers under Part B is fuel for certain economists, deficit hawks, etc., who all publicly denounced the PPACA deficit reduction claims as unattainable, unrealistic (Congress won’t have the nerve to sustain the cuts), and of course, based on funky math (counting savings from cuts while creating new entitlements).
I believe this may be the shining example of a “political pickle” for Congress…
American Jobs and Closing Tax Loopholes Act – HR 4213
Funny title that is rather misleading given the gravity of the health care/post-acute care provisions that are included in this bill. As is the case in Washington, especially these days, important health care provisions not addressed in the PPACA are coming forward in other bills; particularly bills involving unemployment benefits and COBRA benefits, etc. Such is the case in this rather large expenditure bill which by title, is aimed at extending unemployment benefits, creating tax deductibility for COBRA premiums and removing a host of tax loopholes or tax deductions as some may call them.
Imbedded within the bill are a series of important health care related provisions. Briefly summarized, the provisions are;
- A six month extension of the additional federal Medicaid match originally provided under the Stimulus bill. The current added match is set to expire on December 31. The extension provided under this bill would continue the match through June 30 of next year. Fundamentally the issue here is the feds trying to provide a softer cushion or landing area for the states given the ramp-up in Medicaid spending that is coming under the PPACA, the current economies of most states (poor) and the harbinger of pending Medicaid cuts most states will require to keep their programs afloat. While this match is likely a good thing in the interim, recall that it is in effect like giving a crack addict more crack. Under Medicaid, the additional match comes only with additional state spending; spending that most states cannot afford without the additional federal money. Unless the federal money is continually extended in some shape or form, the states will likely face the prospect of cutting their Medicaid budgets at some point, regardless of any economic recovery.
- A provision that staves off any cuts to the physician fee schedule until 2014. This doc-fix element includes increases in 2010 (for the balance of year) and 2011 with no increase specifically factored for 2012 and 2013 although, if spending on physician care remains (during this period) within Medicare spending limits, an increase may occur. In 2014, the physician fee schedule would return to the current law based on the sustainable growth formula (per CBO, a cut in 2014 of 30%). In addition, since Part B therapy rates are tied to the physician fee schedule, the rate cuts that are pending would be automatically fixed (in concert with the doc-fix) and in actuality, increases in rates would be forthcoming. Physician fee-schedule cuts and the issue of physician fees being tied to the antiquated sustainable growth formula was a matter of contention during health care reform debate. The House had passed a broad, permanent fix but the Senate failed to act. The Senate desired something more temporary and less costly. The final legislation as passed (PPACA) didn’t address the matter at all with the exception of counting the savings from the projected cuts as part of the financing elements that produced the “budget deficit reduction” effect. In other words, Congress used the projected savings from the cuts as means of creating a positive financial projection from the CBO. Most policy analysts and economists have claimed all along that one of the significant “risks” with the PPACA positive projections lied with the fortitude of Congress to sustain the significant Medicare cuts contained in the bill. This measure is likely to create renewed calls that Congress is incapable of sustaining the Medicare cuts and in actuality, and as I have written multiple times before, the PPACA is nowhere close to deficit reducing.
- The bill also contains a provision requiring CMS to implement RUGs IV by October 1, in concert with the roll-out and implementation of MDS 3.0. This is a good thing for SNFs. Without RUGS IV going hand-in-hand with MDS 3.0, there would be no case-mix payment system that matched the new assessment tool. RUGs III is correlated to MDS 2.0. The end result would likely be comedic and tragic all at the same time as SNFs would have to complete the new MDS and try to correlate payment back to a case-mix system that didn’t match the new assessment tool. I, and others, envisioned payment snafus abundant and the work to sort it out come RUGs IV roll-out in 2011, the responsibility of the SNF.
The Apex Healthcare E-Newsletter (my organization’s newsletter) for May was just released and posted yesterday and in this issue you can find additional information regarding this topic (the physician fee schedule fix and RUGs IV) http://apexhealthcareconsultants.info/category/may-news-2010/
Part B Therapy Rate Reductions Return
With Congress on recess, the temporary extension of the Part B therapy rate cuts ended on March 31. As of today, with Congress still on “holiday”, the Part B therapy rate cuts remain in effect. Best knowledge has it that Congress is working on another temporary extension that would retro to April 1 and last through April 30. When President Obama signed the Patient Protection and Affordable Care Act in March, the exception process to the Part B cap was extended through the end of 2010.
Medicare Part B therapy rates are directly tied to the physician fee schedule set for a 21% fee reduction in January. Congress while muddling through health care reform, has passed a series of temporary patches to stave off the cut. The belief is that a more permanent fix to the physician fee schedule issue is “in the works” however, the cost of such a fix is an issue. The House passed a fix in late 2009 but the legislation died in the Senate. The Senate has been less inclined to address a permanent fee schedule fix fearing the price-tag would produce additional political damages during a period of existing unrest regarding the health reform bill and the rising debt levels. Additionally, and not without a tremendous amount of political foresight, the Democrats and the President left the fee schedule fix on the side-lines during health reform passage fearing that its sizeable price tag ($250 to $500 billion depending on the scope and permanency of the fix) would push the CBO score to the wrong side of neutral. In summary, the physician fee schedule issue trumps the Part B therapy rate issue and thus, in typical Washington fashion, both hang in legislative limbo.
For now, CMS has indicated that it is willing hold claims pertaining to services under the fee schedule for ten days; from April 1 forward. CMS believes that this temporary hold is better than adjudicating claims concurrent with the existing law (cut in effect) and then having to re-adjudicate another submission once Congress, upon their return on the 12th of April, passes another temporary extension. Per CMS, this will not impact provider cash flow as clean claims (electronic) are not paid prior to fourteen days. For any claims previously tied-up in limbo during the last period prior to the exception grant (signed by the President on March 2 as part of a “jobs’ bill) backdated to January 1 and ending March 31, CMS has instructed facilities to re-submit claims to the regional contractor adding the KX modifier. In effect, the ” claims limbo” that occurred for the period between January 1 and March 31 should be cleaned-up by now for CMS and their regional contractors. Facilities should be on top this and getting their claims properly modified, submitted and promptly paid.
Stay tuned for what happens after Congress returns on the 12th and what the lay of the land looks like post April 30th – the likely deadline for the next temporary extension.
Health Care Reform and Assisted Living
In a bit of an indirect manner, Assisted Living got a boost from health care reform, albeit in a typical governmental fashion. With the Feds willing to use Medicaid as the vehicle for expanded coverage programs for underinsured (those within 150% of the poverty limit with high-deductible plans) and the uninsured, coupled with additional funding for Home and Community Based Services, an expanded source of potential residents for AL providers comes forth. Of course, this new source of residents is not wholly unfamiliar to some providers and as the providers already working within Medicaid waiver programs will attest, not without problems.
Over the past decade, the movement to deinstitutionalize certain at-risk seniors and the chronically disabled has continued to gain momentum initially at the state level, then through the federal level. The first concerted efforts back in the late eighties and early nineties focused on moving the developmentally disabled and mentally ill from institutional settings to community based settings, typically group homes and residential facilities. The dominant majority of this group was (and remains) Medicaid eligible and thus, the shift from an institutional focus for care to a community-based focus tied directly to savings for Medicaid. Without question, tangible benefits in terms of quality of life were also achieved for the resident population.
Fast-forward through the nineties and up to 2009, the transitional movement of deinstitutionalization gained momentum. The focus continued to be on Medicaid eligible individuals and dual-eligible individuals (Medicaid and Medicare) with moderate to minimal care needs placing them “at risk” of institutionalization (generally SNFs or Intermediate Care Facilities). The “at risk” element wasn’t related to their care needs but to the benefit structure of Medicaid which without permissive changes made by the applicable state and the federal government, could only pay for care delivered in a federally certified care center (SNF or ICF). As the Feds became more open to allowing states to “waive” the core requirements for benefit and service eligibility contained within state plans and still receive FMAP (Federal Medicaid matching dollars), the migration of seniors from institutional care to community-based options (principally Assisted Living) picked-up pace. During this period, the popularity of Medicaid waiver programs increased as more Assisted Living providers became willing to accept this source of residents, states enjoyed the benefit of reduced institutional care utilization (a savings) and various advocacy groups touted the quality of life improvements afforded to seniors living in residential care environments as opposed to nursing homes/institutional care centers.
Looking reflectively however, illustrates that this transitional period and the gain in popularity of Medicaid waiver and home and community based care options wasn’t without a series of problems. First, states were often ill-equipped to care manage the targeted group of seniors. As a result, systems for access, payment and ongoing certification of eligibility were often fragmented and ineffective. Second, states and the Feds, under-estimated the demand for residential care. Third, costs associated with these programs soared and providers, while still phasing in to accepting Medicaid waiver residents, encountered (in some cases) rate cuts, mounting paperwork, slow payments and in some cases, no payment. Other problems also occurred such as access issues in various communities (insufficient services to meet the demand), spousal impoverishment qualifications under Medicaid that the Feds had not addressed, and insufficient additional federal funding to grow the waiver programs to meet the rising demand.
Understandably, the Federal government during the creation of health care reform legislation, sought to address some of the more pressing issues that the states encounter within Medicaid waiver programs and in delivering an expanded array of home and community based care options. The result of the recent passage of the Patient Protection and Affordable Care Act is that to a reasonable extent, the issues noted above were addressed. Like all major Federal social policy initiatives, the legislation also has flaws. The benefit potential for Assisted Living providers and home health providers is fairly plain; at least for those provider groups that wish to continue to care for Medicaid waiver residents and/or are targeting an increase in their existing programs. There are also potential opportunities for new service and care programs integrated within senior housing and affordable senior housing projects. Below is a summary of the “pluses” I pulled from the legislation.
- Community First Choice: Allows states to cover the cost of attendant (non-skilled, non-CNA) services for a Medicaid beneficiary if doing so would prevent the individual from being hospitalized or residing in a nursing home.
- Allow states to cover more home and community based services via a plan (state Medicaid) amendment as opposed to a waiver.
- Extends the Money Follows the Person demonstration under Medicaid until 2016 (pays for more home and community based and residential services as needed by the individual rather than a payment targeted toward a specific provider care level such as SNF).
- As of 2014, requires states to provide the same spousal impoverishment protection to a spouses receiving home and community based services (no longer limited only to SNF residents).
- Provides an increased federal match to states that presently spend less than 50% of their Medicaid budget on non-institutional care alternatives provided the states submit plans to rebalance their Medicaid spending, increasing the resources provided to non-institutional care.
- Eliminates the cost-share under Medicare D for dual eligible individuals receiving home and community based services (dual eligibles in a nursing home are already exempt from the cost share).
- Funds the extended Medicaid match (FMAP) that was created under the ARRA (Stimulus Bill). Beginning in 2014 and through 2016, provides 100% federal funding for additional Medicaid costs incurred as a result of expanded Medicaid coverage provisions for lower-income individuals
As I indicated earlier, the legislation does have its share of flaws or imperfections. Below are some of the obvious issues.
- Creation of the CLASS Program (Community Living Assistance Services and Support) which is touted as a voluntary form of taxpayer-funded long-term care insurance that provides payments to individuals to pay for necessary home and community based support and care upon evidence of a disability or disabilities. Unlike traditional long-term care insurance plans, CLASS would cover a very broad array of formal and informal assistance, even on a non-licensed basis. Benefit amounts are self-selected upon enrollment ranging from $50 to $100 per day. The problems with CLASS are many including the fact that upon enrollment, an individual must pay into the program for five years prior to receiving any benefit. Second, the benefit levels are rather paltry, especially at the $50 per day level. Finally, and very unreported within the analysis of the reform bill to date, the premium levels are likely too low for the levels of benefits. In other words, CLASS is actuarially, out of the gate, underfunded and necessarily, premiums will rise. In fact, CMS estimates that premiums, once utilization begins to steadily occur and enrollment levels-off, could rise as high as $180 per month. Since it is in fact, a voluntary plan, it is likely that few will enroll and among those that do enroll, they are likely to already have some level of existing disability or a trend toward early disability - a problem of adverse selection. CMS predicts that the CLASS participants will use benefits at an “exceedingly higher” level than a typical individual purchasing a long-term disability or long-term care plan.
- The legislation maintains the existing Medicaid funding system which already is a convoluted and an economically unsustainable mess. In as much as the Feds are ponying up some additional money and relaxing the bureaucracy on states to expand their Medicaid plans to offer more home and community based care support and options, they are doing so within the same idiotic paradigm that presently has state Medicaid budgets swimming in red ink. In other words, the Fed’s money comes only after states commit to spending and thus funding, the expanded services. Garnering additional FMAP is akin to getting five Big Macs after buying the first one, then being required to continue to buy the additional five to keep the match coming, etc. On the back-end of course, having gorged on all the Big Macs, you now have to pay for the diet and the by-pass surgery. States simply cannot sustain the level of expansion that the Fed is promoting (California is the classic example).
- No one is quite certain how much of a burden the additional level of newly insureds will be under an expanded Medicaid program. Dozens of states are already suing the Federal government over the expansion, primarily because of my point above but also from the perspective that they (the states) will get stuck with an enormous additional Medicaid cost item. As the expanded Medicaid program will contain fairly lavish and generous benefits, including expanded home and community based care options, the risk of adverse selection is enormous (the risk that people with pent-up demand and existing uncared-for disability will now use the system and the benefits at a level far greater than was initially anticipated). Personally, I believe the adverse selection risk is enormous and terribly misrepresented within the legislation.
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