NAVEOS® warns Medicare Advantage plans set to receive huge financial windfall at expense of Federal DSH Hospitals whose MA rates are tied to DRG payment
Chantilly, Virginia (PRWEB) July 12, 2013 -- With the implementation of the CMS 2014 IPPS Proposed Rule on October 1, 2013, 75% of hospitals’ DSH funds will be paid outside the DRG payment, with only the empirically justified amount of 25% paid by the DRG. The 75% of DSH payment due to the provision of uncompensated care will be paid from the Uncompensated Care Pool (UCP) on a periodic basis, but will not be part of the DRG rate. In the past, 100% of the DSH reimbursement was included in the DRG rate.
Consequently, NAVEOS® believes that every DSH hospital will see a reduction in DRG payments from the Medicare program and likely a reduction in reimbursement from their Medicare Advantage payers as well.
One of the implications of the CMS 2014 IPPS Proposed Rule is that payments that will be calculated by Medicare Advantage plans for DSH hospitals may no longer reflect the full costs of the care provided to their members. This is due to the fact that many Medicare Advantage contracts tie their payment to the hospital based on the diagnosis-related group rate.
If this proposed DSH payment methodology is memorialized in the IPPS Final rule, Medicare Advantage rates will drop for DSH hospitals when the DRG rate is reset in the CMS Pricer. Now is the time to review your hospital’s Medicare Advantage plan contract provisions and renegotiate payment rates. NAVEOS® calculates that all DSH hospitals that have linked their MA payments to the DRG rate will incur an estimated minimum reduction of 1.9%; and 340B hospitals could see an estimated reduction of 8.9%. To get ahead of this impending issue, NAVEOS® urges hospitals to contact their Medicare Advantage payer(s) and make the needed rate change to account for this modification in the Federal DSH distribution.
Robert Gricius, Chairman, CEO and founder of NAVEOS® and nationally recognized authority, speaker and expert witness in the area of healthcare finance, commented that “This is an unintended consequence of the implications of the proposed rule for FFY 2014 as it pertains to Federal DSH payments. We do not believe that CMS intended to provide this financial windfall for Medicare Advantage plans and that hospitals need to get ahead of the curve on this issue well before October 1st of this year.”
NAVEOS® can advise hospitals on the percentage increase to their Medicare DRG base rate value in order to adjust for the move of the UCP portion of DSH out of the DRG payment. For more information please visit NAVEOS®' website at http://www.NaveosData.com or you may contact Charlene Mathis, Chief Marketing Officer at 888-550-2708 or by email at Info(at)NaveosData(dot)com.
Charlene Mathis, NAVEOS, http://www.NaveosData.com, (888) 550-2708, [email protected]
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