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House Panel Likely to Advance Bill with Hospital Penalty Change

By Kerry Young, CQ Roll Call

May 24, 2016 -- The House Ways and Means Committee on Tuesday began considering a package of changes to Medicare payment policies, including one designed to address long-standing concerns about how hospitals that serve poor communities are hit by readmission penalties.

The panel began marking up a bill (HR 5273) that also would ease a new restriction on when hospitals can collect more generous Medicare outpatient reimbursements for off-campus offices. The measure would address cases where hospitals had substantial plans in place for new sites before the enactment of last year's budget deal (PL 114-74), which required many hospital outpatient centers to receive the lower reimbursements that physicians get. The cut was projected to save $9.3 billion over a decade.

Separately, certain hospitals and lawmakers have pushed for some flexibility in the Medicare rules on readmission penalties, which were established in the 2010 health law. Hospitals are penalized if the number of their patients that are readmitted within 30 days is considered excessive. The current design "puts hospitals that treat a large share of low income patients at a financial disadvantage," wrote Francis J. Crosson, the chairman of the Medicare Payment Advisory Commission, in a comment last year to the Centers for Medicare and Medicaid Services (CMS).

The Ways and Means draft calls for officials to compare data among hospitals that serve a similar proportion of patients who are dually eligible for both Medicare and the state–federal Medicaid program for low-income people, according to a bill summary. The American Hospital Association welcomed this measure, noting that CMS later could use a more refined methodology to adjust readmission penalties. Future changes could be based on information from broader reports on post-hospital care that are mandated by the Improving Medicare Post-Acute Care Transformation Act (PL 113-185).

At the markup, though, Rep. Charles B. Rangel, D-N.Y., questioned whether this provision would have the effect of lowering the standards for hospitals that serve the poor. He argued that the challenge is to make sure that hospitals serving low-income communities should have the resources they need to prevent admissions of their patients, rather than rejigger the penalty. Still, Rangel agreed with a need to preserve the funding for medical centers serving the poor.

"I don't want these hospitals to be put out of business just because we don't provide the funds for them to do the right thing," Rangel said.

Many lawmakers in both parties and chambers support adjusting the hospital readmission policy. A bill (HR 1343) by Rep. James B. Renacci, R-Ohio, has 42 GOP and 40 Democratic cosponsors. These include Rangel, a point Renacci raised in a cordial way at the hearing.  A companion Senate measure (S 688) from Sen. Joe Manchin III, D-W.Va., has six Democratic and five Republican cosponsors, including Sen. Rob Portman of Ohio.

Portman, who serves on the Senate Finance Committee, on Tuesday said he plans to look at the Ways and Means bill. Senate Finance earlier had considered taking up a measure that would address the readmission penalties "along with four or five other relatively noncontroversial items" regarding healthy policy, Portman said.

"Those hospitals are penalized because of the readmission policy without taking into account the makeup of their patient pool," Portman told CQ HealthBeat. "It's unfair to them."

Len Marquez, director of government relations at the Association of American Medical Colleges, said people living in poverty often don't have the same support at home as those with more money. That can lead to complications unrelated to the quality of care provided to them during their initial hospital stays, which then force patients to return.

"They may not have the transportation necessary" for follow-up care, he said in an interview. "They may not be able to go to the drugstore to pick up the prescription."

Medicare officials are driving hospitals to "look beyond their walls"  and consider what needs and challenges senior citizens and the disabled will have once they return home, Andrew Boozary, a visiting scientist at the Harvard School of Public Health, told CQ HealthBeat in a Tuesday interview. He last year published an article in the Journal of the American Medical Association about readmission penalties, with Manchin and Sen. Roger Wicker, R-Miss., as coauthors.

The key for lawmakers and policy analysts is striking the right balance, which will maintain the benefits of the readmission penalty, Boozary said. The policy has given hospitals more incentive to help people obtain needed services to regain or maintain their health after treatment.

"This is about not letting folks off the hook, but figuring out what that right adjustment is," Boozary said.

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