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29 posts from May 2017

May 31, 2017

CMS Hospital Quality Star Ratings Update


We continue to monitor the CMS hospital quality star ratings on its Hospital Compare website. The overall star ratings are based on 64 quality measures grouped under three process categories—effectiveness of care, efficient use of medical imaging, and timeliness of care—and four outcomes categories: mortality, patient experience, readmissions, and safety of care. Few hospitals, even among the nation’s best, receive a five-star rating.

Recent Data

According to recent CMS star-rating data as reported by the Advisory Board:

Out of 3,629 hospitals eligible for a rating:

83 hospitals received a five-star rating;

946 received a four-star rating;

1,794 received a three-star rating;

694 received a two-star rating; and

112 received a one-star rating.

CMS did not assign star ratings to 969 hospitals for which it lacked sufficient data.

This clustering around the median rating is similar to what we have seen with other programs like the value-modifier. Does CMS create algorithms to create this distribution? A slight edge toward the bottom for the “underperforming” groups, and a small amount who “win” at the top? Something we will monitor going forward.

Ratings continue to unfairly punish “poor” hospitals

As we wrote earlier this year, the star rating system rewards hospitals that serve mostly affluent patients and punishes those serving the poor. Research by Bloomberg BNA compares star ratings of hospitals, indicating a correlation between high star ratings and high household income, and a corresponding correlation between low ratings and low income. Critics of the rating system point out that low-income patients are more likely to have difficulty accessing transportation for both routine primary care and post-discharge follow-up care. There are also consistently low ratings of academic medical centers, which are generally considered among the nation’s best hospitals and which are often located in low income urban areas. 

Data reliability questioned in different rating system

As has been reported, in the search for hospital quality measures that matter, all kinds of rating systems are coming under scrutiny, including those used by the Leapfrog Group, a nonprofit advocate of quality and safety in healthcare.

A study from the University of Michigan concludes that the group's Safe Practice Score (SPS) produces different results than those used by Medicare's Hospital Compare to track common complications and readmissions.

The Leapfrog findings "skew toward positive self-report[ing]," according to the study, which appeared in the journal Health and was entitled "Dissecting Leapfrog."

Plenty of problems with the CMS system, too

As Health Affairs reported last year, the structure of the CMS program has problems, too. They note that a single score to describe hospital quality is probably not useful for consumer. “Given that the quality for different types of care can vary widely within a single institution, it is unlikely that a single summary score would accurately represent the quality of care for all conditions or procedures at one hospital.

To construct the summary star scores, some fairly complex statistical calculations are performed, which essentially use rank order performance on individual measures, weighted by importance to come up with a summary score. The end result is a distribution of summary scores that approximates a bell-shaped curve with 48 percent of hospitals assigned 3-stars; about 3 percent assigned each 1- and 5-stars, and the rest 2- or 4-stars.”

But there are many problems with using a curve. Health Affairs continues: “First, it implies a meaningful difference in performance when there might not be one. For many of the individual measures from which the summary score is derived most hospitals are no different than the national average. Second, it implies that many stars equal high quality and few stars low. Regardless of whether quality across hospitals is uniformly high, low, or average, the curve will distribute hospitals across the 5-stars. Consider the measures reported in the ‘effectiveness of care’ domain. The average national score is over 92 percent for most of the measures; for several it approaches 100 percent. There is little clinically meaningful difference in scores across hospitals and the performance is uniformly high.”

May 30, 2017

Medicare Backlog Must Be Fixed


Since 2014, the American Hospital Association (AHA) has been in court with HHS regarding HHS’ failure to meet statutorily-imposed deadlines for Medicare administrative appeals. And, as has been reported, the Medicare appeals backlog has reached its all-time worst. If you’re a healthcare provider or supplier waiting for a hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Appeals (OMHA) – the third level of the Medicare appeals process – you’ve likely been waiting years to have your case heard or, at least, you’re expecting such a wait.

The suit centered on the Recovery Audit Contractor program. The RAC program's mission is to correct improper Medicare payments by identifying and collecting over- and underpayments. Healthcare providers have the option of appealing recovery auditors' findings, and HHS' Office of Medicare Hearings and Appeals administers hearings concerning denied Medicare claims. Claim denials that reach the third level (of five possible levels) of the appeals process are brought before administrative law judges, who issue decisions regarding coverage determinations.

Court order

Recently, a court determined that there were equitable grounds to issue a writ of mandamus. The Court reasoned that even with certain good faith efforts made by HHS to reduce the backlog (such as a Proposed Rule issued this past summer), the appeals backlog was “still unacceptably high.” In its decision, the Court found that HHS did not “point to any categorically new administrative actions” and continues “to promise the elimination of the backlog only ‘with legislative action’ — a significant caveat.”

The Court ordered HHS to achieve the following reduction thresholds, as proposed by AHA, from the current backlog of cases pending at the ALJ level:

  • 30% by December 31, 2017;
  • 60% by December 31, 2018;
  • 90% by December 31, 2019; and
  • 100% by December 31, 2020

In the ruling, U.S. District Court Judge James Boasberg ordered HHS to eliminate the backlog in accordance with the timeline AHA outlined in its motion for summary judgment. Boasberg also ordered HHS to file progress reports every 90 days on its efforts to reduce the backlog.

AHA Statement

On December 6, 2016, the AHA released a statement from its general counsel: AHA General Counsel Melinda Hatton said the decision “is a victory for hospitals that continue to have billions of dollars in Medicare reimbursement tied up in a heavily backlogged appeals system. To meet the court-ordered backlog reductions, we trust that HHS will implement real reforms critical to resolving the backlog, including fundamental reforms of the Recovery Audit Contractor program.”

Good news for providers

As cited by the Advisory Board, William Dombi, VP for law at the National Association for Home Care and Hospice, said the "ruling may finally spur concrete action by [CMS] to reduce what are wholly unreasonable delays in providing appeal rights to Medicare beneficiaries and providers of health services." However, HHS has said even with additional resources, it likely will not be able to eliminate the backlog before 2021, so we will continue to monitor this story.

May 29, 2017

GOP Senators Send Letter to CMS, Requesting MA Changes


In a recent letter to the CMS Administrator, Republican Senators highlighted specific policy recommendations they would like to see incorporated into Medicare Advantage (MA) plans. This includes measures relating to the fee-for-service normalization factor, plan performance rating methods and employer group waiver plans.  The Senators also noted the importance of CMS’s willingness to work with stakeholders and Congress on these issues. 

The letter was signed by: Senate Finance Committee Chairman Orrin Hatch (Utah), Majority Leader Mitch McConnell (R-Ky.) and Finance Committee Senators Chuck Grassley (Iowa), Mike Crapo (Idaho), Pat Roberts (Kans.), John Cornyn (Tex.), John Thune (S.D.), Richard Burr (N.C.), Johnny Isakson (Ga.), Rob Portman (Ohio), Pat Toomey (Pa.), Dean Heller (Nev.), Tim Scott (S.C.) and Bill Cassidy (R-La.).

Some specifics of letter

“Specifically, we appreciate that the 2018 Advance Notice proposes to pause the phase-in of the use of encounter data to determine patient risk scores. It is important that CMS continue to work with stakeholders and the Congress to ensure that use of encounter data is viable prior to further implementation.”

Fee-for-Service Normalization Factor: We urge CMS to make additional information available regarding the methodology for calculating the normalization factor and to work with stakeholders to fully understand the data sources and implications.  We recognize the challenges that the agency faces in establishing the normalization factor but believe that increased transparency will help establish the most appropriate adjustment.  We are also concerned with the proposed 2018 normalization factor specific to the ESRD Dialysis Model.  This proposed factor, which is calculated based on a risk score that includes at least one outlier year, would result in an 8 percent decrease in payments to plans for serving this vulnerable, high-need population.”

Star Ratings: We urge CMS to ensure that any reflection of data integrity issues into the MA Star Ratings methodology is fair to plans and helpful to beneficiaries in distinguishing plan performance.  We appreciate the CMS willingness to reconsider its approach in recent years and ask that the agency continue to work with stakeholders and the Congress.”    

Employer Group Waiver Plans (EGWPs): We urge CMS to reconsider the 2017 Final Notice policy that waives the bidding requirements for MA EGWPs.  The decision to set payments to EGWPs administratively, which was made by the previous Administration, is likely to adversely impact the roughly 3.2 million beneficiaries with retiree coverage.  Further, CMS took this action despite a lack of Congressional interest in the policy when it was included in then-President Obama’s budget request.  At a minimum, CMS should use the same blend between the old and new methodology for 2018 to provide more time to broadly consider the issue and its impact.” 

Final Rate Notice

On April 3, after the release of the GOP letter, CMS announced the Medicare Advantage Final Rate Notice, laying out the policies governing plan payment for 2018. CMS estimated that MA funding will increase by 0.45 percent on average in 2018. However, plan costs are expected to increase on average by 4 percent to 5 percent due to projected health care cost increases and the expiration of the one-year moratorium on collecting the health insurance tax.

According to analysis from AHIP, CMS responded to the GOP requests on three particular topics with the following policies:

Fee-for-Service Normalization Factor

CMS finalized the normalization factor as proposed for 2018. CMS made a technical correction to the ESRD normalization factor. As a result, the ESRD normalization factor was 1.015, resulting in a lower impact on payments than proposed.

Star Ratings

CMS retained the current Beneficiary Access and Performance Problems (BAPP) Star Rating measure for 2018. In addition, CMS will incorporate results of Appeals Timeliness Monitoring activity audits, if accurate and valid, into data integrity reviews for the four Star Ratings appeals measures. For 2019, the agency intends to retire the current BAPP measure and introduce a revised BAPP measure on the display page that will no longer include enforcement actions or reductions for plans under sanction due to an audit, and may consider scaling reductions of Star Ratings due to data integrity reviews (rather than continue the policy of automatic downgrades to one star).

Employer Group Waiver Plans (EGWPs)

CMS will use the same methodology for payment of EGWPs in 2018 as in 2017. That is, EGWPs will not submit bids for 2018 and CMS will base payments on a 50/50 blend of individual MA plan and EGWP bids submitted in 2016.


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