Policy Evidence

  • Medicare sets its own rates but does not control what providers charge for non-Medicare patients, and so this type of single-payer rate-setting can lead to providers charging commercial insurers or uninsured patients more if government rates are considered “too low”. source
  • Colorado released a proposal to install a new statewide insurance plan option that would reimburse providers between 175% and 225% of Medicare rates, a reduction from the current state average of 289% of Medicare. source & source
  • Medicare reimbursement rules issue financial penalties to hospitals with higher readmission rates to reduce total cost. However, according to a study by Washington University published in JAMA, new Medicare reimbursement rules have softened the penalties on providers at safety net hospitals by shifting these readmission penalties to those providing care to wealthier patients. source
  • The Senate approved a delay of $4 billion in planned cuts to Medicaid disproportionate share hospital (DSH) payments set to go into effect in November. DSH payment amounts were modified in the ACA as Medicaid expansion was predicted to reduce the amount of uncompensated care in many states. source
  • In 2018, CMS stated that it proposed to expand site-neutral payment rates to clinic visits and services from new clinical families to “control unnecessary increases in the volume of covered hospital outpatient department services.” After lawsuits from hospitals, a federal judge ruled against the CMS proposal in September of 2019. source & source
  • A federal judge ruled in favor of the American Hospital Association and other hospital organizations after CMS reduced payments for hospital outpatient services, stating CMS exceeded its statutory authority. source
  • “All-payer” rates are payment rates that are the same for all patients who receive the same service or treatment from the same provider. source

Outcome Evidence

  • A 2019 Government Accountability Office report found that Medicaid Disproportionate Share Hospital (DSH) payments varied by state based on 2014 audit data. Medicaid DSH payments exceeded hospital aggregate uncompensated care costs for four states, covered half the cost for 19 states and less than half the cost for 29 states. source
  • A 2019 Government Accountability Office report found Medicaid DSH payments accounted for 13.6% of the total amount Medicaid paid to disproportionate share hospitals in 2014. They payments varied by state from 0.7% (TN) to 96.6% (ME). source
  • In 2018, the consulting firm, Dobson DaVanzo and Associates reported the cumulative reductions in federal payments to hospitals since 2010 due to several federal policies will reach $218.2 billion by 2028. source
  • On January 1, 2014, Maryland implemented its All-Payer Model for hospitals, which shifted the state’s hospital payment structure to an all-payer, annual, global hospital budget that encompasses inpatient and outpatient hospital services. Over the first three years, the program accumulated $586 million in Medicare savings in hospital expenditures and $461 million in Medicare savings in total cost of care, hitting other targets as well. source & source
  • In 2016, CMS announced the Vermont All-Payer Accountable Care Organization (ACO) Model, a new test of an alternative payment model in which the most significant payers throughout the state – Medicare, Medicaid, and commercial health care payers – incentivize health care value and quality. source & source

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