The recent CMS rule did not provide reasons for the major year-to-year swing in Connecticut hospitals' payments, but a congressional source said it stemmed from the state's hospitals submitting incomplete or inaccurate information last year, on which the CMS based its fiscal 2013 rates.
Stephen Frayne, senior vice president of health policy at the Connecticut Hospital Association, blamed “bad data” for the relatively low fiscal 2013 rural floor-based payments.
The state's rural-floor wage index was 1.2048 in fiscal 2012 before dropping to 1.1759 in fiscal 2013 and rebounding to 1.3119 next year.
“The proposed value of 1.3119 for 2014 corrects the previous error,” Frayne said in an e-mail.
The boost for Connecticut hospitals was dwarfed by $169.1 million extra that 60 of Massachusetts 61 hospitals are expected to receive in the next fiscal year because of the rural-floor provision. Although that is a drop from the $188 million the commonwealth's hospitals garnered in the current fiscal year, it still would boost the hospitals' overall Medicare rates by 5.6%.
The Massachusetts hospitals' increase was the focus of much of the criticism that the rural-floor policy has drawn.
“It is unfair to manipulate the Medicare payment system to benefit one state's hospitals at the expense of all other states' hospitals,” Sen. Tom Coburn (R-Okla.) said in a Senate floor speech in March.
The increase for Massachusetts and Connecticut powered a 4.4% overall Medicare boost for New England urban hospitals under the rule, which dwarfed the 0.8% proposed increase for all acute-care hospitals next year.
The statutorily required national budget neutrality means 434 hospitals—mostly clustered in the northeast—would garner extra cash, while 2,970 other hospitals would face cuts, according to the proposed rule.
Other big payment swings between the current and next fiscal years occurred in Nevada, which went from losing $3.2 million overall to gaining a net $10.9 million. Arizona went in the opposite direction, gaining $31.4 million extra in fiscal 2013 and losing $6.7 million in fiscal 2014.
The regional splits have led a 20-state coalition of hospitals to push legislation to eliminate the statutory requirement for national budget neutrality. That measure, sponsored by Sen. Claire McCaskill (D-Mo.), has yet to advance but a nonbinding budget amendment supporting such a move garnered broad bipartisan support in March.
“This should give Congress further impetus to address this issue,” Dan Boston, a lobbyist leading the hospital coalition against the rural floor provision, said in an interview.
Supporters of the current policy have defended it as needed to correct previous regulatory changes that disproportionately reduced hospital payments to many of the hospitals benefitting from the current policy.
Instead, some hospital advocates have supported a comprehensive overhaul of the hospital wage index, which could include a resolution to the rural-floor issue.
The American Hospital Association is officially neutral on the rural-floor issue, according to an official. The industry group established a task force in 2011 to look comprehensively at wage index issues and it was originally planning to issue a report last fall.
But in an April interview, Joanna Kim, vice president for payment policy at AHA, said that there is now no timeframe for such a recommendation.
“We're still working those recommendations through the field to reach consensus,” Kim said.
Follow Rich Daly on Twitter: @MHrdaly