Massachusetts hospital leaders hope the CMS will overlook a miscalculation submitted by a small hospital there that could otherwise cost facilities across the state $160 million.
Some experts, however, say the CMS may be reluctant to fix the mistake, out of fairness to other states.
Partners HealthCare recently learned that technical errors were made when calculating wage data at its 19-bed Nantucket (Mass.) Cottage Hospital. That has created a problem for other hospitals across the state. That's because Nantucket is technically the state's only rural hospital, and as such, it sets the floor for Medicare payments to hospitals across the state for employee costs.
Nantucket's calculation errors, combined with other methodological changes imposed by federal auditors, now threaten to slash Medicare reimbursements to all Massachusetts hospitals by $160 million, according to Partners.
“We join with all Massachusetts hospitals to urge the federal government to use the new, correct data,” Partners spokesman Rich Copp said in a statement Monday. “We believe it is the responsibility of the government to use the correct data so that adequate Medicare reimbursement is available to cover the cost of care provided to seniors. Any other course of action will hurt hospitals in every corner of the state.”
Tim Gens, Massachusetts Hospital Association executive vice president, also said in a statement that the association hopes the CMS uses the corrected data "especially when an error would so seriously affect so many hospitals across the state."
The CMS said in a statement Monday that it is currently reviewing the hospital's appeal.
Some, however, say the CMS may not want to use the new corrected data. That's partly because Partners submitted the corrected data on April 5—past the deadline for such corrections.
Wage index payments to hospitals across the country are budget-neutral, meaning if Massachusetts hospitals don't get that $160 million next year, hospitals in other parts of the country will.
Healthcare consultant Scott Besler said it's hard to say whether the CMS will use the corrected data. It's possible they'll allow for the correction, or they may say, “I'm sorry but you missed the opportunity to get it in,” Besler said.
Other states may view such a correction, after the deadline, as unfair.
“I think there would be a lot of hospitals across the nation that would be upset because Medicare payments from a general standpoint are applied on a budget-neutral basis,” said Glenn Bunting, director at accounting and consulting firm Moss Adams. “If Nantucket were to receive favor from the CMS to get this error corrected, that impacts ... all the other hospitals in the nation.”
Bunting said the CMS may be “reluctant to stick their neck out in a situation like this.”
Besler said such calculation mistakes aren't unheard of, but oftentimes, the CMS, a state hospital association or a Medicare administrative contractor will catch the mistake before this point.
He called the Nantucket situation “a shame.”
“It's unfortunate that these math errors could create such big problems,” Besler said.
If Massachusetts hospitals do lose that $160 million next year, that could constitute as much as a 10% drop in Medicare funding for some hospitals and lead to layoffs of 2,000 staff members, according to the Boston Globe, quoting estimates by the Massachusetts Council of Community Hospitals.
For years, hospital leaders across the country have criticized the way Massachusetts hospitals receive those wage reimbursements based on Nantucket's data.
The leaders of the North Carolina, Ohio, Oregon and Wisconsin hospital associations wrote a Bloomberg article in 2014 criticizing the part of the Affordable Care Act that mandates hospitals in urban areas receive wage reimbursements at least as high as a state's rural hospitals, as part of a nationwide budget-neutral system.
In that article, they called the system in Massachusetts, the “Bay State Boondoggle,” complaining that the state's hospitals manipulated that part of the law to their advantage. They said that after Partners acquired Nantucket Cottage, in an affluent area of the state, the hospital switched to the rural hospital payment system to help boost Medicare wage reimbursements for hospitals across the state.
“Massachusetts' gain came at the expense of hospitals across the country—from hospitals that are struggling to care for Medicare beneficiaries in their own states,” the association leaders wrote.