The CMS' current formulas for determining uncompensated-care payments for hospitals aren't pinned to the actual costs the facilities incur, a new government watchdog study says.
Although the federal government typically spends approximately $50 billion per year attempting to reimburse hospitals for uncompensated care, the U.S. Government Accountability Office says the CMS' system is inefficient and undermines hospitals' abilities to treat underserved populations.
Currently, the CMS calculates Medicare uncompensated-care payments based on the number of days a hospital spends treating Medicaid and low-income Medicare patients. But that formula in recent years has given some hospitals more money when their uncompensated-care costs have actually decreased thanks to the Medicaid expansion.
“Neither the current poor alignment of Medicare UC payments with hospital uncompensated-care costs nor the lack of accounting for reductions in hospital uncompensated-care costs for uninsured patients resulting from Medicaid payments are consistent with Medicare's role as a prudent payer of healthcare,” the GAO's report said.
Instead, the GAO has recommended that the CMS tie the payments to actual uncompensated-care costs, as suggested in a proposed CMS rule from April. The agency also needs to monitor when hospitals are eligible for both Medicare uncompensated-care payments and disproportionate-share hospital payments to prevent dual payments.
According to the CMS' proposed rule, the agency may tie uncompensated-care payments to actual cost data from a Medicare worksheet. HHS agreed with the GAO's recommendations and said it would consider stakeholder input before releasing a final rule on uncompensated-care payments later this year.
