Blog, Reimbursement, The Hospital Finance Podcast®

Recap from American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues [PODCAST]

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The Hospital Finance Podcast

In this episode, we are joined by a trio of experts in healthcare to discuss their takeaways and the highlights from the recent American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues.

Learn how to listen to The Hospital Finance Podcast on your mobile device.


Highlights of this episode include:

  • Special guests: Bob Mahoney – Senior Consultant, BESLER, Mark Polston – Partner, King & Spalding, and Kristin DeGroat – Compliance and General Counsel, BESLER.
  • BESLER’s Bob Mahoney shares his insights on the presentation made by Secretary of Health and Human Services, Alex Azar which talked about current issues such as Medicaid and prescription drug prices.
  • Presenter Mark Polston shared his thoughts on current uncompensated care issues like charity care, financial assistance, and bad debt.
  • Mark shares what he thinks hospitals should consider knowing that uncompensated care is a fluid concept
  • BESLER’s Kristin DeGroat shares her perspectives on social media as it pertains to healthcare lawyers and healthcare professionals.
  • And more…

BESLER has long been at the forefront of national reimbursement issues, securing millions of dollars in additional reimbursement for our clients. Visit our Reimbursement Services page to learn about our area of expertise.


Part One: Bob Mahoney – Senior Consultant, BESLER

Mike Passanante: Hi, this is Mike Passanante. And welcome back to the Hospital Finance Podcast.

Each year, the American Health Lawyers Association holds its Institute on Medicare and Medicaid Payment Issues. And this year was no different. Recently, BESLER participated and attended that meeting in Baltimore, Maryland. And we thought we would take this podcast episode to bring you some thoughts and ideas that were heard from that particular meeting.

And joining me is Bob Mahoney who is a Senior Consultant on our Reimbursement Services team here at BESLER to share a little bit about what he heard there. Welcome to the show, Bob.

Bob Mahoney: Thank you, Mike. And I was in Baltimore for three days, full of sessions. It’s great. It was highly attended this year, the session on Medicare and Medicaid. It’s a great session. And because of the location in Baltimore, they got some top people from Washington DC and Baltimore and CMS in particular and top lawyers from that area. And if you’re involved in Medicare and Medicaid reimbursement, it really is one of the top seminars to go to with large, diverse speaking groups.

Mike: Well, certainly, one of the first ones we want to talk about is a heavy hitter. They had the Secretary of HHS there, Alex Azar. Why don’t you tell us what you heard in his session, Bob?

Bob Mahoney: Yeah, that was quite an event to see him speak there. I’ve been there years before, and this is probably the top keynote speaker. He’s the Secretary of Department of Health. And so, obviously, it’s big, what he talks about. And the CNN cameras were there and the Secret Services walking around. So it was certainly different than what you see in a normal seminars.

And one of the big quotes he talked about the administration’s healthcare policy is he said, and I quote him, “Americans deserve a health care system that takes care of them, not takes advantage of them. We were taking a bold approach to reform regulations in order to deliver to American patients better care at lower costs and the greater peace of mind they deserve.”

And this is probably during the week that the 2020 budget was announced. And there were cuts in it in the preliminary budgets and Medicare and Medicaid. So they’re obviously looking in the different direction of higher quality at lower cost.

Another thing that he talked about was that he said “drug rebates would result in higher drug list price.” So, you have to play by the rules and work within the rules. But it was certainly an interesting speech he gave in showing the administration’s focus going forward on healthcare.

Mike: Another individual that spoke there was Clayton Nix who’s the chairman of the PRRB board. And he spent his time on appeals.

Bob Mahoney: Yes. And it’s really great to go there and meet Clayton Nix and all the people there from the PRRB board which is the Provider Reimbursement Review Board. And to meet those people, and him explaining exactly how that’s going to happen, and what their process is, and everybody submits an appeal and uses the lawyers to  submit their appeals, and taking a long time, he explained in that process why it takes a long time. The process enhancements they’ve made, you can do it electronically now, submit your appeals, and that’s certainly making things quicker, get it to them quicker.

It’s great to put a face with the name that you’ve been dealing with throughout the years if you’re working in the appeal arena.

And also, what he said was interesting. I guess he’s thinking about a lot of people are complaining those cost reports out there, and they weren’t being settled. So, CMS and the MACs made a push to close those cost reports.

Well, when they closed the cost reports, people go through, and appeals increased. And now they’re seeing an increase in appeals since the 2012 and 2013 cost reports were closed. And now, they are being appealed.

So, as much as they work on the backlog, it’s just a continuing flow of work for them, just like everybody else.

Mike: It’s certainly a hot topic in the industry there.

And obviously, this meeting, Bob, covers both Medicare and Medicaid. But when we talked before the show, you mentioned that you felt like there was an increased emphasis on Medicaid across all the presentations. What are you thinking about there?

Bob Mahoney: Yeah, as we talked to our clients and contacts down there, everybody has mentioned more Medicaid sessions happening. And I think what’s going on there is we kind of see the administration and the policy is Medicaid expansion might go away. The Medicaid you have becomes more important if you lose those dollars and the states struggle. Medicaid programs are changing, and it is quite a big population, a big piece for a hospital.

There were sessions for Medicaid Fundamentals, Current Issues in Medicaid Supplemental Payments & Financing, the Changing Face of the Medicaid Program, Addressing Social Determinations in Medicaid-Managed Care.

And this is a big issue for the hospitals, a big part of their client base. And like I said, with Medicaid expansion, ObamaCare, the change that the administration’s talking about—and Alex Azar did mention all that going on, going forward, that they’re looking at everything—as payments go down, you need to understand how to maximize and understand what’s going on in the program, so it’s beneficial to you or your hospital.

Mike: Bob, we talked about the S-10 quite a bit on this program. And certainly, that was a topic of interest there at the at the meeting as well, both its current impact and recent audits.

Bob Mahoney: Yes… I mean, DSH is always a big issue. It’s one of the major appeals issues. It’s always been a change. And now, with the world of S10 coming in, it’s been quite a change to that whole process. And going forward, it’s going to be a bigger change as CMS attempts to capture more data.

And recently, about 200 hospitals across the country were picked to audit their 2015 S-10. And it was a struggle. The order was a difficult order. And the results have not been posted yet or what CMS plans to do with these.

But Alicia Key who works for the California Hospital Association shared a letter that they had submitted in California on behalf of all California hospitals and the issues they had with the audits for the S-10. They could have a long-term effect.

And most seminars talked about it. It’s an issue that looks like, now, if the audits are difficult, what’s going to happen is if they settle, appeals grow. And you can see how this all comes full circle at this seminar. Everybody’s talking about appeals, and then changes to various worksheets.

Mike: Bob, we’re due for DSH cuts coming up. They’ve been pushing those off, essentially, as part of the ACA. Was there any discussion at the meeting about that?

Bob Mahoney: Yeah, several sessions about DSH cuts, starting with Azar speaking, and that’s why the Medicaid is so important, and the S-10 is going to be used to be cutting DSH. The hospitals are just looking for other ways to make things right.

And that’s one of the reasons I think this year is one of the most highly attended—certainly, I’ve seen in the past five years (and most people said ever)—because there’s so many changes coming in with this administration, with other things being the ObamaCare. All these change is coming. If you get in this room with the HLA, with the lawyers and the people from CMS, it will certainly give you a better understanding of what’s going on. That’s really the great advantage of the seminar to attend.

Mike: Bob, thanks for that great perspective today.

Bob Mahoney: Thanks, Mike. My pleasure to be here.


Part Two: Mark Polston – Partner, King & Spalding

Mike: In continuing our discussion around AHLA, I’m joined by Mark Polston who is a Healthcare Partner at the King and Spalding Law Firm. Mark, welcome to the program.

Mark Polston: Well, thank you. And I’m happy to be here.

Mike: Mark, you were fortunate enough to speak at this year’s AHLA. And you did speak around uncompensated care issues. So we want to dive into those with you here on the show today.

And in some of our notes and exchanges before the podcast, you mentioned that there is no uniform definition of what constitutes uncompensated care. So maybe you can start out by talking about what the basic definitions of uncompensated care are and where they come from.

Mark Polston: Certainly! I’d be happy to do that.

If you just start at a basic level, really, what uncompensated care, at its most fundamental, boils down to is you provided care and you did not receive enough finances, I guess, or reimbursement to sort of cover the cost of performing that care. And that’s a very simple concept to understand. But there are many buckets of sort of uncompensated care that hospitals deal with.

There’s the concept of hospitals provide charity care, for example. All hospitals have charity care programs, or they don’t have to call them charity care programs, they call them financial assistance programs. So when people are eligible for those programs, they get discounted off hospital charges, and those amounts that they’re discounted off of are obviously care that’s not being compensated because they’re paying below those charges.

Another sort of idea or concept of uncompensated care is bad debt. So let’s say that you have a commercial patient who has a commercial insurance, but that patient has a co-payment or deductible responsibility under their insurance, but they ultimately don’t pay that. Well, that’s bad debt. And people account for that as bad debt, but it’s really uncompensated care because they’re not paying the portion of the cost that their insurance provider requires them to pay to pay for their care. So that’s uncompensated as well.

And then, there’s another concept out there about uncompensated care which is what about the amounts that you receive from an insurer, whether it’s a government insurer or a commercial insurer, that don’t really cover your ultimate cost?

So for example, let’s take a Medicaid patient. Everybody knows that the Medicaid program doesn’t really pay at the level of cost when they reimburse for their enrollees. So, if a hospital provides, say, an inpatient stay, and the charges for that in-patient’s stay from the hospital’s perspective are let’s say $15,000, the amount that they get from the Medicaid program is going to be substantially less than those $15,000 in charges. Those are just their charges, right? That’s the price tag. But it’s still going to be substantially less than ultimately what it cost the provider to provide that care to that Medicaid enrollee. That’s uncompensated too.

So, should that be sort of included in any sort of basic definition? Well, again, to your question, there’s really no one idea of what uncompensated care is. It really depends on who’s asking the question. But all of those concepts—care that’s provided through a charity care program or a financial assistance systems policy, bad debt for people who theoretically can pay, but decide not to pay, that could be uncompensated care. And then, this other concept of the shortfall between what you do get paid either from an insurance company or from a self-pay individual that doesn’t cover the cost, that’s also uncompensated care. But that’s not really included in most reporter’s definitions for uncompensated care for a variety of reasons.

So, this is somewhat kind of an unwieldy answer here, but to get to the point that there is really no uniform definition of uncompensated care, but there are concepts that we talk about—charity care, financial assistance, bad debt and shortfall that all can fit within the concept of uncompensated care.

Mike: Sure! And you also look at things like Medicare, IRS and GAP as part of those definitions, right?

Mark Polston: That’s right. And so, when I said it really depends on who’s asking the question, that was an allusion to what you just talked about.

Medicare asked the question of uncompensated care because it uses the amount of uncompensated care—and I’m putting air quotes around that that you can’t see. It uses that definition of uncompensated care to distribute payments to hospitals that we typically think of as Medicare DSH hospitals.

But it distributes payments from a pool of funds that the agency establishes at the beginning of a cost reporting year. And it says it’s directed by the Medicare statute to total up the amount of uncompensated care that each one of those DSH hospitals provides during a particular period of time and compare that to all of the uncompensated care that’s provided by all hospitals who are DSH hospitals.

And so, your ratio—it will be based upon your ratio—you get a little bit of a slice of the pie that the government has come up within this pool of dollars, a multi billion-dollar pool.

So, there’s a definition of uncompensated care there that the Medicare program focuses on. And they’ve decided uncompensated care means the amount of charity care that a provider provides during a particular period of time, plus bad debt. But they exclude from that definition, that Medicaid shortfall that I was talking about.

So then, let’s look at the IRS, for example. The IRS requires non-profit providers to report the amount of charity care that they provide. And that’s required by law so they can maintain their non-profit status. But in their concept of uncompensated care, they actually only look at charity care in financial assistance policies. They don’t include the concept of bad debt within the definition of uncompensated care.

Then of course all providers or people in the financial suite are familiar with the GAP accounting policies. And those require organizations to report in their financials their charity care policies—report on their charity care policies, plus the amount that was provided consistent with those charity care policies.

So, depending upon what those charity care policies require, you can have a different definition of uncompensated care from one provider to the next.

So, there’s all these sort of mushy questions about what is uncompensated care. It depends on actually who’s asking the question.

And then, finally, even within that framework of what is uncompensated care, if you look at these individual elements—charity care, for example. Well, one hospital’s charity care is very different than another hospital’s charity care because there’s no uniform definition of what a charity care program should be.

So again, it depends upon who’s asking the question. And even if only one organization, such as CMS, for uncompensated care payments is asking the question, what your charity care and your uncompensated care may look like, or your program may look like, is very different than what another providers may look like too.

Mike: Great information there, Mark. Let me pivot a little bit and ask you the question: “Why does it matter as to how much uncompensated care a hospital provides?”

Mark Polston: Well, that’s a great question. And part of it is what I was just talking about. If the Medicare program is going to distribute this pool of billions of dollars of payment to all of the DSH hospitals, the thousands of DSH hospitals around the country based upon the amount of “uncompensated care” that they provide, well, that makes an enormous difference as to how much you provide in uncompensated care; and more to the point, how much you recording that uncompensated care on worksheet S-10 of your cost report because that’s the data source that the government uses for coming up with that ratio that you provide for uncompensated care.

So again, the message for our providers is, playing within the rules of the game, being consistent on regulatory policy, how can you ensure that the amount of uncompensated care that you’re reporting on that worksheet is as high as possible so that you can advance yourself as compared to all the other providers who are dipping from the same pool, right? It’s a zero-sum game.

So, if finances are your thing, that’s the most immediate reason why it matters what is the definition of uncompensated care and how much you’re providing.

But I think that there’s also going to be, in the future, other measurements of uncompensated care—or let me rephrase that as, “There are going to be other ways in which the government is going to be making decisions for hospitals based upon the amount of uncompensated care that they provide.”

And so, people should really be focusing on these various definitions and where the government may draw the line between who provides enough compensated care and who doesn’t provide enough uncompensated care in the future.

Let me give you an example of that. So, in the past, the government has come up with several programs to help safety net hospitals. The DSH program is one of them. The uncompensated care program is one of them as well. But there’s also the 340B drug discount program.

And the way in which the government has sort of divided the haves from the have-not’s, i.e. who is eligible for and who should qualify for getting some of these subsidizations from the government has, in the past, focused upon the number of low income individuals that you provide services to in an in-patient basis. So that’s how you decide who’s in the 340B program, for example, how high your Medicare DSH percentage is.

But there’s been a big recognition that that’s probably not the most refined way to figure out who’s providing uncompensated care to others in the community. And so, the government has pushed for transparency on this issue as CMS did by focusing upon what uncompensated care a provider is recording on its cost report worksheet.

But when it comes to the 340B program, there’s a lot of focus upon reform of that program. It wouldn’t surprise me—In fact, the idea has been floated already—that if there is going to be reform with the 340B program, perhaps a better way to figure out which covered entities or which hospitals are eligible for participation with the 340B program, perhaps “uncompensated care” is the better way to divide the haves from the have-not’s.

And so, the point of all this is, five or six years ago, nobody really cared about the uncompensated care so long as they can report something to the IRS. But now, the amount of uncompensated care you provide has become a huge focus because it’s going to make financial differences.

So, if you’ve been just following the old rules and haven’t been keeping up with how the definitions of uncompensated care are shifting and being refined, you’re just playing by the old rules, you’re going to be left behind. You need to figure out what the new rules are. You need to figure out how they apply in the context in which you’re seeking to report those and what the financial consequences are going to be for you.

Mike: That’s a great bridge to my next question, Mark. What sort of things should providers consider doing knowing that uncompensated care is somewhat of a fluid concept?

Mark Polston: Right! That’s a really great question. It’s one that I get a lot.

I think what they want to do is ensure—one thing that they have to figure out, for example, is to what extent is chasing after their bad debt, frankly, worth it? Is the juice worth the squeeze in chasing after bad debt? Hospitals typically do that by trying to do some internal collecting. And then, if they can’t collect on that bad debt, they send it out to third-party collection agencies. And the wrinkle here is that the Medicare program will pay you and reimburse you for unreimbursed Medicare bad debt. But you have to treat Medicare bad debt and non-Medicare bad debt in the same way.

So, if you send out some bad debt for collection, you got to do the same thing for Medicare bad debt. That all has to come back from outside collection agencies before you’re allowed to claim that as a reimbursement.

So, there’s sort of a timing issue there. Do you want to claim that as bad debt and let it stay at the collection agency where you might get some money in? Or do you want to just say, “You know what? We’re going to write all that off, put that on our S-10 because that’s valuable for us on our S-10 because now I can claim it as bad debt today, rather than a year or two years from now. If I can claim it as bad debt, and Medicare considers that to be uncompensated care, then I raised my amount of uncompensated care.

So, they have to think about these timing issues, and whether the traditional way of chasing after bad debt still makes sense now that the definitions and the uses of uncompensated care is changing.

I’ll say another thing, and then I’ll leave it at this. Since the definition of uncompensated care in all circumstances is linked to hospitals’ charity care programs, every hospital should be going back and looking at their charity care policies and ensuring that there’s no requirement that you provide charity care at various income levels. You can make all those decisions on your own. But what the government does look for is whether or not you’re following those policies.

And so, what you have to ensure is that the charity care policy that you’re putting in place is not so sophisticated and doesn’t require so much collection of information that, inevitably, the people in your—whatever, if the patient is in financial assistance or whatever department—aren’t going to follow that policy, because it’s too difficult. You need to ratchet some of that back—still having documentation requirements, but ensuring that you’re not going to have so many documentation requirements that an auditor could come through and say, “Well, you’re not really following your charity care. So we’re going to disallow this as charity care.”

That’s caught up a number of providers in the recent audits from the Medicare uncompensated care program. So they need to be cognizant of that as well.

Mike: Mark, are there any other changes or updates to Medicare uncompensated care payments that you’d like to share?

Mark Polston: Yeah, I think one thing that everybody should be focusing on is, in the upcoming proposed in-patient prospective payment rule for 2020 (which should probably be out any day now), CMS is going to announce again its policy for how it’s going to calculate uncompensated care payments.

And the big news is that there were several audits done of hospitals in the past three to four or five months. These audits began back in the last quarter of 2018. And they were audits of selected providers worksheet S-10’s. And some of those providers found that they were surprised by the results of the audits.

The agency was fairly aggressive on some issues. There are some big issues that were reversed after some lobbying to the agency. But there’s no doubt that many of the providers have had adjustments for those time periods. And the other concern is that the agency will use those adjustments in the calculation of upcoming uncompensated care payments for fiscal year 2020.

Well, is that fair, you might ask yourself. There are a number of hospitals. This is the first time the agency has ever audited the worksheet S-10. And they didn’t audit everybody of course. They only audited a select number of hospitals. And I don’t think they did that randomly either. They selected out hospitals with high amounts of charity care. So, those hospitals now have these negative audit adjustments while there are other hospitals out there that didn’t have those audit adjustments.

Is CMS going to allow that sort of basic unfairness to impact the amount of uncompensated care payments? That’s something I think we’re going to have to focus on when the proposed rule comes out. It’s possible the agency won’t use the results. But it’s possible the agency will. And depending upon which side you fall down on, you may want to fight one way or the other hard for that.

Mike: Great insights, Mark. If someone wants to learn more about your practice and what you do, where can they go?

Mark Polston: Well, they can go to the King & Spalding website. You can contact me there. I have my biography. So I’m at King & Spalding website. The last name is Polston. But also, happy to reach out to me by email, MPolston@KFLaw.com.

Mike: Mark, thanks for joining us today on the podcast.

Mark Polston: Thank you very much.


Part Three: Kristin DeGroat – Compliance & General Counsel, BESLER

Mike: So, continuing our discussion around the AHLA meeting I’m joined by a Kristin DeGroat who is the Compliance and General Counsel here at BESLER. Kristin, welcome to the podcast.

Kristin DeGroat:  Thank you for having me.

Mike: So Kristin, you had an opportunity to attend this year’s AHLA. And one of the things that you and I have talked about is the use of social media. And I know you attended a session on that. While that was maybe specifically pointed towards lawyers, there’s obviously implications for provider organizations generally.

So, could you share your thoughts on that with us and talk about some of the pitfalls that came to mind for you for not only lawyers, but other healthcare professionals?

Kristin DeGroat: Sure! You know, healthcare-related entities and those that they employ, whether it be doctors or nurses, allied health professionals, anyone that could partake in the healthcare-related field, it seems like they all have blogs and LinkedIn profiles, Facebook pages, Twitter accounts. There’s just so many types of social media out there that they can use—in addition to lawyers. We use those same sites.

But we all use them then to come across to the general public who will either be using our services, whether it be the doc services, or a nurse, or actually receiving care at the healthcare entity. Everyone needs to be careful what they post.

Let’s say you’re a doctor. You have a blog, and you may be posting about what you believe a certain type of procedure should be, and then you may relate it back to, “Well, hey, when I performed this at x entity, this is what we do,” the entity may say, “Well… wait, wait, wait. That’s not how we perceive it. That’s great how you perceive it.” But let’s say the entity doesn’t come back and say anything. Let’s just say they’re silent. Is there anything out there where it says, “Okay, is your silence then is your acquiescence that you actually provide this type of care or provide this type of service?”

Specifically, for a lawyer, when I think about LinkedIn, I think about there’s a skills and endorsements section where someone can say, “Hey, Kristin can provide x service for us.” Well, what if that’s not a service for us I provide? Then I have a duty to say, “Look, thank you so much. I appreciate the endorsement. But I can’t accept this because that’s not exactly a service I provide. That’s not what I do in my day-to-day functions?”

Well, I would think that that would be similar for a doctor or a nurse or anyone who could be providing care, or an entity. But I can control that source. I can go on and say, “Hey, that’s not me. I don’t want to get that out there and be liable for any of the repercussions that could stem from that.”

But let’s say there’s a site where I can’t control—a rating site, maybe a Yelp, or another source that says, “Hey, you know, I give so many stars to this doctor for providing this service.” Again, it goes back to that acquiescence. Does the silence mean “yes, we do this. And here’s where do we go with it” or do we have to actively say, “No, we don’t do that.”

I think from a practical perspective, we should say, “Hey, look, we don’t do that. We appreciate it. But hey, we thank you for the review. It was great. But that’s not really something we do.”

Practically, we probably should. I don’t know how we would accomplish that in all instances because there’s just so much type of social media out there. But I think that’s something we need to think about.

And in thinking something very innocuous, maybe you said, “Oh, look at how adorable…”—let’s say I’m a NICU nurse. “Look how we decorated the NICU” and you post the photo. And you don’t realize, but at the bottom of the photo—and maybe it doesn’t show a picture of a baby, but what happens if it touches the edge of their name? Now, you’ve put information out there that maybe doesn’t affect you personally. It’s not, “Hey, this is an endorsement of the skills you provide which are not correct.” But now you’ve actually released protected information.

And so, we have to be very careful and very aware of what we’re posting, even on let’s say our personal site. Let’s say the nurse who posted that was on her personal site—not the hospital’s Facebook page, but actually her Facebook page. So we have to, again, be very, very aware of what we’re doing.

And so, in looking at these pitfalls that could happen, we need to always be looking at, before we post anything, before we look at the skills and endorsements, or accept these skills and endorsements, we need to think how will we be perceived by those that will come to us for our services.

So, again, whether it be a lawyer or a doctor or a healthcare entity, we have to control not only from an entity perspective, but from the individual perspective—which can be very difficult, again, because there’s so many sites out there. But I think as long as we’re aware and looking at how we could be perceived or what’s out there, I think that will be the only way and the best way to protect yourself.

And maybe not just staying quiet, but actually, if there is a way to come back on a review and say, “Well, we appreciate this. You know, that really doesn’t apply,” or reaching out maybe to the social media site itself and requesting that that posting be taken down—although sometimes, once it’s out of the box, it’s hard to get it back in. So again, always forward thinking, not back thinking, “Oh, now how do I fix this?”

Mike: Great thoughts, Kristin. Thanks very much for joining us on the podcast today.


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