Blog, Reimbursement

Reimbursement Updates for Hospitals: What You Need to Know in 2023

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Understanding reimbursement updates is crucial as they dictate the parameters of the compensation hospitals receive for their healthcare services. They also directly influence a healthcare organization’s financial health, the scope and quality of care it can provide, and its overall operational efficiency.

BESLER is dedicated to keeping healthcare providers informed and ahead of the curve. In a recent episode of BESLER’s The Hospital Finance PodcastⓇ, Director of Reimbursement Services, Christina Brown, discusses an upcoming healthcare finance webinar on the topic.

Christina Brown takes a deeper dive into the reimbursement updates in her webinar presentation, “Reimbursement Best Practices Series – Reimbursement Updates,” bringing her wealth of expertise to highlight the potential impacts of these adjustments.

Key Reimbursement Updates for Hospitals in 2023

The most significant reimbursement updates for hospitals in 2023 pertain to several key aspects that will reshape the financial landscape of the healthcare industry:

  • Transmittal 18 had the most significant impact with the return of sequestration (financial), and the addition of the supplemental exhibit formats for S-10, DSH, and Medicare Bad Debt (reporting). It requires hospitals to take a deep dive into the patient detail to ensure compliance with the new reporting requirements.
  • Transmittal 19 provided mostly clarification and instructional updates to various lines throughout the Cost Report.
  • Transmittal 20 was the least significant of the three transmittals as updates were more geared towards Rural Emergency Hospital providers.
  • Transmittal 21 contained minimal changes to Chapter 40 of the Provider Reimbursement Manual, including items regarding the end of the Public Health Emergency (PHE).

Transmittal 18

Transmittal 18, released near the end of 2022, impacted several worksheets. It signifies a critical shift toward better recognizing and supporting healthcare in rural and underserved communities.

The transmittal also addresses the Sequestration Calculation Adjustment, marking the end of relief from sequestration with the conclusion of the public health emergency for COVID-19. The adjustment amount is 2%; however, this will be eliminated, restoring the original sequestration cut.

Another significant change brought about by Transmittal 18 is the introduction of Worksheet S-10 Part II, required for cost reports beginning on or after October 1, 2022. This worksheet plays a pivotal role in capturing uncompensated care costs, providing a clearer picture of the financial responsibility borne by hospitals in providing care to uninsured and underinsured patients.

Transmittal 18 also introduces Worksheet D-6, applicable only for hospitals involved with Cellular Therapy Acquisition. The worksheet delves into the inpatient routine, ancillary, and other costs of acquiring stem cells for transplantation.

Supplemental to these major updates, Transmittal 18 brings changes in Worksheet I-5, Part III, for providers with an End Stage Renal Disease (ESRD) program. It also introduces specific changes and clarifications in Worksheet S-2 Questions, focusing on aspects like FTE cap calculation, TEFRA providers, and purchasing professional services from unrelated organizations.

Transmittal 19

Transmittal 19 introduces several fundamental changes and clarifications to the healthcare reimbursement landscape. Released on March 24, 2023, it presents significant updates to the instructions and introduces new forms.

The transmittal includes updates to several worksheet lines. Notably, Worksheet S-2, Line 39, has received an instruction update for the FY25 formula, and Worksheet S-10, Lines 27 & 27.01, has updated instructions to include HHA H-4 for Medicare Bad Debt. Transmittal 19 also brings clarity to Exhibit 2A.

In addition, it affects E Part A, Lines 48 & 49, introducing changes to the end date of the MDH program. For E Part A, Line 70.75, and E Part B, Line 39.75, it adds an adjustment for N95 respirators. Worksheet G-3, Lines 24.51-24.60, has seen lines for other COVID-19-related funding not on line 24.50, such as Payroll Retention Credits or State Emergency Relief Funds. Finally, a new form, WS E-95, has been introduced to calculate Inpatient (IP) and Outpatient (OP) payment adjustments for N95 respirators.

Transmittal 20

Transmittal 20, issued on April 14, 2023, adds a Rural Emergency Hospital (REH) provider type, reflected in Worksheet S-3 Part I, Line 15.10, capturing the output. The incorporation acknowledges the essential role that rural emergency hospitals play in healthcare delivery and the unique challenges they face.

On the payment front, E Part B, Line 3, denotes that REH provider types will receive Outpatient Prospective Payment System (OPPS) reimbursement plus an additional 5%. This adjustment offers critical financial support to REHs, improving their capacity to deliver essential medical services in rural communities.

E Part B, Line 28.5, was designed explicitly for REH payment, further emphasizing the commitment to acknowledge and support rural emergency hospitals in their crucial role. Additionally, D-6 Part I, Line 28, was added to account for clinic input, offering a more comprehensive and precise understanding of the overall healthcare service delivery and associated costs.

Transmittal 21

Transmittal 21, issued on July 28, 2023, contained very minimal changes to Chapter 40 of the Provider Reimbursement Manual.

  • All references to the CHART Hospital provider type that were added in Transmittal 18, were removed in Transmittal 21 in the form set and instructions.
  • In the instructions, there was clarification added for items related to COVID-19 to specify the end of the PHE on May 11, 2023.
  • In the instructions, clarification for worksheet S-10 references in the form and exhibits 3B and 3C, to specify amounts should come from S-10, Part I for the hospital and hospital complex. (There were not multiple parts to worksheet S-10 prior to Transmittal 18.)

FY 2024 IPPS Proposed Rule

The FY 2024 Inpatient Prospective Payment System (IPPS) Proposed Rule, released on April 10, 2023, proposes a net increase of 2.8% in the base rate, a decrease compared to the 3.8% increase in the FY2023 IPPS Final Rule. This change is primarily due to a 3% market basket increase and a 0.2% productivity adjustment reduction.

Additionally, the proposed rule suggests a significant decrease in Long Term Care Hospital (LTCH) payments, with a 2.5% drop compared to FY2023. This decrease could impact the revenue streams of medical facilities, necessitating strategic measures to optimize revenue management.
As experts in healthcare finance, BESLER is committed to helping its clients navigate these complex reimbursement landscapes, ensuring they are abreast of all changes and can maximize their reimbursement opportunities.

Check out our upcoming Webinar – FY 2024 IPPS Final Rule Summary – that we are presenting live on Wednesday, Sept. 13, at 1 PM ET. Register now to join us to learn all about the FY 2024 IPPS Final Rule.

The Impact of Reimbursement Updates on Hospitals

The landscape of hospital reimbursement is constantly changing, with new transmittals and rules frequently being issued. These factors significantly impact hospital finances, with new payment methods, changes to existing ones, and the addition of new provider types.

Compliance with these changes presents an essential requirement for hospitals. The adjustments demand considerable modifications to internal systems, processes, and documentation.

Operational impacts are also a critical concern for hospitals regarding these reimbursement updates. The outlined changes will require modifications to staffing, service delivery models, and overall active strategies to ensure hospitals can optimally benefit from the updated reimbursement structure.

Operational Impact

The operational impact of these reimbursement updates for hospitals is profound, requiring significant adjustments to current practices and procedures to meet the changing requirements.

Introducing COVID-19-related funding in line 24.50, Transmittal 18 may require hospitals to train their finance and accounting staff to effectively manage these resources and ensure compliance with specific requirements. Documentation processes may also require revision to maintain a clear record of fund usage.

Although complex with its numerous updates, Transmittal 19’s changes may drive hospitals to revisit their existing systems and processes, identifying areas for improvement or adaptation. Improvements could lead to more efficient operations and enhanced patient services.

Transmittal 20 also implies operational changes for REHs, which may have to adjust their service delivery models and administrative procedures to meet compliance requirements and maximize reimbursement.

The proposed decrease in LTCH payments and an overall increase in the base rate presented by the FY 2024 IPPS require a thorough review and potential alteration of current operational strategies. Hospitals may find it beneficial to enhance operational efficiency, optimally allocate resources, or even consider alternative service delivery models to navigate these changes effectively.

How Hospitals Can Prepare for the Reimbursement Updates

In the ever-evolving landscape of healthcare finance, it is crucial for hospitals to proactively prepare for reimbursement updates to stay ahead of the curve and ensure their financial sustainability.

Staying Up-to-Date on the Latest Changes

Staying up-to-date with the latest reimbursement updates for hospitals is critical. Hospitals can leverage multiple resources, including CMS bulletins, healthcare finance publications, and expert advisories like BESLER, to keep themselves informed. Regular training sessions for staff can also help in understanding and implementing.

Analyzing the Impact of the Changes

Not all changes will impact all hospitals uniformly. Conducting a thorough analysis to understand how each update affects your hospital’s financial, operational, and compliance aspects is vital. This deeper understanding can guide decision-making and strategic planning, ensuring your organization can navigate the changes successfully.

Making Adjustments to Business Plans

As the reimbursement landscape shifts, hospitals must prepare to adjust their business plans accordingly. Alterations could include revising financial projections, changing operational procedures, or rethinking service delivery models. Regular review and adjustment of business plans ensure they align with the prevailing reimbursement realities.

Developing a Strong Compliance Program

A robust compliance program adheres to the latest regulations and has systems in place to monitor compliance continually. Regular audits, staff training, and a culture of compliance can prevent penalties and maximize reimbursements.

Investing in Technology

Harnessing the power of technology can simplify the complex task of tracking, understanding, and implementing reimbursement updates. BESLER’s team and reimbursement technology solutions assist hospitals in navigating these complexities. BESLER provides up-to-date information, analysis tools, and compliance aids, helping hospitals manage the reimbursement process.

Work with BESLER to Stay Ahead of Reimbursement Updates

BESLER’s healthcare finance experts offer invaluable advice on how hospitals can stay informed with the latest reimbursement updates. By adopting a proactive and educated approach, hospitals can better navigate the financial implications of these updates. Doing so ensures they are both compliant and optimized for maximum reimbursement.

The information presented in our podcast and webinar highlight the indispensable role of technology in maintaining compliance with new requirements. BESLER’s technology solutions enable hospitals to manage and stay ahead of the latest updates easily. Such a technological investment can lead to improved compliance and increased reimbursement prospects.

Take advantage of these essential insights! Listen to the full podcast episode and watch the webinar to understand the latest reimbursement updates for hospitals. Please contact us for further queries regarding our hospital revenue integrity and reimbursement technology. We’re here to assist you in navigating these changes effectively.

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