Modern Healthcare – August 19, 2019

August 19, 2019 | Modern Healthcare 9

third-party coverage such as Medicare

or private insurance.

Hospitals cannot receive more money

in Medicaid DSH payments than they

spent to treat Medicaid beneficiaries or

the uninsured. Part of the motivation be-

hind that stipulation was to prevent hos-

pitals from double dipping by collecting

DSH payments to cover costs that had

already been reimbursed.

The Children’s Hospital Association

of Texas said in a statement that it is ex-

ploring its options.

“We are disappointed with the result

because it will reduce critical Medicaid

funding to safety-net providers like chil-

dren’s hospitals,” the association said.

“These hospitals are heavily reliant on

Medicaid payments because 50% to

80% of their inpatient days are covered

by Medicaid. Children’s hospitals care

for all children, and are, in fact, often the

only place that children with complex

conditions can get life-saving care.” l

HOSPITALS THAT CARE for a large

share of Medicaid, low-income and

uninsured patients stand to receive less

funding from the federal government

after an appeals court reconsidered how

Medicaid disproportionate-share hos-

pital reimbursement is calculated.

A three-judge panel of the U.S. Court

of Appeals for the District of Columbia

Circuit last week reversed

a lower-court decision

and reinstated a 2017

rule establishing that pay-

ments by Medicare and

private insurers are to be

included in calculating a

hospital’s DSH limit, ul-

By Alex Kacik

from about a third of ED visits nation-

wide in 2010 to 42.8% in 2016.

Out-of-network billing among admis-

sions to in-network hospitals occurred

only slightly less often. Out of 5.5 million

admissions, 37% resulted in at least one

out-of-network bill during the entire sev-

en-year period. The frequency rose from

26.3% in 2010 to 42% in 2016, according

to the study.

Hospital and physician groups have

lobbied to thwart federal legislation that

would cap out-of-network pay. Con-

gress hopes to pass legislation address-

ing surprise billing in September.

Researchers analyzed

data from a single private

health insurer. They found

the cost to the patient as-

sociated with the surprise

bills increased signifi-

cantly during the study

period. The patient’s po-

tential financial responsi-

bility from out-of-network

ED bills grew from an av-

erage $220 in 2010 to $

in 2016, though many pa-

Policy

Federal appeals court limits hospitals’

disproportionate-share funding

THE TAKEAWAY

Surprise out-of-

network billing

and related patient

costs are increasing

among inpatient

admissions

and emergency

department visits to

in-network hospitals,

according to a study.

THE TAKEAWAY

The three-judge

panel ruled that the

2017 payment rule

will help hospitals

most in need.

By Shelby Livingston

Insurance

Surprise medical

bills getting

bigger and more

frequent

timately lowering its maximum reim-

bursement.

The case, brought by four children’s

hospitals in Minnesota, Virginia and

Washington and an association rep-

resenting eight children’s hospitals in

Texas, concerns the calculation of the

uncompensated costs of treating Med-

icaid beneficiaries known as the “Med-

icaid shortfall.”

For instance, if a hospital spends

$1 million on treating Med-

icaid patients who have

no other healthcare cov-

erage and Medicaid pays

$600,000, then the Medicaid

shortfall is $400,000.

In some instances, Medic-

aid patients have additional

EVIDENCE CONTINUES to mount that

patients are being hit with higher costs

from surprise medical bills.

The latest indicator: A study in last

week’s JAMA Internal Medicine re-

vealed that surprise out-of-network bills

and related costs are increasing for in-

patient admissions and emergency de-

partment visits to in-network hospitals.

It comes as congressional leaders are

trying to craft a set of legislative fixes.

Stanford University researchers found

that from 2010 through 2016, 39% of 13.

million trips to the ED at an in-network

hospital by privately insured patients

resulted in an out-of-network bill. That

figure increased during the study period

tients’ bills far exceeded those averages.

Those figures represent the difference

between the amount charged by out-

of-network physicians or ambulances,

and the amount the insurer would pay

in-network for that service.

The potential cost to patients for out-

of-network bills from inpatient admis-

sions grew from an average $804 in 2010

to $2,040 in 2016. In 2016, however, the

90th percentile of patients with out-of-

network bills faced potential costs of

$4,112 or more.

Ambulances accounted for the most

out-of-network bills for both ED visits

and inpatient admissions.

For ED patients, 85.6% of

ambulance encounters re-

sulted in an out-of-network

bill, while 81.6% of ambu-

lance encounters for pa-

tients who were admitted

resulted in a surprise bill.

In both settings, emergen-

cy medicine and internal

medicine were among the

specialties that billed out-of-

network most frequently. l