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Medicare: The Impact for You and Your Patients

Medicare: The Impact for You and Your Patients

Access to healthcare is a hot-button issue in America. Each election cycle, we hear arguments on all sides of the healthcare debate, and 2018’s mid-term election was no different.

Your organization’s programs hinge on continuous regulation changes. These changes can have a big impact, even more so for facilities with older or lower-income patient populations. For rural hospitals, Medicare and Medicaid make up about 60 percent of revenue, versus 45 percent of revenue for urban hospitals.

Medicare spending is expected to grow 7.4 percent each year through 2026, says the Centers for Medicare & Medicaid Services (CMS). Compare that to private insurance spending, which is expected to grow by 4.7 percent each year. Any way you slice it, that’s a huge chunk of your revenue to take into consideration.

Growing Medicare Reliance

Today, more than 59 million people who are over the age of 65 or living with disabilities rely on Medicare to cover healthcare services ranging from preventative care to hospitalizations to nursing home care. Of Medicare beneficiaries, 1 in 3 have more than five chronic conditions and a quarter say they are in fair or poor health.

America’s population is growing older – 1 in 5 Americans is older than 65, and 10,000 Americans will turn 65 each day over the next 15 years. That means increased demand for healthcare services and a shift in cost to Medicare. Healthcare spending is up, according to CMS, and an aging population is one of the drivers behind that spending.

Medicare Advantage enrollment is expected to surge over the coming years; more than 4 in 10 beneficiaries are expected to be in the program by 2028 because people are more attracted to the extra benefits MA offers. 

The Ongoing Battle of Readmission Rates

Reducing readmissions is at the top of every healthcare executive’s wish list. Medicare’s Hospital Readmissions Reduction Program seems to be working in its goal; in recent years there’s been a decline in national readmission rates for both Medicare patients and those patients who are covered under Medicaid or privately insured.

But hospitals that serve in low-income communities are up against additional challenges. Patients who don’t have regular checkups or proper follow up are more likely to end up back in the hospital. Recently, CMS has decided to evaluate safety-net hospitals in their own class, which should reduce penalties for those facilities.

Maintaining Medicare Compliance

Hospitals in rural areas or in communities with older populations are most impacted by compliance shortcomings.

The Emergency Department is one area that’s become particularly challenging to many hospitals’ Medicare designations. For some facilities, physician shortages have left them without enough providers to adequately screen and stabilize ER patients. Two Maine hospitals were cited this year for “patient dumping” and actively diverting mental health patients away from the hospital.

Mental health care demand among Medicare patients is on the rise. As of 2015, only 1,118 short-term psychiatric beds were available for Medicare patients, which is simply not enough to support the 20 percent of adults aged 65 or older who have a mental illness.

Maintaining access to services is crucial. Strategies to cope include hiring more providers, relying on Telehealth to make specialists more accessible or using locum tenens to fill staffing gaps.

Budget Cuts

Cuts to Medicare through decreased allowances for bad debt or uncompensated care will have a profound impact on hospitals. The same goes for proposals to reduce Medicare payments to providers and change to a quality-based payment system rather than paying based on number of services. Hospital margins would narrow if such strategies are implemented.

With a new Congress, we will have to wait and see whether Medicare eligibility is expanded to cover more Americans.

Reductions and Shutdowns

Your peers at hospitals across the country report a widening gap between what Medicare covers and what their patient care costs actually are. With each new regulatory mandate, healthcare providers have had to reduce services or lay off employees to make up the difference.

Some hospitals are deciding to end their Medicare Advantage agreements over disputes in pay rates. Still others face a possibility of shutting down if they can’t meet federal Medicare requirements.

Patients are left in the lurch when facilities decide to no longer accept Medicare or when they close altogether. Half of Medicare beneficiaries have an income less than $23,500, according to Kaiser Family Foundation analysis. Traveling further distances to receive care or finding a new insurance plan may not be possible. Crucial healthcare access points are vital to communities.

What’s Next for CMS

As we look toward 2019, there are a plethora of Medicare rules and regulations to watch. These are some of the critical issues that may have a big impact on your organization and your patients:

  • Lawmakers will lift some previously held restrictions on Telehealth services, including allowing providers to bill for Telehealth.
  • CMS is easing readmission penalties against safety-net hospitals.
  • Lower rates will be paid for outpatient services on hospital campuses, which will cut reimbursement rates dramatically and don’t take into account the complex conditions that hospitals treat in outpatient settings.

Sources: Fierce Healthcare, Healthcare Finance News, Healthcare Leaders Media, Henry J Kaiser Family Foundation, Clarion Ledger

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