Hospital finance is complicated, and California hospitals operate in a challenging environment. Hospital executives are faced with the task of developing financial strategies that contain costs yet allow for the provision of health care to the state’s large uninsured population. CHA is committed to providing hospital financial executives with the resources needed to address these challenges, and believes that hospitals should be reimbursed adequately to cover the cost of care.
Through state and federal advocacy efforts, CHA dedicates many resources to fair government reimbursement and strives to improve hospitals’ financial outlook through legislative and regulatory channels. CHA’s statewide committees and workgroups help provide direction on how to best represent the diverse issues that affect hospitals’ financial performance. In addition, CHA DataSuite is an information-based toolset, available only to CHA members, that helps hospitals analyze government reimbursement changes, and the potential impact of regulatory and legislative actions on hospitals.
Hospital finance is complicated, and California hospitals operate
in a challenging environment. Hospital executives are faced with
the task of developing financial strategies that contain costs
yet allow for the provision of health care to the state’s large
uninsured population. CHA is committed to providing hospital
financial executives with the resources needed to address these
challenges, and believes that hospitals should be reimbursed
adequately to cover the cost of care.
Through state and federal advocacy efforts, CHA dedicates many
resources to fair government reimbursement and strives to improve
hospitals’ financial outlook through legislative and regulatory
channels. CHA’s statewide committees and workgroups help provide
direction on how to best represent the diverse issues that affect
hospitals’ financial performance. In addition, CHA DataSuite is an information-based toolset,
available only to CHA members, that helps hospitals analyze
government reimbursement changes, and the potential impact of
regulatory and legislative actions on hospitals.
On Jan. 16, CHA submitted a
comment letter to the California Department of Tax and Fee
Administration (CDTFA) on its
proposed amendments that would clarify how sales and use tax
is applied to medical items furnished by hospitals.
Yesterday, Gov. Newsom released his first proposed state
budget, totaling $209 billion for 2019-20. CHA was
pleased to see health care as a primary focus of the budget.
Other clear priorities are early childhood development, housing
and paying down debt.
Yesterday, the Department of Health Care Services (DHCS) shared
four approval letters. dated Dec. 12, from the Centers for
Medicare & Medicaid Services (CMS). Hospitals should share
the relevant letters, linked here, with their accounting firms:
The Department of Health Care Services has released its
bimonthly update providing information on current programs
and activities, including draft guidance for the 340B Drug
Pricing Program, the Drug Medi-Cal Organized Delivery System
waiver, the medication-assisted treatment project, Whole Child
Model implementation and the Whole Person Care pilot program.
CHA has released
a summary — prepared by Health Policy Alternatives —
of the Centers for Medicare & Medicaid Services (CMS)
proposed rule revising Medicaid managed care and Children’s
Health Insurance Program (CHIP) regulations.
CHA has prepared the attached comment letter urging the Health
Resources and Services Administration (HRSA) to make its
final rule addressing ceiling prices for drugs purchased
under the 340B Drug Pricing Program effective on Jan. 1, 2019.
Earlier this month, the Centers for Medicare & Medicaid Services
(CMS) released its fiscal year 2017 report
to Congress addressing Medicare oversight of accrediting
organizations and the Clinical Laboratory Improvement Amendments
of 1988 (CLIA) Validation Program. Accrediting organizations are
required to comply with the Medicare conditions of participation,
while CLIA requires laboratories that perform testing on human
specimens to meet requirements established by the Department of
Health and Human Services. The report details the review,
validation and oversight of these programs, and is required under
the Social Security and Public Health Service acts. The
report also outlines current pilot studies intended to streamline
the assessment process.
Responding to a request for additional clarification from many
hospitals around the country, the Centers for Medicare & Medicaid
Services (CMS) posted
frequently asked questions (FAQs) about the requirement that
hospitals make public a list of their standard charges (e.g., a
hospital chargemaster). As outlined in the federal fiscal year
2019 inpatient prospective payment system
final rule, hospitals must publish that information via the
internet in a machine-readable format.
The Internal Revenue Service has released a draft version of
Form 990-T for 2018, offering new insight into how certain
portions of the Tax Cuts and Jobs Act of 2017 that impact
organizations with 501(c)(3) exempt status will be implemented.
As of Jan. 1, section 512(a)(7) now treats certain employee
fringe benefit expenses — including expenses related to
transportation benefits — as taxable income for tax-exempt
Hospitals should seek additional direction and guidance from
their tax department or consultants.
CHA has submitted the attached comment letter to the Centers for
Medicare & Medicaid Services (CMS) on its
proposed rule that would make changes to the Medicare Shared
Savings Program. CHA thanks members for their feedback, which
helped inform these comments.
In the letter, CHA outlines a number of principles that members
believe are critically important in new alternative payment model
designs. CHA appreciates CMS’ continued stakeholder engagement on
its new direction for the Center for Medicare & Medicaid
Innovation and the development of new alternative payment models,
and urges CMS to reconsider a number of provisions.
reported in CHA News, the Centers for Medicare &
Medicaid Services (CMS) last year redesigned Medicare cards for
beneficiaries. The updated cards include a new, unique Medicare
beneficiary identification (MBI) number that replaced the
previous Social Security-based number. If beneficiaries are
unable to provide a copy of their new card, providers may find
that information through:
MBI Look-Up Tool through the Noridian Medicare Portal. The
new portal feature will only return the MBI if the patient’s
new Medicare card has been mailed.
Remittance advices generated after Oct. 1, 2018, through Dec.
31, 2019. CMS will return both the new MBI and health insurance
claim number (HICN) when providers submit a claim with a valid
and active HICN. The MBI will be reported in the same place as
the “changed HICN” today.
Last week, the California Department of Health Care Services
(DHCS) announced that it received Centers for Medicare & Medicaid
Services’ (CMS) approval of its
state plan amendment to extend the supplemental payment
program for certain physician services. The effective date is
retroactive to July 1, 2018, and the program will be extended an
additional 12 months — from July 1, 2018, to June 30, 2019. The
supplemental payments are funded by the 2016 state voter-approved
Proposition 56, the California Healthcare, Research and
Prevention Tobacco Tax Act. For newly added Current Procedure
Terminology codes for physician services and for codes with
changes to the supplemental payment amounts, payment was expected
to begin on Sept. 24, 2018. DHCS will process retroactive
payments in the first half of 2019; providers are not required to
take any additional action. More information about these
payments and DHCS’ proposal is available in a previous
CHA News article.
The California Department of Tax and Fee Administration (CDTFA)
released the attached proposed amendments to Regulation 1503,
Hospitals and other Medical Service Facilities, Institutions
and Homes for the Care of Persons. Under the current
regulation, sales tax does not apply to items sold to a person
insured under Medicare Part A; instead, they are considered
exempt sales to the United States. The proposed amendments
would clarify that medical services facilities — including
hospitals — are primarily service providers that generally do not
sell the tangible personal property they use or furnish in the
provision of medical services to their patients. The
proposed regulatory change would further clarify that the sales
tax does not apply when property is furnished to a patient
insured under Medicare Part A. An interested party meeting
will be held on Sept. 27 at 10 a.m. in Sacramento; details
are included in the proposed amendments. CHA will lead
efforts to submit comments, which are due Oct. 12, on hospitals’
behalf and will meet with the CDTFA director. CHA will keep
members informed of the process via CHA News.
CHA encourages hospitals to participate in a new American
Hospital Association initiative that encourages good stewardship
of the 340B Drug Pricing Program. The initiative,
announced earlier today, aims to strengthen the 340B program
by increasing transparency while helping 340B hospitals better
communicate the program’s immense value for vulnerable patients
and communities. Under the initiative, hospitals are encouraged
Communicate the program’s value by publishing an annual
narrative that describes how the hospital uses program savings to
benefit the community.
Publicly disclose the hospital’s estimated savings under the
Continue rigorous internal oversight to ensure the hospital’s
program meets Health Resources and Services Administration rules
Last month, the Internal Revenue Service (IRS) issued Notice
2018-67, which requests public feedback on the calculation of
unrelated business taxable income. The notice also provides
interim guidance and transition rules related to IRS Code Section
512(a)(6) for exempt organizations with more than one unrelated
trade or business. Finally, the notice addresses treatment of
Global Intangible Low-Taxed Income Inclusions (GILTI) for
purposes of unrelated business income (UBI).
Exempt organizations may rely on the notice for tax years
beginning after Dec. 31, 2017, until proposed regulations are
published. Organizations may rely on reasonable, good-faith
interpretations of the unrelated business income rules, taking
into account all the facts and circumstances.
In an effort to promote drug pricing transparency, hospital
groups yesterday sued the Department of Health and Human Services
(HHS) in an attempt to force the agency to make effective a final
rule that requires drug companies to disclose the ceiling price
for drugs acquired under the 340B Drug Pricing Program. The
plaintiffs — the American Hospital Association, Association of
American Medical Colleges, America’s Essential Hospitals, 340B
Health and three hospital systems — allege that, in delaying the
effective date of the final rule five times, HHS violated the
Administrative Procedure Act.
In 2010, Congress required the HHS Secretary to develop a final
rule that addressed ceiling prices, among other topics. The final
rule includes provisions that address the method of calculating
ceiling prices and allow the federal government to penalize drug
companies that intentionally overcharge 340B providers. More
information about the lawsuit is available on the
American Hospital Association website. CHA will continue to
monitor the situation and will share developments with members as
Earlier this week, hospital representatives — including the
American Hospital Association, the Association of American
Medical Colleges, America’s Essential Hospitals and three
hospital plaintiffs — refiled a lawsuit seeking relief from
Medicare payment cuts to hospitals participating in the 340B Drug
Pricing Program. The cuts reduced Medicare payments by nearly 30
percent, or $1.6 billion, to certain hospitals for outpatient
drugs purchased under the 340B program.
Late last year, a federal district court
granted the government’s motion to dismiss an earlier lawsuit
that sought to prevent these payment cuts, which consequently
became effective Jan. 1, 2018. At the time, the judge who ruled
on the case did not address the case’s merits, instead holding
that plaintiffs must first present a concrete claim for
reimbursement to the Department of Health and Human Services. In
July, an appeals court further delayed ruling on the case because
no claims had been filed when the lawsuit to prevent the
cuts was initially filed.
The CHA member forum to discuss the Centers for Medicare &
Medicaid Services’ (CMS) outpatient prospective payment system
rule for calendar year (CY) 2019 has been
rescheduled for Sept. 14 at 10 a.m. (PT). The
proposed rule also includes payment updates for ambulatory
Members who have already registered will automatically
receive meeting materials and the dial-in number the morning of
During the forum, CHA will provide an overview of the proposed
rule and seek member input for its comments, which are due to the
agency Sept. 24.
Of note, CMS proposes to reduce the payment rate for hospital
outpatient clinic visits provided at all off-campus hospital
outpatient provider-based departments (HOPDs) to 40 percent of
the OPPS rate. This includes excepted and non-excepted off-campus
provider-based HOPDs. CMS also proposes to modify its policy
related to excepted off-campus provider-based HOPDs that expand
the families of services they offer.