CMS Stretches PCIP Budget and AHA Cries Foul

Hospitals are getting nervous over a proposal by the Centers for Medicare and Medicaid Services to change the pre-existing condition insurance plan (PCIP) with less than six months left in the program.

In a letter to CMS Director Marilyn Tavenner, American Hospital Association Vice President Rick Pollack on Friday wrote that the PCIP program, which began in 2010 and is set to run out on Jan. 1, “is now running out of its appropriated funds sooner than expected, and CMS is reducing payments to providers in an attempt to stretch the remaining funds to the end of the year.”

The PCIP was created as part of the Patient Protection and Affordable Care Act to provide temporary insurance to those with pre-existing conditions. Beginning Jan. 1, health insurance companies no longer will be allowed to deny coverage to those with pre-existing conditions, making PCIP obsolete.

“The AHA is disappointed that the rate reduction was issued without input from the provider community and did not provide a sufficient definition of the rate that will be paid to providers,” AHA’s Pollack wrote. “We believe this will lead to confusion during these remaining months of the program.”

The PCIP program was too successful, according to CMS. According to the proposed rule, “The combined effect of the number of individuals enrolled in the program, particularly very sick individuals, their high utilization of covered services, and the statutory limitations on enrollee cost-sharing (which limits the maximum amount an enrollee pays out-of-pocket for covered services to $6,250 in 2013) has led to a situation where the overall cost of the PCIP program is higher than originally projected.”

To stretch the budget, CMS will base PCIP’s new payment rates on “100 percent Medicare rates.”

“Simply referring to ’100 percent of Medicare payment rates’ is not adequately clear and raises many question[s] as to what is included in these rates. For example, this reference does not address whether the many adjustments that are made to Medicare rates, such as indirect medical education and disproportionate share hospital payments, are included,” Pollack wrote.

“The AHA believes the simplest way to remedy this problem would be to base payment on the current Medicare Advantage out-of-network provider payment guidelines most recently updated in December 2012,” he concluded. “While we believe there are some issues with those guidelines, the limited time remaining under the PCIP program does not warrant development of a new set of guidelines. Furthermore, providers are familiar with those guidelines, which include discussion of the various adjustments that might apply and address the payment basis for each provider type.”

Comments on the proposed regulations closed yesterday. If approved, the regulations will be applied to all reimbursements for services that occurred after June 15, 2013.