[T]he state of Vermont will “hit pause” on a decision that reduced Medicaid reimbursements for seven hospitals and increased reimbursements for the others starting March 1.
Steven Costantino, the commissioner of the Department of Vermont Health Access, said Tuesday his department will “hit pause” on its decision to change Medicaid reimbursements for Vermont’s hospitals so that it can work out a better decision with hospitals.
Under the changes, the state’s seven largest hospitals, including UVM Medical Center and Rutland Regional Medical Center, would be paid about 75 percent of what Medicare (the federal program) pays, instead of the previous 87 percent. Small hospitals in rural areas would get about 112 percent instead of 93 percent.
Costantino’s department manages Medicaid, which provides health care coverage for low-income, disabled, and elderly Vermonters. He said the department changes Medicaid payment rates every year in order to match how much the Legislature has appropriated for Medicaid to pay hospitals and how much hospitals ended up billing the state.
In 2015, Vermont’s Medicaid program adopted a type of payment system that the federal Medicare program (primarily for people over 65) uses: The state started paying hospitals so-called facility fees so that they make more than independent practices; they also paid certain types of hospitals more than others.
The department expected the changes to cost Vermont about $10 million in calendar year 2015, above and beyond what it paid in 2014, according to Costantino. He said hospitals actually billed Vermont about $20 million more in 2015 than the previous year, and Vermont needed to change rates in 2016 to make up the difference.
The decision to change rates came into the spotlight on Monday, even though the department made the original decision to cut rates on March 3, and the decision was retroactive back to March 1. The department’s website said it took public comment from Feb. 13 to Feb. 29, but received no public comments.
Al Gobeille, the chair of the Green Mountain Care Board, which regulates hospital budgets, said he found out about the change Friday. He said, aside from having general knowledge that the department changes its rates annually, he had no idea the state was going to change its rates so drastically.
“I was not sure how the administration would deal with the budget deficit and always kind of wondered if it would come down to a Medicaid rate decrease, but I mean, that’s just me thinking in my own head,” Gobeille said in an interview Tuesday.
“I also think that when you’re trying to build trust and communication with the hospitals, to work on reform, which isn’t just doing regulation, then you have to be even more aware of the effect of changes like this,” he said.
The Department of Vermont Health Access’s changes already went into effect, according to Gobeille, meaning that the department has to reverse them—and change computer code back to the previous billing practice — in order to hit the “pause” button.
The changes reduced the largest hospitals’ payments to the same level that Dartmouth-Hitchcock Medical Center makes. Dartmouth-Hitchcock is still tied up in a lawsuit against the state, the U.S. Centers for Medicare and Medicaid Services, and the U.S. Department of Health and Human Services over the lower reimbursement rate.
Rick Adams, a spokesperson for Dartmouth-Hitchcock, said the hospital has not reached any type of settlement, and plans to move forward with the lawsuit because, “We believe that Vermont’s flawed payment schedule is not only fundamentally unfair; we believe that it’s unconstitutional and it violates several provisions of Medicaid law.”
The Vermont Association of Hospitals and Health Systems, which represents all of Vermont’s 14 hospitals, condemned the Medicaid rate change on Monday, but released a statement on Tuesday in favor of hitting pause.
“(The hospital association) has committed to working with the state in the coming weeks to chart a practical solution to this challenge, one which we hope will recognize the vital role that Medicaid reimbursement plays in our commitment to serve everyone regardless of their ability to pay,” the statement said.
