MACPAC recommends changing definition of Medicaid shortfall

The Medicaid and CHIP Payment and Access Commission yesterday recommended that Congress change the definition of Medicaid shortfall to exclude costs and payments for all Medicaid-eligible patients for whom Medicaid is not the primary payer.
 
In comments submitted last week, AHA urged the commission to delay making recommendations related to the Medicaid Disproportionate Share Hospital program in light of ongoing litigation. “An intermediary step the commission could consider is to recommend that the Secretary of Health and Human Services collect and report data on third-party payments included in the calculation of Medicaid shortfall to better assess future policy recommendations,” AHA said.
 
The U.S. District Court for the District of Columbia last year voided a Centers for Medicare & Medicaid Services rule regarding how third-party payments, such as private insurance or Medicare, are treated for purposes of calculating the hospital-specific limitation on Medicaid DSH payments. Appeals are underway in the D.C. Court of Appeals.
 
Addressing AHA’s letter at yesterday’s meeting, MACPAC Chair Penny Thompson said that MACPAC did not need to wait for the court’s deliberations to move forward with a policy change, which she said is intended to better align with the purpose of Medicaid DSH payments.
 
MACPAC also recommended changes to the Medicaid rebate program, including eliminating the drug-rebate cap. Currently, Medicaid rebates are capped at 100 percent of a drug’s average manufacturer price and once a drug manufacturer hits the cap, they can raise list prices, increasing profits in their other markets while breaking even on drugs in the Medicaid market. In addition, commissioners voted to recommend giving states 180 days to review newly approved drugs in order to develop coverage policies. Lastly, in the area of program integrity, the commissioners voted to recommend that Congress make optional the establishment of a Medicaid recovery audit contractor program. MACPAC will include all of these recommendation in its June report to Congress.