CMS looks for data on practice of "steerage"; hospitals voice concern

A hospital.

The Centers for Medicare & Medicaid Services has raised concerns about a hospital practice known as “steerage”--which involves a provider buying commercial insurance coverage for patients who are already eligible for Medicare or Medicaid coverage in order to obtain higher levels of reimbursement.

As a result, the agency has asked (.pdf) for comments from the provider community in an attempt to determine the frequency of the practice.

“We believe this practice not only could raise overall health system costs, but could potentially be harmful to patient care and service coordination because of changes to provider networks and drug formularies, result in higher out-of-pocket costs for enrollees, and have a negative impact on the individual market single risk pool (or the combined risk pool in states that have chosen to merge their risk pools),” said CMS in the request for comments published in the Federal Register. 

Hospitals are often on the lookout for ways to increase reimbursements for care. Steerage for patients into health insurance exchanges that are not eligible for expanded Medicaid eligibility in certain states may make sense for some patients. But enrolling Medicare-eligible or soon-to-be-eligible patients into commercial plans could lead to patients paying higher Medicare premiums down the line, the result of penalties for late enrollments.

But the gathering of information has drawn some push-back from the hospital community, particularly the American Hospital Association. In a Sept. 22 letter (.pdf) to acting CMS administrator Andrew Slavitt, the lobbying group raised some concerns about CMS' scrutiny of steerage.

“Third-party payment of premiums--whether by a family member, a community-based organization, a government program, providers or a charitable organization--is an important tool for expanding coverage for vulnerable Americans,” said the letter, written by AHA Executive Vice President Thomas J. Nickels.

“Indeed, access to coverage and routine healthcare should take precedent over any concerns about the risk pool, which can be addressed through other policy vehicles and through broader enrollment of younger, healthier individuals,” he wrote.

Instead, Nickels and the AHA urged CMS to restrict its scrutiny of the issue to whether hospitals steer patients to specific insurance plans, creating a potential for a conflict of interest.

“We are strongly opposed to broad-brush approaches that would impact all hospitals, such as ubiquitous reporting requirements or modification of the conditions of participation (in the Medicare or Medicaid programs),” the letter said. “Such mechanisms could reduce hospitals’ ability to help patients enroll in coverage.”