FHA Comments: CMS-1677-P: IPPS Proposed Rule

June 12, 2017

Page 1

Submitted Electronically

June12, 2017

SeemaVerma

Acting Administrator

Centers for Medicare & Medicaid Services

Room 445-G, Hubert H. Humphrey Bldg.

200 Independence Avenue, SW

Washington, DC 20201

Re: Medicare Program: Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2018 Rates, etc.(CMS-1677-P)

Dear Mrs.Verma:

The Florida Hospital Association (FHA), on behalf of its more than 200 member hospitals and health systems, welcomes the opportunity to comment on the Medicare proposed rule entitled “Medicare Program: Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2018 Rates, etc.” published in theFederal RegisteronApril 28, 2017. The proposed rule would revise the hospital inpatient prospective payment system (IPPS), the long-term care hospital (LTCH) payment system, and quality reporting requirements for specific providers. In this letter, we are submitting comments on the following issues:

Uncompensated care payments and the use of S-10 data
Documentation and coding adjustment
Hospital readmissions reduction program – socioeconomic adjustment
Perceived transparency for national accrediting organizations

Regulatory reform

Uncompensated Care Payments and the Use of S-10 Data

For several years, CMS has discussed using the cost report’s Worksheet S-10 data for hospital charity care and bad debt to determine the amount of uncompensated care each hospital provides, in place of the current formula of Medicaid and Medicare SSI days. Prior to this current proposal, CMS resolved that it was premature to propose the use of the cost report data. A recent report issued by Dobson/DaVanzo in April 2017 that compared the information on current S-10s to the IRS 990s found that the data are getting better, with increased correlation between the two reports as it relates to uncompensated care. MedPAC has also found that the correlation between audited uncompensated care data and the S-10 was over .80 compared to the current proxy methodology at .50. While we are not there yet, the S-10 is better than the proxy that we are using currently.

CMS now believes that it has reached a tipping point with respect to the use of Worksheet S-10 data and, starting in FY2018, proposes to begin a three-year transition that wouldincorporate

hospitals’ Worksheet S-10 data into the methodology for determining uncompensated care payments.Specifically, CMS proposes to continue to use data from a rolling three-year period to estimate uncompensated care costs. The agency will uselow-income insured patient days as a proxy for uncompensated care for cost reporting periods before FY2014 and the Worksheet S-10 uncompensated care data for FY2014 and subsequent years.For FY2018, CMS will estimate each hospital’s share of uncompensated care using a blend of three years of historical data from 2012, 2013, and 2014 cost reports. For the first two years, CMS will continue to use Medicare SSI days and Medicaid days from the 2012 and 2013 cost report as proxies for uncompensated care costs. For the third year, CMS will use 2014 reported uncompensated care costs on each hospital’s Worksheet S-10 of the Medicare cost report. CMS expects to transition fully to using S-10 data over three years so that the computation will be based entirely on S-10 data by 2020. This will allow the approximately $7 billion in uncompensated care payments to be distributed using a direct measure of uncompensated care rather than using Medicaid days as a proxy.

The FHA supports the proposals to phase in the use of the Worksheet S-10 to compute uncompensated care costs. Using S-10 data, coupled with selective auditing of cost reports submitted by hospitals reporting the highest levels of uncompensated care, will lead to far better estimates of uncompensated care costs at disproportionate share hospitals than using Medicaid and Medicare SSI days as a proxy for uncompensated care. We also believe that this is the best time to make such as transition as the $1 billion increase in the disproportionate sharepool due to the change in the data source will ease any negative impact for many providers in FY2018.

The use of the S-10 will also create more balance between Medicaid expansion and non-expansion states.2014 was the first year for expansion under the Affordable Care Act – moving forward with Worksheet S-10 beginning with FY2014 addresses the inequity of expansion/non-expansion in distributing disproportionate share dollars. The current proxy measure – Medicaid patient days – provides added funding to hospitals in expansion states who are also being paid for the patient stays under their state Medicaid program. Those days are not uncompensated.

In addition, using the S-10 will have the effect of increasing the share of the uncompensated care pool that goes to hospitals with high levels of uncompensated care in the emergency department and relatively few Medicaid days. Actual measures of uncompensated care should be used to distribute these uncompensated care dollars. The shift to using the S-10 will have the effect of increasing the share of the uncompensated care pool that goes to hospitals with high levels of uncompensated care. Hospitals with large numbers of Medicaid inpatient days but relatively little uncompensated care will receive a smaller share of the uncompensated care pool.

While we are supporting this change, we urge CMS to allow providers with obvious errors in the data submitted on Worksheet S-10 to have a short window for correction. In looking at individual provider reports, it is apparent that when CMS first proposed using this data, most hospitals responded by improving the accuracy of what was reported. For those with oversights that were not previously detected, we ask that a period for correction be established.

Finally, we urge CMS to look again at the impact of including Medicaid shortfalls in the calculation of uncompensated care, particularly if pending legislation were to phase out or otherwise end Medicaid expansion. CMS should look to their proposal from two years ago and,

FHA Comments: CMS-1677-P: IPPS Proposed Rule

June 12, 2017

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if expansion were ended, address Medicaid shortfalls when states are on a more even footing for Medicaid coverage. Such a review should not delay the transition to the S-10, but rather be addressed in future proposals for capturing all uncompensated care.

Documentation and Coding Adjustment

In FY2017, when completing the final recoupment required under the American Taxpayer Relief Act for perceived overpayments tied to coding and documentation, CMS finalized a cut that was almost two times what it had planned and lawmakers had expected. CMS has not proposed to correct for this discrepancy when implementing the reduction for 2018 and, as a result, hospitals would now be left with a larger permanent cut than Congress intended when legislating the restorations under the Medicare Access & CHIP Reauthorization Act of 2015. We urge CMS to restore the excess cuts and help ensure that our hospitals have sufficient resources to continue providing quality care in their communities.

Hospital Readmission Reduction Program – Socioeconomic Adjustment

CMS proposes, for FY2019, to implement the socioeconomic adjustment to calculating readmissions penalties as mandated by the 21st Century Cures Act. The law requires a budget-neutral approach in which readmission penalties are based on hospitals’ performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and Medicaid. The FHA recognizes that readmission performance is impacted by poverty; availability of resources for caregiver support, transportation, and medication assistance; and other factors beyond a hospital’s control. We support the inclusion of a socioeconomic adjustment in the readmissions reduction program.

While we support CMS’ intent to adjust the readmission penalties for socioeconomic status, we cannot comment on the methodology because of the lack of access to needed data. CMS proposes to use the Medicare Modernization Act (MMA) file to identify full-benefit dual eligible beneficiaries in the Readmission Reduction Program socioeconomic adjustment calculation. The Master Beneficiary Summary File contains dual status information which is derived from the MMA files. To obtain this data, CMS suggests that providers and analysts apply to ResDAC, the Research Data Assistance Center within CMS. Providers and those analyzing this change to calculating the readmissions penalties need the full 100 percent file for the country in order to comment on CMS’ proposed methodology. Needing to go through a cumbersome research process results in additional costs, an extended timeframe, and the potential to receive solely data extracts, which would be insufficient to analyze and provide meaningful comments on the socioeconomic adjustment proposal. CMS needs to provide access to this file so the best methodology/approach can be developed to ensure that hospitals with a significant volume of low income patients are not unfairly penalized.

Perceived Transparency for National Accrediting Organizations

CMS has proposed to require all accreditation organizations with Medicare deeming authority to make all survey reports of all organizations they accredit, including reports on full accreditation, deficiency, follow-up and complaint surveys as well as all providers’ plans of correction, available on their public Web sites. While the FHA supports the public release and transparency of health care quality data, we do not believe that the proposal from CMS accomplishes this goal. Hospital survey reports do not provide actionable data for consumers to make health care decisions. Accreditation survey reports review processes and protocols, serving as quality improvement tools for health care providers. As mentioned by The Joint Commission in their comments on this proposal, such a requirement would “chill” the open and confidential dialogue that is the foundation of their improvement efforts. FHA recommends that CMS not move forward with this proposal.

Regulatory Reform

Following the announcement by the new Administration, CMS has sought comment on opportunities to modify or eliminate duplicative, excessive, antiquated and contradictory provider regulations. Reducing the administrative burden in health care would save billions of dollars annually and allow providers to spend more time on patients, not paperwork. We urge CMS to consider the following –

Cancel Stage 3 of the meaningful use program
Suspend electronic clinical quality measure reporting requirements
Remove faulty hospital quality measures
Hold Medicare Recovery Auditors financially accountable for poor performance
Provide more regulatory flexibility in payment reform models
Expand coverage of telehealth services
Permanently prohibit enforcement of the direct supervision regulations for Critical Access and other small and rural hospitals
Modify the Conditions of Participation to allow hospitals to recommend post-acute care providers
Create a Stark regulatory exception for clinical integration arrangements
Create Anti-Kickback regulatory safe harborsfor clinical integration arrangements and for assistance to patients

These actions would serve to not only reduce regulatory burden, but also to enhance affordability and value, continue to promote quality and patient safety, and continue to ensure access to care and coverage, all while advancing health system transformation and innovation.

The FHA appreciates the opportunity to provide these comments for consideration in finalizing the IPPS rule for FY2018. If there are any questions, please do not hesitate to contact me .

Sincerely,

Kathy Reep

Vice President/Financial Services