Date: June 25, Dear Ms. Tavenner:

Transcription

1 20555 VICTOR PARKWAY LIVONIA, MI p newhealthministry.org Date: June 25, 2013 Marilyn Tavenner Administrator Centers for Medicare & Medicaid Services Hubert H. Humphrey Building 200 Independence Avenue, S.W., Room 445-G Washington, DC RE: CMS-1599-P, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation; Medicare Program; Proposed Rule (Vol. 78, No. 91), May 10, 2013 Dear Ms. Tavenner: CHE Trinity Health is pleased to submit these comments on the Centers for Medicare & Medicaid Services (CMS) 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 Fiscal Year 2014 Rates; Quality Reporting Requirements for Specific Providers; Hospital Conditions of Participation (78 Federal Register , May 10, 2013). CHE Trinity Health was formed in May 2013 by the consolidation of Catholic Health East and Trinity Health. The new organization is one of the largest multi-institutional Catholic health care delivery systems in the nation. It serves people and communities in 21 states from coast to coast with 82 hospitals, 89 continuing care facilities and home health and hospice programs that provide nearly 2.8 million visits annually. With annual operating revenues of about $13.3 billion and assets of about $19.3 billion, the new organization returns almost $1 billion to its communities annually in the form of charity care and other community benefit programs. It employs more than 87,000 people, including 4,100 employed physicians. We appreciate your staff s ongoing efforts to administer and improve the payment systems for acute inpatient hospital services and long-term care hospital services, especially considering the agency s many competing demands and limited resources. CHE Trinity Health has provided detailed comments that follow this cover letter. We appreciate the ability to respond to the proposed rule changes. If you have any questions, please feel free to contact Tonya Wells at wellstk@trinity-health.org or Sincerely, Tonya K. Wells Vice President, Public Policy & Federal Advocacy 1

2 CHANGES TO MS-DRG CLASSIFICATIONS AND RELATIVE WEIGHTS MS-DRG Documentation and Coding Adjustment The Centers for Medicare & Medicaid Services (CMS) proposes a cut of 0.8 percent in fiscal year (FY) 2014 that would fulfill part of the American Taxpayer Relief Act of 2012 (ATRA) requirement that CMS recoup what CMS claims is the effect of documentation and coding changes from FYs 2010, 2011 and 2012 that CMS says do not reflect real changes in case-mix. We agree with CMS that this proposal helps mitigate extreme annual fluctuations in payment rates. While we continue to believe these congressionally mandated adjustments are not warranted, the proposal has provided hospitals with additional time to manage these sizeable cuts. We are troubled that CMS continues to compare hospitals documentation and coding practices in FY 2010 to their documentation and coding practices under an entirely different system in FY We also are concerned that necessitating larger adjustments in the future would be contrary to the agency s stated goal of mitigating extreme annual fluctuations in payment rates. Section 7(b)(1) of the TMA, Abstinence Education and QI Programs Extension Act of 2007 (Public Law ), as amended by the American Taxpayer Relief Act of 2012, only applies the documentation and coding adjustment to the standardized amounts. Nowhere does Congress authorize CMS to make a documentation or coding adjustment to the HSP. For these reasons, we urge CMS not to apply any portion of the 0.8 percent proposed recoupment on a prospective basis to the standardized amount or the hospital-specific payment rate. In addition, we agree with the American Hospital Association's (AHA) previous assertion that CMS coding cuts are overstated is not limited to only the 0.8 percent cut related to FY 2010 it also applies to cuts the agency made related to FYs 2008 and Specifically, CMS made one-time payment cuts of 5.8 percent to recoup what it states were overpayments made in FYs 2008 and Yet, the Medicare Payment Advisory Commission (MedPAC) found that CMS could have overstated these cuts by cumulatively as much as 0.36 percent in FY 2008 and 0.36 percent in FY 2009 or by a total of 0.72 percent. Therefore, we urge the agency to correct this over-recoupment by implementing a onetime increase of 0.72 percent to inpatient payment rates. Recalibration of MS-DRG Relative Weights When CMS initially proposed to split the general radiology cost center into three, the AHA requested that the agency further consider the impact of adopting those cost centers before finalizing its decision. There were concerns that adopting these cost centers would implausibly reduce the CCRs for these services so much so, that, in the outpatient setting, it may result in a CT of the chest being reimbursed at a similar level to a routine chest X-ray. The AHA's concerns have now proven to be valid CMS states in the proposed rule that if it maintained one CCR for general radiology, it would be However, if it uses three CCRs (one for each of general radiology, MRI scans and CT scans), general radiology would be 0.170, but MRI and CT scan CCRs would be reduced to the implausibly low levels of and 0.045, respectively. These new CCRs would dramatically lower reimbursement for MRI and CT scans; as predicted, in the outpatient setting, we believe it will result in a CT of the abdomen or of the head being reimbursed at a similar level to a routine chest X-ray. This is inappropriate. We believe these CCR reductions are occurring because cost reporting requirements do not ensure hospitals capture cost information for capital-intensive services consistently. Specifically, they do not require hospitals to allocate radiology overhead to specific imaging items. Accordingly, much of the overhead belonging to MRI and CT scans remains in the general radiology cost center and is not allocated to the MRI and CT scan cost centers, causing them to be improperly low. Therefore, we urge CMS to reconsider the impact of these new radiology CCRs (including in the outpatient setting) before adopting them, and to work with hospitals to help refine how these CCRs are calculated before implementation. Although a respectable number of hospitals are reporting the new cost centers, we are concerned they are not consistently allocating among them and that MRI and CT scans will be paid inaccurately if the detailed cost centers are used. 2

3 DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENT CHANGES DSH Payments / 75% Pool The Patient Protection and Affordable Care Act of 2010 (ACA) requires that, beginning in FY 2014, hospitals initially receive 25 percent of the DSH funds they would have received under the current formula, with the remaining 75 percent flowing into a separate funding pool for DSH hospitals. This pool would be reduced as the percentage of uninsured individuals declines, and would be distributed based on the proportion of total uncompensated care each Medicare DSH hospital provides. We understand that changes to the DSH payment methodology are mandated by the ACA; however, we would recommend a phase-in approach instead of immediate change to the 25% - 75% redistribution. We are also very concerned that hospitals will be negatively impacted in States that do not expand their Medicaid programs as the prescribed redistribution mechanism relies on Medicaid inpatient days and Medicare SSI inpatient days as a proxy for uncompensated care. We are also concerned regarding the proposal to distribute DSH payments from the pool on a periodic interim, rather than per-discharge, basis. Distributing these additional DSH payments on a periodic interim basis would have two significant unintended consequences of serious concern to hospitals. First, we are concerned about how Medicare Advantage plans can calculate appropriate payment amounts for hospitals if the additional DSH payment is not included in the per-claim payment amount. In addition, distributing these payments on a periodic interim basis would arbitrarily impose payment cuts on certain sole community hospitals (SCHs) because these payments would not be accounted for in determining whether SCHs are paid the federal rate or their hospital-specific rate. In essence, CMS would only permit these hospitals to account for 25% of the care they provide to this population in need. To resolve these issues and avoid unintentional payment cuts to hospitals, we strongly urge CMS to distribute the additional DSH payments on a per-discharge basis and not on a periodic interim basis. Further, we recommend that CMS include the uncompensated care payments in calculating whether a SCH is paid the higher of the Federal rate or hospital-specific rate. The concern is that the 75% pool will not appear in the PRICER and many Medicare Advantage plans base their contracts on the PRICER. Hospitals may be in multi-year contracts, when the 75% is removed from the DSH payment those Medicare Advantage payments will be dramatically decreased, to the detriment of the safety-net hospitals, and a windfall to the insurance companies. The use of PIP also adversely impacts Sole Community Hospital reimbursement, and negates the Congressional intent of the designation serving as a benefit to the rural hospital. We echo AHA s concern and support their suggestion that the 75% pool be paid on a per discharge basis, as a way of addressing both the SCH and Medicare Advantage payment concerns. If CMS determines payment will be on a PIP basis as proposed, since the DSH is to be calculated as usual on the cost report, and then decreased by 75%, we recommend that the PRICER include full calculation of the DSH payment as a reference point, then show the decrease by 75% as a negative amount as one of the payment components to arrive at the net amount. That would allow for a specific line item in the PRICER payment calculation as a reference for the Medicare Advantage companies and hospitals to utilize. Per Section 3133 of the ACA, CMS is proposing to establish an uncompensated care pool, funded with 75% of the otherwise calculated DSH amount (75% pool). While the 75% pool is statutorily mandated by the ACA, the allocation methodology is at the discretion of the Secretary. Although CMS considered adopting definitions of uncompensated care to include the cost of bad debt and charity care as provided on the Medicare cost report worksheet S-10, the proposed rule for FFY 2014 is not using the S-10 to allocate the 75% pool. We agree with the proposal not to use the worksheet S-10 data, but recommend that CMS work with hospitals to help improve consistency of the data compiled and recorded in this worksheet, and develop a timeline to transition to using this worksheet. CMS recognized the concerns of the Provider community in the new format of the S-10 and confusion with the instructions impacting the accuracy and consistency of the data reported on the S-10. We echo those concerns with the accuracy and consistency of the S-10 data. We believe there are several issues to address with the S-10 prior to its use as an 3

4 allocation source for the DSH 75% pool. Several of these concerns also apply to the current use of the S- 10 charity amount for HIT Meaningful Use calculation. Questions were raised in several forums with CMS about the inclusion of patients awarded presumptive charity care as part of the reported charity care charges. We believe the presumptive charity care should be included. We would encourage CMS to include in the definition of charity care, presumptive charity care. There are various vendors available who specialize in using publicly available data to determine a patient s likelihood for qualifying for charity under the provider s charity policy based on a historical analysis of the provider s documented charity approvals. This approach of creating a basis in analytics creates a process based on multiple decision criteria. This approach also ensures that providers are not overstating presumptive charity based on simple FPL estimation and that there is specific information from the databases for the patient to document the presumptive determination. These patients would in all likelihood be bad debts if not granted presumptive charity by the hospital, therefore the aggregate total of bad debt and charity would not be impacted if presumptive charity were to be included in the definition. The ability of hospitals to utilize presumptive charity enables hospitals to realize cost reductions and efficiencies in relation to uncooperative patients and allows for consistency in reporting community benefits including Treasury requirements. Worksheet S-10 lines column 2 are for charity care awarded to insured patients, for their patient responsibility amount (coinsurance and deductible). There is inconsistency due to confusion in the instructions for this form. The lead paragraph for these lines indicates amounts to be reported at gross charges, then second and third paragraphs specify uninsured patients in column 1 and insured patients in column 2. Some Providers are including gross charges in column 2 for insured patients, where we believe CMS intended column 2 to be populated with the patient responsibility amount, to which charity care was awarded, not gross charges. Until this is clarified, this inconsistency would greatly skew the allocation of the 75% pool among Providers. The recent IRS proposed rule related to 501(r) requires tax-exempt Providers to offer uninsured patients who qualify under the financial assistance policy (FAP) a discount from gross charges. This is enforced through reporting on the 990. For the patients awarded charity care after discharge, therefore after uninsured discount has already been applied, would they be reported on S-10 under uninsured (column 1) at their gross charges or at their net patient responsibility after the uninsured discount, or should the uninsured discount be reversed upon award of charity? We believe the uninsured patient receiving the 501(r) mandated discount should still be reported at gross charges on S-10. Additional confusion is related to the instructions that the charity care and bad debt amounts reported be for services delivered during this cost reporting period. In order to report only on those charity and bad debt amounts for services during the period, would entail manual effort to obtain patient-level detail of the adjustments during the year and excluding those patients with date of service in prior periods. It would also require estimates or accruals of charity and bad debt that may occur for patients after the cost report is prepared, based on historical analysis, without the benefit of reconciliation at final settlement. In addition, lines 27 and 28 remove the allowable Medicare bad debts claimed on the cost report from the reported total bad debts. However, the Medicare bad debt is not restricted to services during the period, but rather for bad debt adjustments taken during the period, the S-10 is mixing apples and oranges using two different bases for these adjustments. The Medicare bad debts should be a sub-set of the total bad debts if CMS intends to subtract the Medicare bad debt to arrive at the non-medicare bad debt. Adjustments taken during the period, similar to Medicare bad debts, should be the basis for the charity and bad debt amounts reported on S-10, not restricted to services during the period. It is a verifiable number, without estimates, and is consistent with the Medicare bad debt basis. In the interim, we believe that CMS made a good choice using the total SSI days and Medicaid days as the allocation basis for the DSH 75% pool. One weakness in this allocation basis is that the smaller safety-net hospitals with high Medicaid and SSI percentage to total days, but lower aggregate Medicaid and SSI volume than the larger University hospitals will experience a net loss of DSH funds while the larger volume hospitals will experience a net increase in DSH funds. Is it administratively feasible to use the aggregate 4

5 Medicaid and SSI percentage at the hospital level to allocate the 75% pool? This methodology may even the playing field for the smaller safety-net hospitals. DSH Counting Days Associated with Medicare Advantage Plans The Allina District Court decision vacated the regulation promulgated in the CMS FFY 2005 IPPS final rule, which included the Medicare Advantage days in the Medicare fraction of the DSH calculation, ruling it was not a logical outgrowth of the FFY 2004 proposed rule to include the Medicare Advantage days in the Medicaid fraction. CMS is now readopting the policy to count the days of Medicare Advantage patients in the Medicare fraction in the FFY 2014 IPPS proposed rule. CMS believes that while the beneficiary has elected Medicare Advantage under Part C, the beneficiary is still entitled to Part A, and therefore should be in the Medicare fraction. The determining factor in this issue is how the two fractions used in the disproportionate patient percentage are calculated, and where, the Medicare Advantage dual eligible days fit into these fractions according to the statute. The Medicare fraction according to both, the Social Security Act 1886(d)(5)(F)(vi)(I) and the Federal Register 42 CFR ((b)(2)(i)(B), is based on patient days related to patients who were entitled to both Medicare Part A and supplemental security income benefits. The Medicare Part C (Medicare Advantage) option for beneficiaries was created as part of the Balanced Budget Act of 1997 (BBA). The BBA amended several items in clause (5)(F), but specifically did NOT amend the Medicare fraction references to Medicare Part A to include Medicare Part C. The BBA also did not specifically exclude Medicare Part C from the Medicaid fraction, as the Medicare Part A is specifically excluded. As evidenced by the BBA section 4622 Payment to hospitals of indirect medical education costs for Medicare+Choice enrollees, Congress did not assume Part C was synonymous with Part A to the point that it would not exclude the need to specifically mention Part C. Part C was cited several times in the IME section of the BBA. Therefore, if Part C was not specifically excluded from the Medicaid fraction, as Part A is, then it should be included in the Medicaid fraction, not the Medicare fraction. Congress did directly speak to the issue of Medicare Advantage by creating Medicare + Choice under Part C as an alternative to Medicare Part A, in the BBA. As part of the overall legislation which implemented Medicare + Choice, the BBA, Congress made several amendments to the statutory wording of Social Security Act 1886(d)(5)(F), the section that describes the DSH adjustment. This section of the Act specifically includes Medicare Part A in the Medicare fraction and specifically excludes Medicare Part A from the Medicaid fraction. Looking at the plain language of the statute in light of the fact that Medicare patient days can fall into one of three categories, Part A, Part B, or Part C, it is clear and unambiguous that Congress did not intend Medicare Advantage to be excluded from the Medicaid fraction. Section 4001 of the BBA (SSA 1851(a)(3)(A)) states, to be Medicare + Choice eligible, an individual must be entitled to benefits under Part A and enrolled under Part B. However, once Medicare + Choice eligible, SSA 1851(a)(1) states that individual is entitled to elect to receive benefits under this title (A) through the original Medicare fee-for-service program under Parts A and B, or (B) through enrollment in a Medicare + Choice plan under this Part [Part C]. Once that individual makes the election of Part C over Parts A and B, they would not be entitled to the specific benefits under Part A, but rather would be entitled to the specific benefits under Part C. The statute defines the days in the Medicare fraction specifically as the number of such hospital s patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this title, SSA 1886(d)(5)(F)(iv)(I). The plain meaning of the statute is that the patient must be entitled to Part A during that particular inpatient stay, if they are Part C, that encounter is not entitled to payment under Part A. CMS believes that the Part C beneficiary is still entitled to benefits under Medicare Part A. We do not believe that the plain language rule would give deference to the CMS belief when faced with three distinct categories such as Part A, Part B, and Part C. An argument discussed by the Court in the Jewish Hospital case, Jewish Hospital Inc. v. Secretary of HHS, 19 F.3d 270, US Court of Appeals (6 th Cir, 1994), as well as other courts, distinguished between the terms entitled and eligible as used in the relevant statute. The Court states furthermore, Congress spoke of eligibility in the Medicaid proxy and entitlement in the Medicare proxy. See 42 U.S.C. 1395ww(d)(5)(F). The Secretary would have this Court conflate eligibility with entitlement. Adjacent 5

6 provisions utilizing different terms, however, must connote different meanings. To be entitled to some benefit means that one possesses the right or title to that benefit. Thus, the Medicare proxy fixes the calculation upon the absolute right to receive an independent and readily defined payment. Jewish Hospital. The statute states that the Medicare fraction numerator is the number of patient days for such period which were made up of patients who (for such days) were entitled to benefits under part A of this title. Once the individual makes the choice for Part C, they are no longer entitled to bring a claim under Part A, until they terminate their Part C election. The ensuing patient days that result from an inpatient hospital stay are not entitled to benefits under Part A, but rather are entitled to benefits under Part C. Since these are not such days under Part A, they are not to be included in the Medicare fraction and are not to be excluded from the Medicaid fraction. Therefore the Medicare Advantage dual eligible days would be included in the Medicaid fraction. This distinction between entitled and eligible is echoed by the Court in Emma Bohlen v. Richardson, US Dist Ct, ED PA, (6/19/72), Legacy Emanuel Hosp v. Shalala, US Ct of Appeals, 9 th Cir (10/9/96) and Cabell Huntington Hosp v. Shalala, US Ct of Appeals, 4 th Cir (11/27/96). We agree with AHA comments in opposition to counting the Medicare Advantage days as part of the SSI percentage in the DSH calculation. Medicare Advantage patients are not entitled to Part A benefits, they receive benefits under Part C. If CMS maintains its stance that the Medicare Advantage days properly belong in the Medicare fraction, then it is only logical that the allowable DSH percentage (which includes both Part A and Part C days in the SSI% of the DSH calculation) also be multiplied by the Medicare Managed Care Simulated DRG Amount, in addition to the Other than Outlier Federal Payments (Medicare Part A) currently used, in calculating the allowable DSH amount, similar to how the current calculation of the IME amount includes both the Federal Payments and the Medicare Managed Care Simulated Payments. If the Medicare Advantage patient days are going to be considered entitled to Part A in determining the allowable DSH percentage, then the Medicare Advantage simulated DRG payments should be considered entitled to Part A for purposes of calculating the allowable DSH amount. If CMS finalizes the DSH count of Medicare Advantage days as proposed, it should only be on a go forward basis, no retroactive application to fiscal years prior to The Court vacated the prior rulemaking in Allina, therefore this is a new rulemaking process applicable to FFY 2014 and forward. WAGE INDEX Core-Based Statistical Areas (CBSA) Due to lack of time for hospitals to react to potential issues and impacts from revised CBSA using 2010 census data, we support the delay in using the newest CBSA data until FFY We request that the new CBSA data be published prior to the FFY2015 IPPS proposed rule to allow hospitals sufficient time to review the information and provide comments to CMS. We recommend that CMS host national calls and open door forums with the provider community to educate the provider and for CMS to receive feedback about possible CBSA changes. We also encourage CMS to include appropriate timing for a slow phase-in of any changes to CBSAs. Imputed Rural Floor We agree with the CMS proposal to extend the imputed floor program for one year. CMS states in the proposed rule that this is a result of trying to continue to explore potential wage index reforms as well as their intention to further evaluate the need, applicability, and methodology for the imputed floor. We note that the AHA Medicare Area Wage Index Task Force has issued draft recommendations and have requested comments from hospitals prior to finalizing the report. The imputed rural floor program is included in the AHA report. We recommend that the industry consider all recommended changes to area wage index and have a chance to provide input to CMS prior to finalizing any decisions regarding the imputed rural floor. 6

7 We recommend that if CMS concludes the expiration of the imputed rural floor will occur in the final rule, that CMS afford those hospitals a multi-year phase-out, as their wage index is returned to their CBSA determined factor. To realize such a cut in revenue without the benefit of a phase-out may result in dramatic cost cutting through elimination of services vital to their community, in order to offset the lost revenue. INPATIENT ADMISSION CRITERIA UNDER MEDICARE PART A Time-based Presumption of Medical Necessity for Inpatient Services The CMS proposal related to admission and medical review criteria is rooted in appropriate concern for the increasing time patients are receiving observation services and the potential financial impact on Medicare beneficiaries under Part B (receiving services in observation status) instead of Part A (receiving services in inpatient status). As a way to lend predictability to payment expectations, CMS is proposing, that if a patient is in-house for at least two midnights, equivalent to two day length of stay (LOS), the presumption would be that the admission was reasonable and necessary. In an attempt to add clarification to inpatient admission criteria, CMS proposes length of stay be the primary factor in determining if an admission is reasonable and necessary. However, while CMS may refer to the stay as "one utilization day", a stay crossing two midnights is actually a 2 day length of stay (LOS) for cost report purposes, with the patient being discharged on the third day (count the day of admission, but not the day of discharge). The proposed presumption of "one utilization day" being an outpatient stay is too harsh given that Geometric Length of Stay (GMLOS) is used in the DRG table. The FFY 2013 DRG table has 10 DRGs with GMLOS less than 1.5 days, 49 DRGs with GMLOS less than 2.0 days, and 216 DRGs with GMLOS less than 3.0 days. The Geometric Mean is a mean or average, therefore GMLOS of less than 3.0 for any given DRG would in all likelihood include cases with 1 day stays (less than two midnights). In essence, the 49 DRGs with GMLOS less than 2.0 days would no longer qualify as inpatient under the presumption. The impact to future DRG GMLOS would result in increased GMLOS as the one utilization day presumed to be outpatient cases would no longer be paid under Part A, and therefore out of the statistics for computing future GMLOS for those DRGs. This would then have ramifications to the Transfer DRG impacts to providers, as the future GMLOS would increase, causing more cases to be subject to lower Transfer DRG payments. Like CMS, we believe "that the inpatient admission decision is a complex medical judgment that should take into consideration many factors, such as the patient's medical history and medical needs, the types of facilities available to inpatients and outpatients, the hospital's bylaws and admission policies, the relative appropriateness of treatment in each setting, patient risk of an adverse event, and other factors." Yet, the medical judgment of treating physicians is all too often second-guessed by RACs, which are able to evaluate a beneficiary's admission in hindsight, looking at the entire medical record rather than only the information that was known to the physician at the time of admission. It is no coincidence that the increase in observation services occurred with the advent of the RAC program. Therefore, to help address what CMS sees as troubling growth in observation care, we suggest that, rather than adopting a timebased presumption, CMS address issues surrounding the RAC program and process to ensure consistency across regions and maintaining the spirit of CMS' program in general. Any time-based assumption of medical necessity creates a gross over simplification and does not reflect the real complexity and intensity that is required to provide the clinical care these patients need. In fact as more cases fail to qualify as inpatient, hospitals find the intensity of service delivered to observation patients is often as high as that of inpatients. Unless the reimbursement model for observation care also changes, hospitals payments will not cover the costs of providing the necessary services. Time-based assumptions also penalize hospitals who have worked diligently to improve the efficiency of care and timeliness of tests and treatment. Ideally patients would receive diagnosis and care as quickly as possible and be discharged to home with additional community based services to support continued recovery and prevent readmission. 7

8 Although we applaud efforts to simplify the medical necessity determination process, this simplification alone would be very detrimental to providers and to patients. If simplification is the goal, we propose other changes such as, revamping the reimbursement model by removing "observation" as a level of care designation. Patients would either be in the hospital or outpatient (treated outside the walls of the hospital). Payment would be based on the intensity of services provided inside the hospital not governed by time or the artificial place of service called observation. In fact there are little to no differences in the intensity of service provided to patients in an observation bed or inpatient bed. If realignment of reimbursement cannot occur quickly, then other simplifications would still be of value. Other simplifications could include: 1. Approval of the "admit to case management" process that was approved in Florida. This would help streamline the process for determining the correct patient level of care; 2. Agreement that if cases under two midnights equal observation then cases over two midnights are automatically inpatients absent evidence of fraud and abuse and; 3. A RAC audit process that takes into consideration the hospital's appeal overturn rate so that better hospitals would have fewer audits. This would greatly reduce the audit burden for hospitals and would remove considerable costs for both hospitals and CMS. CHE Trinity Health has a denial overturn rate of over 90% at the Administrative Law Judge level, so we would welcome a more selective approach to RAC audits and denials. Furthermore, CHE Trinity Health supports the following recommendations offered by the AHA: AHA urges CMS to limit RAC review to only the information in the medical record that was known to the physician at the time of the decision to admit, excluding from their review information from after the patient s admission. Currently, unlike a treating physician, the view of RACs and other federal contractors is always in hindsight and, therefore, can consider the patient s length of stay and final outcome rather than focus on his or her presenting condition. Thus, it is not surprising that RACs and other federal contractors frequently conclude, for example, that many patients who were admitted as inpatients could instead have been placed in observation status. In fact, likely driven by the financial incentives, RACs largely have concentrated their attention on hospital claims for short inpatient stays. Denying payment for an entire inpatient stay is far more lucrative for the contractors than identifying an incorrect payment amount or an unnecessary medical service. AHA urges CMS to instruct the RACs to focus their audits on those other factors that the agency has said are relevant to the admission decision, including patient history and comorbidities, the severity of signs and symptoms, the risk of an adverse event, and health risks presented by a decision to send a beneficiary home rather than admit him or her, instead of only factors like the patient's length of stay and outcome. Typically, the RACs have elevated the importance of factors like the patient s length of stay and outcome in making patient status determinations. Because the inpatient admission decision is a complex medical judgment, focusing on only a couple of factors, as the RACs seem to do, is, by definition, arbitrary and unfair. If anything, it would be more appropriate to establish a presumption of medical necessity based upon the physician s admission order. After all, the physician decision to admit a beneficiary is an expert medical judgment that already includes an expectation that the beneficiary will need hospital care for more than 24 hours. Such a decision is by definition difficult to evaluate months later based on the cold medical record. CMS proposal to give no presumptive weight to the admission order seems inconsistent with the agency s recognition of the complexity of medical judgment involved. It also seems inconsistent with making a physician order a condition of payment, as we discuss below. Finally, AHA urges CMS to penalize RACs for incorrectly denying an inpatient stay not just to recoup their contingency fee to provide some check on the strong financial incentive RACs have to conclude that beneficiaries should not have been admitted. Specifically, we urge CMS to create a substantial penalty that would be triggered for each denial that is overturned upon appeal, as well as a penalty that would be triggered by poor performance (such as a high percentage of overturned denials) and assessed periodically. We recommend in addition to a base penalty CMS would assess on the RAC for claims overturned upon appeal, that 8

9 the RAC reimburse the provider its appeal costs, as courts do in litigation cases. As alluded to above, the RACs have a strong financial incentive to deny claims the more claims the RAC denies, the more the RAC is paid, and denying payment for an entire inpatient stay is far more lucrative than identifying an incorrect payment amount or an unnecessary medical service. Although CMS currently recoups the RAC s contingency fee if a denial is overturned on appeal, the multi-level appeal process is expensive and cumbersome for hospitals. No matter the merits of their cases, there is a limit to the number of denials hospitals can realistically shepherd through the appeals process, making CMS' current "penalty" an ineffective disincentive to discourage improper denials. If these three changes are made to the RAC program, we believe a time-based presumption would not be needed. If CMS Adopts a Time-Based Presumption, It Must Be Significantly Modified As stated above, we suggest that CMS make changes to the RAC program rather than adopting a timebased presumption. However, if CMS elects to adopt one or both of the presumptions it has proposed, we urge the agency to modify them in four important respects: The trigger to start the clock for the time-based presumption for an inpatient admission should be when the physician writes the admission order; The medical necessity of the inpatient admission should be upheld absent evidence of fraud and abuse; In addition to the time-based presumption exceptions proposed by CMS, there should be an exception for when the patient left against medical advice before one Medicare utilization day passed; and Clarify whether the services spanning less than two-midnights would be automatically considered observation care (substitute the admission order in lieu of an observation order). We believe that all care and services furnished to a beneficiary after the admission order time be considered inpatient care even if the patient remains in the ED or the observation bed. Therefore, we urge that the clock for any time-based presumption begin not when the beneficiary is moved from any outpatient area to a bed in the hospital in which the additional hospital services will be provided, as CMS has proposed, but when the physician writes the admission order. This would maintain consistency with Medicare s three-day payment window policy and with regulations included in CMS-1455-NR, Part A to Part B Rebilling of Denied Hospital Inpatient Claims, and CMS-1455-P, Part B Inpatient Billing in Hospitals. We also ask that CMS make an additional exception to any time-based presumption for a stay where documentation in the medical record supports the admission order, but the patient left against medical advice before one Medicare utilization day passed. And finally, we ask that you improve the situation for beneficiaries by revising program regulations so that observation services will count toward meeting the 3-day prior hospital stay requirement for Medicare coverage of skilled nursing facility care. This policy could apply to all observation services or just those which are provided within the 72-hour bundling window. We recognize that the 3-day requirement is statutory and cannot be waived, but CMS does have administrative discretion to specify how the rule will apply in these situations. Admission Order and Supporting Documentation The proposed rule reinforces the current practice of the admission order needing to be written by a physician/practitioner. We do not disagree that the physician must write orders for the delivery of medical care to the patient. However the level of care decision is a financial decision only and it only impacts hospital reimbursement and the patient! In fact, physicians are paid the same regardless of the level of care. Physicians across the country are vehement that they have no desire or ability to keep up with the level of care rules (which change frequently) and want to focus instead on high quality evidence-based 9

10 care. Therefore hospitals have had to create numerous, time-consuming, and costly processes to comply with this part of the Conditions of Participation. As mentioned above, an Admit to Case Management option would greatly assist both the hospital and the physicians, while still requiring the physician to write the orders for care. CMS Should Delay the Effective Date of Any New Rules Governing Inpatient Hospital Admission and Medical Review Criteria As noted in the inpatient PPS proposed rule, CMS has issued a separate proposed rule that would change existing policy to permit hospitals to rebill services under Part B when a Part A inpatient stay is denied due to inappropriate patient status. The agency also issued an Administrator s Ruling to permit hospitals to rebill services under Part B in the period before a final Part B billing rule takes effect. CMS has provided some guidance to hospitals regarding implementation of the Administrator s Ruling, but many questions remain. In addition, as illustrated above, modifying Medicare rules regarding when inpatient hospital admissions are appropriate, as well as medical review of those admissions, is complicated and would be logistically burdensome for hospitals. Many internal policies and procedures would need to be re-evaluated and potentially changed and education of the hospital staff undertaken. While CHE Trinity Health appreciates CMS s attempt to modify Part B rebilling policy through the Administrator s Ruling and Proposed Rule, the Ruling and Proposed Rule engendered uncertainty and confusion, and highlight that there may be logistical challenges that would be involved in implementing CMS proposed changes to the policies governing inpatient hospital admission and medical review criteria. As such, if CMS adopts any of its proposed changes discussed in this letter, CHE Trinity Health requests the agency delay the effective date of those changes until at least fiscal year This will provide hospitals time to take actions needed under the inpatient PPS rule, the Administrator s Ruling and any new Part B billing rule. This will also allow hospitals a year to deal with the implementation of ICD-10. Proposed Payment Reduction Should Not Be Implemented The proposed admissions payment reduction should not be implemented. CMS estimates that its proposed clarification of current policy would increase inpatient PPS expenditures by $220 million. Therefore, the agency proposes to offset this additional expenditure by permanently and prospectively reducing the operating PPS standardized amount, the capital standard federal payment rate, sole community hospitals and Medicare-dependent hospitals hospital-specific rates, and the Puerto Ricospecific amount each by 0.2 percent. While CMS cites its special exceptions and adjustments authority under section 1886(d)(5)(I)(i) of the Social Security Act in making this offset, this reduction is not appropriate given that CMS positions this as a more detailed statement of current policy, and not a change in current regulations. In addition, we agree with AHA comments that Medicare contractors have been inappropriately denying inpatient admissions and forcing hospitals to bill these services as outpatient services. Therefore these admissions should have been paid as inpatient all along and will not result in additional payout. In the CY 2013 OPPS rule, CMS discussed the trend towards extended observation services may be attributable to hospital concerns that RAC review would determine the inpatient admission as not reasonable and necessary. Understanding that the trend of extended observation began in the wake of the Medicare Modernization and Improvement Act of 2003 requirement for RAC reviews, calls into question the time period used by CMS actuaries of FY 2009 FY 2011 to determine the impact of encounters shifting from OPPS back to IPPS. We agree with AHA comments that the use of the special exception adjustments provision by CMS in this situation is inappropriate. Finally we agree with AHA comments that additional admissions under this policy are related to volume and do not impact payment rates and therefore an adjustment should not be made. We strongly urge that CMS not finalize the proposed reduction related to admission policy. 10

11 HOSPITAL READMISSIONS REDUCTION PROGRAM (HRRP) CHE Trinity Health agrees with: The three year applicable period as it aligns with publicly reported data on Hospital Compare; and The changes in methodology, i.,e., to exclude deaths, transfers to another acute care hospital, patients under the age of 65 and the linking of MedPAR data with Medicare Enrollment Database for greater precision of the data so long as this would not penalize beneficiaries in any way. CHE Trinity Health concurs with the following Catholic Health Association (CHA) comments regarding the HRRP: Include hip and knee procedures but oppose addition of COPD to the readmissions reduction program; Support of the exclusion of planned readmissions and encourage CMS to work with the physicians and the hospital community to identify other planned readmissions that should be excluded; and Concern regarding CMS methodology for risk-adjusting the readmissions measures. It will disadvantage hospitals serving a high percentage of low-income patients by imposing unnecessary and inappropriate payment reductions. We agree with CHA that patient race, language, life circumstances, environmental factors, and socioeconomic status (SES) should be included in the risk-adjustment methodology because these factors also have an impact on health outcomes and are outside the control of the hospital. We believe the approach suggested by MedPAC in its June 2013 report would address this problem and be within CMS' current legal authority to implement. While we agree with the changes to the algorithm, given the three readmission adjustment factor updates applied for FY13, and per the rule on p. 477, which sites a decrease in rates for AMI, HF, and PN, CHE would encourage CMS to consider refiguring the FY13 factors again. In addition, we agree with the logic of not adding conditions if their volumes are decreasing and/or moving to the outpatient (OP) setting. CHE Trinity Health asks for clarification on: pp the conditions not being included. On p. 479 it states not feasible for CMS to add readmission measures for three of the conditions identified by MedPAC in its 2007 Report to Congress (CABG, PCI, and other vascular conditions). But on p. 480, We are also exploring how we may address CABG in this program at a future time. Do you mean PTCA? As written it appears contradictory. Language around COPD readmission measure as it initially appears to be cited on p. 482 as 30- day all cause risk-standardized rate of readmission for an acute exacerbation of COPD. However, on p. 484, it states, The COPD readmissions measure assesses all-cause unplanned readmissions (excluding planned readmissions) rather than readmissions for acute exacerbations of COPD only. CHE Trinity Health would encourage CMS to reconsider including AMI s with a 5th digit of 0: if the episode of care is unspecified, it could be outside the 30-day readmission. Per ICD9 guidelines, 410 codes are used for acute condition of up to 8 weeks duration. HOSPITAL VALUE-BASED PURCHASING (VBP) PROGRAM CHE Trinity Health supports the proposed removal of three measures from the VBP program beginning with the FY 2016 payment. The measures PN-3b Blood culture performed before first antibiotic received in hospital and HF-1 Discharge planning are no longer NQF endorsed and have been recommended for removal by the Measure Application Partnership. CMS reports that the measure AMI-8a Primary PCI received within 90 minutes of hospital arrival is topped out. 11

12 CHE Trinity Health agrees that topped out measures should be removed from the VBP program so that the program focuses on measures where there is room for improvement and where meaningful distinctions in hospital performance can be made. CHE Trinity Health supports the proposed addition of a VBP waiver application process for hospitals that have experienced a natural disaster or other extraordinary circumstances beyond their control. A hospital in such circumstances can already apply for a waiver of data submission deadlines under the inpatient quality reporting program (IQR), but CMS correctly points out that some hospitals may be able to meet reporting deadlines but would have their quality performance negatively affected as a result of the disaster or other extraordinary circumstances. The proposed policy would ensure that these hospitals would not be penalized under the VBP program for poor performance for reasons outside their control. CHE Trinity Health encourages CMS to: Remove redundancy when selecting measures across programs; and Be consistent with publicly reported data timeframes. For example, on p. 554 there is a proposal to increase the minimum number of cases for the mortality measures: we would encourage consistency with the parameters of how data is included on Hospital Compare. We would also encourage that consistency for the mortality reporting timeframe: either use 3 years for VPB a la Hospital Compare or align Hospital Compare timeframe with VBP s. HOSPITAL-ACQUIRED CONDITION (HAC) REDUCTION PROGRAM CHE Trinity Health supports the HAC Reduction Program, with some modifications to the currently proposed rule. First, we support AHA's position that the selected measures inappropriately overlap with both the value-based purchasing and inpatient quality reporting programs, creating potential for "double dipping" or double payment penalties. Secondly, we support the first approach to measure the AHRQ PSI Indicators individually, as opposed to using the composite score for the measures. Thirdly, we would encourage CMS to reconsider the proposed scoring methodology to allow for needed risk adjusting for specific measures, where the population has higher volumes of sicker patients. We agree with AHA that there is potential to misrepresent quality of care in our hospitals to the public, should the methodology remain as it is currently proposed. Lastly, we are in support of a 24-month evaluative period, but would encourage CMS to utilize more current data as it is available. HOSPITAL INPATIENT QUALITY REPORTING PROGRAM CHE Trinity Health is pleased that CMS is taking steps to align the IQR program with the meaningful use electronic reporting requirements under the Medicare EHR Incentive Program by allowing hospitals to voluntarily report electronically on a specific subset of 16 IQR measures and use this report to satisfy the reporting requirement for the Incentive Program. It is very important, however, that, CMS proceed as proposed to exclude the electronically-reported data from public reporting on Hospital Compare. It would not be fair to compare results for hospitals reporting on chart-abstracted and electronic versions of the same measure since measures manually abstracted benefit from the broader context that is available in a chart. LABOR AND DELIVERY BEDS IN GRADUATE MEDICAL EDUCATION PAYMENTS CHE Trinity Health does not support the proposal to include labor and delivery beds in the count of available beds used in the graduate medical education calculation. While we recognize that CMS general practice of treating the counting of beds and patient days similarly, we believe labor and delivery services should be an exception, as is the case with healthy newborn nursery services. The labor and delivery beds are generally not available to Medicare beneficiaries. 12