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June 7, 2007 Ms. Leslie Norwalk, Esq. ATTN.: CMS-1533-P Re: Medicare Program; Proposed Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2008 Rates; Proposed Rule, Federal Register, Volume 72, No. 85, Thursday, May 3, 2007 Dear Ms. Norwalk: On behalf of our approximately 200 member hospitals and health care systems, the Illinois Hospital Association (IHA) is taking this opportunity to formally comment on the proposed rule establishing new policies and payment rates for hospital inpatient services for fiscal year 2008. IHA commends the Centers for Medicare and Medicaid Services (CMS) for its thorough analysis in the development of this rule; however, the Association does have some concerns with several of the provisions. Specifically, IHA has its gravest concerns with the proposed "behavioral offset" cuts related to the move to severity-adjusted diagnosis-related groups (DRGs), the use of Present on Admission codes, hospital quality data validation and the cuts to capital payments. Therefore, in accordance with instructions in the rule, the Illinois Hospital Association presents the following comments for your consideration: 1. DRG REFORM AND PROPOSED MS-DRGs: DRGs: Severity of Illness The American Hospital Association (AHA) has proposed a "phased in" approach to the DRG expansion and our Association agrees. Specifically, the IHA supports the AHA approach which suggests the following stages: DRGS: Hospital-Acquired Conditions However, there is a challenge to properly and fairly identifying these conditions using the Present on Admission codes. The Present on Admission (POA) codes were just released less than a year ago and while several states are moving toward using them for public reporting, it does not represent the majority of states or hospitals. As IHA has tracked both New York and California’s developments in implementing the POA, it is still not completely reported and there are segments that are not reported well or report "unknown" quite often. As stated before in several forums, the Illinois Hospital Association has been providing educational training and support for over a year. The actual direction from CMS for health information technology companies and providers to utilize with the HIPAA 837 4010A1 version was just recently released. IHA urges CMS to move ahead and require reporting on all diagnostic codes using the POA, but to only implement compliance review and adjustments on those two or more conditions that CMS adopts for payment changes. The largest hurdles to overcome in reporting POA are those that require complete and accurate reporting by time of discharge by clinicians caring for the patient. As medical records staff cannot interpret or read in more than what is documented by a clinician, it will be important for providers within a setting to establish one method for documenting in the medical record and for training and feedback to be provided to physicians and all staff. Areas in which there are too many unknown or clinically undetermined codes need to be studied thoroughly and records reviewed to determine patterns, disease conditions, or other reasons for incomplete record documentation. In all reports by the Center for Disease Control and Prevention, it has been well documented that healthcare acquired infections are one of the top ten leading causes of death. Additionally, there are negative features associated with hospital acquired infections such as longer lengths of stay, higher costs, potentially chronic conditions leading to more care for the patient, and the harm to patients. If CMS were to proceed in this area, the agency needs to be prepared to accept a number of "clinically undetermined" cases to be reported as well as "unknown." The staph aureus septicemia is by far one of the largest areas to cover and one in which there are many different ways to diagnose upon admission based upon clinical location of infection. However, there are ways to limit the scope of this infection and to better determine an area of focus. While some of the diagnostic codes may not be in the complication or co-morbidity ICD-9-CM list, it is not difficult to put in a coding request change and with supporting documentation have it adopted. As healthcare acquired infections are an area of consumer and patient attention, it seems inevitable that this will become a focus area either in fiscal 2009 or beyond. DRGs: Behavioral Offset In conclusion, CMS should not implement a "behavioral offset" at this time. Once the MS-DRGs are fully implemented, CMS can investigate whether payments have increased due to coding rather than the severity of patients and determine if an adjustment is necessary. CMS is not required to make an adjustment at this time, and should not do so without an understanding of whether there will even be coding changes in the first few years of the refined system. CMS can always correct for additional payments made as a result of coding changes in a later year when there is sufficient evidence and an understanding of the magnitude. 2. WAGE INDEX: 3. HOSPITAL QUALITY DATA: Data Validation and Appeals Process: The validation process continues to be a challenge for all providers due to the consistent occurrences of errors in processing by the CMS vendor. Rather than responding to criticism and making adjustments, hospitals spend a considerable amount of time trying to educate the vendor and Quality Improvement Organizations (QIO) diverting valuable time from quality improvement. As noted several times in comments, the CMS vendor should have an advisory group outside the QIO and should pilot test their processes and outcomes. If the CMS processing resource utilized quality improvement processes, there would not be the rate of error hospitals have continuously found in processing. Additionally, while data specifications are released, CMS should also be releasing its methodology for measurement calculations and validation. If this had been the case, the error in understanding the application and usage of "Admission date" could have been alleviated. For years, providers and payers have utilized an admission date definition and payment methodology, and for CMS to re-define admission date without any coordination during the validation process caused a great deal of resources to be wasted as hospitals incorrectly failed validation and all parties spent considerable time trying to rectify the problem. Common Software Publicly Available: To reduce cost and time for vendors and providers, there should be a publicly available software made available by CMS, similar to DRG and AHRQ Quality and Patient Safety software. As the HQA measurements are shifting to the Value Based Purchasing approach, the merging of finance and quality to derive value would be an important step forward to a standard methodology and results. Since CMS already has the software to create the measurement results, the software could be utilized by vendors and providers and thereby reducing artificial result variations due to programming variations and interpretations as well as driving down the costs of participation. Also, health plans, employer groups, and consumer groups would have access to the publicly available software to create various payment and performance assessment models. Opportunities for PQRI Reporting Methodology: When Electronic Health Records (EHR) systems were designed, the infrastructure and expected output were more focused on integrating process methodologies into EHRs so that concurrent care delivery could follow acceptable guidelines of care. The design approach allows for triggers, reminders, and flags to be set utilizing HQA methodologies for care delivery and not for reporting. Of the EHRs in place in Illinois, all of the hospitals for HQA reporting review the EHR on-line and then enter the same information into their HQA products for reporting to Joint Commission and HQA. We are hopeful that if the Physician Quality Reporting Initiative is successful that consideration would be given to allowing for an additional method for reporting HQA data similar to PQRI (and not using CPT codes to accomplish – perhaps a SNOMED approach or something along those lines). For example, a provider using an EHR currently has a number of the HQA process guidelines built in – some even requiring a response in order to advance care delivery. However, once the provider meets the standard of care by the guideline, the information is only stored as service rendered, not rendered and with reason (typically reason can be reported). However, the EHR systems cannot generate the HQA elements but could be capable of generating the HQA actual result. Again, an approach similar to PQRI might work for some provider EHR systems and given the EHR systems meet certification requirements, there should not be a problem in ensuring compliance with the guidelines of care. By incorporating the guidelines of care into EHRs and advancing EHRs, the goal of achieving and sustaining the standards of care for all people can be more readily achieved. As we have seen through the validation process and introduction of new measurements, the results are often times initially more the result of incorrectly entered information than of actual care. By advancing the EHR to all providers, quality of care through practice guidelines and evidence based research can be more readily advanced in the United States.4. CAPITAL IPPS: For FY 2008, CMS proposes eliminating the capital update for all urban hospitals (a 0.8 percent cut) and the large urban hospital add-on (an additional 3 percent cut). However, CMS proposes to update capital payments for rural hospitals by 0.8 percent (the capital input price index) although that percentage increase is effectively eliminated by the behavioral offset discussed above. In addition, CMS is considering discontinuing the IME and DSH adjustments to capital payments. These cuts, based solely on the discretion of the administration with no congressional direction, are unprecedented. According to the Medicare Payment Advisory Council (MedPAC), overall Medicare margins will reach a 10-year low in 2007 at negative 5.4 percent. It is estimated that the proposed cuts to inpatient capital payments would decrease payments to Illinois hospitals by $14.3 million in FY 2008 and by approximately $880 million nationally over the next five years. Capital cuts of this magnitude will disrupt hospitals’ ability to meet their existing long-term financing obligations for capital improvements. Hospitals have committed to these improvements under the expectation that the capital PPS would remain a stable source of income. Reducing capital payments would create significant financial difficulties and consequently, IHA is opposed to these unnecessary cuts, which ignore how vital these capital payments are to the ongoing maintenance and improvement of hospitals’ facilities and technology. CMS justifies the cuts based on an analysis that purports to show that hospitals are experiencing substantial positive margins under the capital payment framework. The analysis, which averages hospital inpatient Medicare capital margins for the period from 1996 to 2004, is deficient in several respects. What hospitals experienced in 1996 is irrelevant to the operating environment of today, eleven years later. Looking at a snapshot period rather than a full capital cycle of fifteen to twenty years is misleading. The averaging system is meant to balance the high spending cycles of some hospitals with the low spending cycles of others over time, but isolating any given portion of the cycle may not achieve this. Secondly, for the first ten years under the capital PPS, many hospitals were paid for their capital costs under a "hold harmless" methodology, which transitioned from the "cost-based" methodology to the fully prospective methodology. Therefore, if CMS were to examine hospitals’ capital margins under a prospective system, it should exclude the period prior to 2002 altogether, since those years allowed the hold harmless payment methodology. Capital "revenues" during this period would not be representative of a fully prospective system. Finally, the regression establishing the capital PPS was based on total costs, not just capital costs, so CMS should be looking at total margins. As noted earlier, MedPAC estimates an overall hospital Medicare margin in 2007 of negative 5.4 percent. Whether or not hospitals experience a narrow positive margin for their capital payments is of small consequence when the hospital loses money, on average, every time it treats a Medicare beneficiary. CMS’ analysis concludes in 2004, the year when the margin dropped to its lowest point, 5.1 percent, in the time period CMS selected – 34 percent below the 2003 capital margin and 41 percent below the 2002 capital margin. Extending that trend line projects that capital margins today are negative, which should not be a surprise because it is the very same overall Medicare margin trajectory that MedPAC has documented – a sharp and steady decline since 2002 – from positive 2.4 percent to an estimated negative 5.4 percent in 2007. Hospitals must make a healthy positive margin in low spending years in order to access loans and take on large, long-term financial obligations. Yet, CMS is suggesting that a modest capital margin (5.1 percent in 2004 and likely lower today) is excessive. In addition, CMS has not fully considered the ramifications of dramatic capital cuts on the use of technology and the quality of hospital infrastructure. Reduced capital payments would make buying the advanced technology and equipment that patients expect much more difficult for the nation’s hospitals, and could have the effect of slowing clinical innovation. These changes disadvantage large urban and teaching hospitals, where much of the innovation and cutting-edge research is generated. These hospitals will be even more challenged to keep up with leading technology, facilities and patient care. Moreover, for many hospitals, investing in information technology would become even more challenging. Without these facility and technological improvements, all patients will be deprived of these advances. At a time when the administration and Congress are pushing for such investments, this proposal may have the opposite effect of slowing needed adoption of health information technology. Also, the Illinois Hospital Association opposes possible cuts to the IME and DSH adjustments under the capital system. CMS has no analysis of the impact of these proposed changes on the high-caliber medical education of our future physicians and the community-wide services for which hospitals often lose money providing, such as burn and neonatal units. It is irresponsible of CMS to make such changes without a clear understanding of the broader ramifications. Ms. Norwalk, thank you again for the opportunity to comment. The Illinois Hospital Association also welcomes the opportunity to work with your agency in the continued development and refinement of the Medicare payment system. Sincerely, Thomas A. Jendro | |
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