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September 14, 2007
Mr. Kerry Weems
Acting Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Room 445-G, Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Washington, D.C. 20201
ATTN.: CMS-1392-P
Re: Medicare and Medicaid Programs; CY 2008 Proposed Changes; Proposed Rule,
Federal Register, Volume 72, No. 148, Thursday, August 2nd, 2007
Dear: Mr. Weems:
On behalf of our approximately 200 member hospitals or 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 outpatient services and other services for calendar year 2008. The
Association presents the following comments for your consideration:
APC RELATIVE WEIGHTS:
CMS is proposing to "package" the payment for procedure codes in the
following seven categories into the payment for the services for which they
are furnished:
- Guidance services,
- Image processing services,
- Intra-operative services,
- Imaging supervision and interpretation services,
- Diagnostic radiopharmaceuticals,
- Contrast media,
- Observation services.
The rule indicates that this proposal would be implemented in a
"budget-neutral" manner. CMS also states that it expects that the result of this
packaging approach will moderate the growth and spending seen over time in the
OPPS system. CMS states:
"Creating additional incentives for providing only necessary services in the
most efficient manner is of vital importance to Medicare today, in view of the
recent explosion of growth in program expenditures for hospital outpatient
services paid under the OPPS….We are hopeful that expanded packaging and
ultimately, greater bundling under the OPPS may result in sufficient moderation
of growth in volume and spending that further controls would not be needed.
However, if spending were to continue to escalate at the current rates, even
after we have exhausted our options for increased packaging and bundling, we are
considering multiple options under out authority to address these issues,
including the possibility of imposing external controls that could link growth
in volume to reduced payments under the OPPS in the future."
The Illinois Hospital Association is concerned about that last statement;
hence, it will monitor closely CMS’ actions (if any) involving the imposition of
further controls.
- The Medicare Modernization Act of 2003 requires that for FY 2008, CMS’
payment for "Specified Covered Outpatient Drugs (SCODs)" equal the
average acquisition cost of the drug, adjusted for pharmacy overhead costs.
The overhead percentage add-on is proposed to equal to 5%. Additionally,
the agency is proposing to instruct hospitals to remove the pharmacy overhead
charge from the charge for the drug or biological and instead report the
pharmacy overhead charge on an un-coded revenue code line on the claim.
This would allow CMS to package payment for the overhead costs of the
procedure into the APC payment for that procedure. This policy would not apply
to radiopharmaceuticals. Concerning these changes to the payment for drugs
and biologicals in the OPPS, the Illinois Hospital Association has the
following concerns:
- CMS is presumably basing its estimate of "5% overhead costs" on a 2005
MedPAC study. This percentage is not only lower than the 6% applied to
overhead for drugs furnished in physicians’ offices; given the elements of
overhead, including labor distribution costs, invoicing, etc., the proposed
add-on percentage of 5% in the rule appears low.
- Secondly, IHA is very concerned as to the capability of its hospitals to
separately identify and bill for any ancillary service overhead
component. Historically, hospitals set their prices based on the combination
of direct and overhead cost components. Not only would the process of
identifying, separating and billing the overhead component of the charge
from the total charge be administratively difficult, CMS gives no direction
as to what cost items (or cost report references) make up the "overhead"
portion. There is likely to be an enormous amount of confusion among
hospitals as to how to specifically comply with this provision if it is
implemented.
Therefore, IHA strongly urges CMS to withdraw its proposals relating to
pharmacy overhead items for the upcoming year, and instead, examine all the
ramifications of such a policy before implementing it in the future.
CMS is proposing to reduce the payment for partial hospitalization (PHP)
by 23% to account for pricing differences the agency believes are present in
PHP programs operated by community mental health centers (CMHC), as well as
substantial differences in costs between hospital-based and free-standing
programs. Consequently, the proposed per diem rate for PHP services in FY 2008
is $179.88, a significant reduction from the FY 2007 amount of $233.65. IHA
strongly objects to such a drastic payment reduction in one year. Several
hospitals in Illinois have discontinued their partial hospitalization programs
within the past several years, primarily for financial reasons. A further
payment reduction could only serve as an impetus for other facilities to scale
back, if not completely close down their programs. Access to this much needed
service on the part of Medicare beneficiaries is already strained.
Therefore, the Illinois Hospital Association recommends that CMS re-visit its
pricing and costing data and, if a reduction is necessary, implement a
percentage reduction that is no more than 5% in any one year.
The Illinois Hospital Association continues to be concerned about CMS’
payment structure for Type A and Type B emergency department (ED) visits.
Specifically, the new policy implemented by CMS’ 2007 final OPPS rule led to
significant confusion and concern about how hospital "fast tracks" are
treated. Fast tracks generally function as a part of the emergency room
that examines specialized cases (e.g. heart-related emergencies) or less
emergent cases so that patient flow can move through the department more
smoothly. These areas can be physically adjacent or even located within the
24/7 ED but, hospitals often discontinue triaging patients to fast tracks
during certain hours (e.g., the midnight shift).
Reimbursing hospitals for non-24/7 ED fast tracks at the clinic rate is not
good healthcare policy. ED overcrowding and ambulance diversions are
significant issues for America’s health care system and fast tracks improve
patient care, patient flow and patient satisfaction. CMS’ policy has led
many hospitals to consider closing these special units, a move that would
exacerbate the nation’s ED diversion and overcrowding problems. The IHA
believes CMS’ policy can be improved to be clearer on the appropriate coding
for fast track ED services and recommends applying the following criteria:
- If a hospital with a Type A, 24/7 emergency department has a "fast
track" area to which some patients are sent for expedited or specialized
care, the fast track area is part of the Type A ED and can bill using the
Type A ED CPT codes, regardless of the fast track's hours of operation, as
long as:
- the fast track is a hospital-based facility which
provides unscheduled episodic services to patients who present for
immediate medical attention;
the fast track area is physically located within the
same building as the 24/7 ED; and
the 24/7 ED and the fast track share a common
patient registration system.
CMS has proposed maintaining the total outlier pool in FY 2008 to 1% of
total outpatient payments, consistent with the percentage applied in FY 2007.
In order to achieve the 1% spending target, CMS has proposed increasing the
fixed dollar threshold to $2,000, an increase of almost 10%. Therefore, to be
eligible for an outlier payment in 2008, the cost of the service must exceed
1.75 times the Ambulatory Payment Classification (APC) payment rate and it
must also be at least $2,000 more than that APC amount. The outlier payment
amount would equal 50% of the difference between the computed service cost and
1.75 times the APC payment amount. The Illinois Hospital Association
suggests that CMS verify that its data, in particular its charge data, are as
current and accurate as possible. Hospitals’ pricing policies have changed
within the past few years as a result of revisions to the Medicare inpatient
outlier payment calculation which CMS implemented. Comparatively lower
percentage increases are being instituted and some hospitals have even reduced
their prices. So unless CMS uses an accurate hospital price database, the
agency could inadvertently be setting its fixed threshold amount ($2,000)
artificially high.
NECESSARY PROVIDER CAHs:
Included in the proposed rule is a provision addressing the creation of
"off-campus" or provider-based, off-campus facilities effective January 1st,
2008. Included in this rule are off-site rehabilitation and psychiatry
sub-providers established by the critical access hospital. The rule stipulates
that an off-site facility created or acquired by a "necessary provider,"
critical access hospital after 1/1/2008 must be at least 35 miles away from any
other acute or critical access hospital (otherwise known as the "distance
requirement"). The consequences of failing to meet this distance requirement are
severe: the CAH would lose its critical access hospital status and would
consequently need to convert to a prospective payment system acute care
hospital. As such, it would have to comply with all Medicare Conditions of
Participation applying to those hospitals. While the proposed rule allows
the grandfathering of arrangements that were in effect prior to the January
implementation date, the Illinois Hospital Association strongly opposes this
rule and urges CMS to withdraw it. Specific concerns include the following:
- The rule does not address rural health clinics specifically. Although
these clinics have separate provider numbers and separate provider agreements,
CMS does not state whether it considers these facilities "provider-based," and
subsequently, subject to the 35-mile provision. Implementation of this rule
would severely hinder the establishment of new clinics in the future, thereby
potentially reducing access to needed medical services in these communities.
- This proposal ultimately places a severe and undue burden on critical
access hospitals seeking to bring much-needed health care services to
underserved communities. This, again, is especially true when considering the
need for specialized rehabilitation or psychiatric services.
- There is no cost-reimbursement benefit to CAHs for their rehabilitation or
psychiatric services; those services, by law, are already reimbursed under
their respective prospective systems. It is unclear what is motivating CMS to
include these services in its distance requirement rule.
- The discontinuance of critical access hospital status and the
re-application of the hospital as a prospective payment, acute care hospital
(as a consequence of non-compliance with this rule) would place extreme
administrative hardship on hospitals that are already facing severe financial
and resource challenges. To again have to apply for Medicare participation as
a "PPS hospital" requires additional application and documentation reporting,
not to mention the resulting financial hardship loss of CAH status would
create.
MEASUREMENT ISSUES:
The Illinois Hospital Association respectfully submits the following
comments as they pertain to the proposed rule addressing outcome measurements
for the OPPS:
Measurements have not been approved by National Quality Forum;
therefore the validity, reliability, accuracy and appropriateness have not
been assessed.
DRAFT measurement specifications were only released for these measurements
on September 5th and are just being vetted for
public comment.
While the DRAFT specifications focus on emergency care patients, there
is no mention of observation care patients. This is problematic given the
criteria CMS has established for observation care services versus inpatient
admissions.
While some of the measurements mirror some of the services assessed on
inpatient side, the outpatient information reporting systems are quite
different.
Most hospitals do not have the same information reporting systems for
emergency and observation care as they do for inpatient care. Since hospitals
are not using standard performance measurements or collection systems on the
emergency and outpatient setting, it will take time to have the health
information technology vendors that service the outpatient care settings of
hospitals to incorporate the variables, values, and intervention processes for
reporting out.
Most vendors are unaware of the draft specifications recent release and
given the controversy and measurement methodology issues, vendors will not
begin programming until final specifications are issued.
Hospitals cannot afford to perform retrospective reporting of data in the
emergency or observation setting as the volume of patients is significant.
Furthermore, while it may appear to be less challenging to some to collect
similar types of data in the inpatient and outpatient settings, there are
differences in reimbursement and therefore, higher per case costs in
collecting outpatient data.
The volume of patients in the Ed and Observation care settings are
significant – yet, the volume of data and number of data elements required to
generate one process measurement remains constant between inpatient and
outpatient settings.
SYSTEM PERFORMANCE ISSUES:
Given the experience with the CMS warehouse processing and the continuing
inpatient data processing errors and problems, hospitals are extremely concerned
about the volume of data errors and amount of time to be expended by providers
on an untested system. Hospitals have spent countless hours identifying
problems, waiting for corrections, and in some instances having to appeal
validation results as a result of warehouse processing problems.
For CMS to move ahead with an untested system would be a huge financial
burden for providers to bear as we are confident there will be problems in the
warehouse and providers will bear the cost of re-work and hospital staff hours
spent on identifying and verifying issues.
VALIDATION:
The validation process on the inpatient side is fraught with CDAC errors and
with little room for hospitals to effect change on CDAC errors. Hospitals are
very concerned that CDAC staff have not been trained, and given the history with
ongoing CDAC errors, it is most likely significant issues with validation will
only increase. As hospitals cannot appeal scores 80% or greater, even knowing
there are obvious CDAC errors, this will again be another source of wasted
hospital resources and frustration.
IHA and its member hospitals remain totally committed to performance
reporting and public accountability. It is important that the information
provided to consumers is accurate, complete, timely, valid, reliable, and
reflective of the hospital services. Given all of the issues raised, we request
that CMS proceed with its measurement validity, reliability, and accuracy review
by the National Quality Forum and the public vetting process. We also ask that
CMS review the issues raised in this communication and address the concerns
expressed by IHA and its 200 member hospitals.
Mr. Weems, thank you again for the opportunity to comment. The Illinois
Hospital Association welcomes the opportunity to work with your agency in the
continued development, refinement and reform of the Medicare payment system.
Sincerely,
Patricia Merryweather
Senior Vice President
Illinois Hospital Association
pmerryweather@ihastaff.org
Thomas A. Jendro
Senior Director, Finance
Illinois Hospital Association
tjendro@ihastaff.org
1151 E. Warrenville Road
Naperville, Illinois 60566
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