CommonSpirit Health Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule
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On behalf of the patients and communities we serve,
We appreciate that CMS did not use the FFY 2021 IPPS proposed rule to make numerous broad policy changes, especially in the midst of a declared public health emergency (PHE). We also appreciate CMS's approach to specific proposed policies, such as payment for indirect and direct graduate medical education costs, clarifying the health information exchange objectives, eCQM validation changes, and special payment consideration for
PUBLIC REPORTING OF MEDIAN PAYER-SPECIFIC NEGOTIATED CHARGES BY MS-DRG
CMS proposes to require hospitals to include on the annual Medicare cost report what the agency calls "market-based payment rate information." The proposal would require every hospital to report:
1) The median payer-specific negotiated charge that the hospital has negotiated with all of its Medicare Advantage (MA) organizations organized by
2) The median payer-specific negotiated charge the hospital has negotiated with all of its third-party payers, which would include MA organizations, organized by MS-DRG.
The agency also requests comment on incorporating this information in the IPPS MS-DRG relative weights beginning in FFY 2024.
CommonSpirit believes both proposals are misguided and unlawful. While CommonSpirit supports transparency and agrees in the value of helping patients understand their financial liability for healthcare services, CMS's proposed is entirely unhelpful to patients. CommonSpirit urges CMS not to finalize these proposals and instead work with stakeholders, including providers, patients and payers, to leverage existing tools and make consumer-usable cost and quality information available to patients.
Violating the Medicare Act
Section 1886(d)(4)(B) of the Social Security Act contains
For each such DRG the Secretary shall assign an appropriate weighting factor which reflects the relative hospital resources used with respect to discharges classified within that group compared to discharges classified within other groups.
Since FFY 2008, CMS has determined the weights based on the costs incurred by applicable hospitals when treating patients within each MS-DRG. CMS determines such costs by multiplying each hospital's average charges for patients within each MS-DRG by applicable cost-to-charge ratios. This approach is consistent with
The contract rate data that CMS proposes to gather may be appropriately used to establish the weights, but it does not reflect relative resources used in treating patients within each DRG. Specifically, CMS states it is considering using the median payer-specific negotiated charge for each MS-DRG with payers that are MA organizations, or, alternatively, the use of median payer-specific negotiated charges for MA plans and all third-party payers, or other similar data based on negotiated rates in contracts between hospitals and payers. However, these rates are not equivalent to costs or resources and will give the patient no useful information when making their healthcare decisions. Rather, the rates reflect myriad factors relating to negotiations between hospitals and private payers. CMS's proposed approach will not provide any reasonable measure of the relative resources used to treat patients among MS-DRGs and will not provide data that is more accurate than the current cost information already gathered by the agency.
In addition, the agency appears to conflate market price with cost. As set forth in section 1886(d)(4)(A) of the Act, relative weights are intended to reflect "the relative hospital resources used with respect to discharges classified within that group" and not the relative price paid. CMS currently uses an appropriate cost-based methodology to estimate the weight for each MS-DRG. In proposing to use median payer-specific negotiated charges to set MS-DRG relative weights, CMS has not adequately explained why it thinks market price, rather than costs is a better measure of hospital resources used. It would be arbitrary and capricious for CMS to move forward with this proposal.
Differentiating Among Contract Arrangements
CMS is correct in recognizing in the proposed rule that MA plans frequently pay the amount that would have been paid under IPPS perhaps multiplied by a factor that may be slightly more or slightly less than 100%. Indeed, the Berenson study cited by CMS in the proposed rule indicates that MA plans pay between 100% and 105% of IPPS rates. The data from MA contracts, therefore, will simply reflect what Medicare has been paying under IPPS; that is, this data will report the most recent IPPS rates based on the most recent IPPS MS-DRG weights. Any weights calculated based on this data will necessarily be the same, or nearly the same, as the weights CMS has most recently used under IPPS. These weights would therefore be based on old cost data, as IPPS weights are based on older, not current, cost data. In fact, if MA plans continue to pay hospitals based on IPPS rates, using MA contracted rates to determine MS-DRG weights will freeze the weights beginning with the weights in place when the methodology change is implemented. Thus, using rates from MA contracts will not reasonably reflect the current resource utilization, and certainly will be far less accurate than the current cost methodology.
Combining MA rates with commercial insurance rates adds complexity but does not reflect appropriate resource use for the Medicare population. While many commercial, non-MA contacts with hospitals also use IPPS rates, using this data will result in the same problems as using the MA contract rate data described above. Further, mixing MA and non-MA contract rates will infuse other factors that will lead to inconsistency. Specifically, there is a lack of comparability between a Medicare patient population and a commercial insurance patient population, making the use of commercial insurance contract rates a poor basis for determining the resource use among MS-DRGs for purposes of establishing Medicare payment rates. In addition, other contracts, including some MA contracts, may be based on per diem rates. Per diem rate contracts typically involve either a single per diem rate or multiple rates based on the unit in which the patient is receiving services. These rates are rarely based on the patient's diagnoses, and virtually never based on MS-DRGs. Mapping these rates to MS-DRGs and using them to calculate the MS-DRG weights will result in weights based primarily on length of stay rather than on hospital resource use.
There are numerous other variations of contract arrangements. For example, some contracts for both MA and non-MA populations use capitation, under which the hospital is paid a fixed amount per member per month. Mapping these rates to MS-DRGs becomes highly arbitrary and completely disconnected with the MS-DRG resource utilization. Rather, capitation rates represent negotiated amounts reflecting the forecasted average cost of treating the payer's members assigned to the hospital. Other contracts have stop-loss provisions and/or risk-sharing arrangements, while still others have rates reflecting various trade-offs, including volume levels and a consideration of rates globally as they apply to the entire complement of services subject to the contract. These arrangements may reflect risk allocation or other factors, but do not reflect resource utilization.
In addition, contracted rates between hospitals and payers do not reasonably reflect comparative resource utilization among MS-DRGs. Use of these rates will yield arbitrary results that are much less accurate than the current cost-based methodology. The use of contracted rates, whether MA rates or all-payer contracts rates, to determine MS-DRG rates would therefore be inconsistent with the governing statute and would be invalid. As the use of the contracted rates to set MS-DRG rates would be invalid, there is no legitimate rationale to require that hospitals to report the median contract rates.
Legal Concerns
CMS cites no Congressional authority to require hospitals to furnish median payer-specific negotiated charge information by MS-DRG. Rather, CMS relies exclusively on a rule the agency promulgated in 2019, commonly known as the "Hospital Price Transparency Final Rule," to require disclosure of negotiated charge information by MS-DRG. The Hospital Price Transparency Final Rule is scheduled to go into effect on
The same is true as to the potential approach to change the method of calculation for MS-DRG relative weights beginning in FFY 2024. CMS says that it is considering adopting in the FFY 2021 IPPS final rule a change to the methodology for calculating the IPPS MS-DRG relative weights to incorporate this market-based rate information, beginning in FFY 2024. But if it is unlawful to require disclosure of median payer-specific negotiated charge information by MS-DRG, then CMS could not use that information to change relative weights.
Regardless, the legal issues are unsettled. If the agency nevertheless elects to finalize these proposals, it should not do so unless and until (1) the court upholds the hospital price transparency final rule, (2) the agency has adequately explained the basis for concluding that payer-specific negotiated charges by MS-DRG reflect resources used, and (3) stakeholders have had another opportunity to comment on the proposal.
Reporting Burden
CMS explains the payer specific negotiated charges used by hospitals to calculate these medians would be the payer-specific negotiated charges for service packages that hospitals are required to make public under the requirements finalized in the Hospital Price Transparency Final Rule that can be cross-walked to an MS-DRG. CMS states this is possible because hospitals are already required to publicly report payer-specific negotiated charges in accordance with the Hospital Price Transparency Final Rule. CMS expects the proposal will pose minimal difficulty and will create an average annual burden of 15 hours per hospital. Based on the number and types of contracts described above, CommonSpirit estimates it will take considerably longer than CMS estimates, and in some cases, cross-walking rates to MS-DRGs will be impossible.
The proposal offers a simplified example where a hospital negotiates payments with four different MA organizations and the process whereby a hospital would calculate the median for seven discharges for a certain MS-DRG. This example oversimplifies the process that most hospitals will undertake. For example, a health system like CommonSpirit that operating 137 hospitals in in 21 states will have multiple contracts for each individual hospital, within each state, and with each payer. This could result in our health system needing to calculate hundreds of discharges for a given MS-DRG across more than 3,000 arrangements with payers, each with 10-15 unique benefit designs. Additionally, as CMS notes in the preamble, some third-party payers do not pay based on MS-DRGs. As a result, hospitals will need to calculate an MS-DRG based on the same or similar package of services. This process becomes even more complicated if commercial plans do not pay the hospital based on fee for-service rates. As a result, this proposal places significantly higher burden on hospitals than what is reported in the proposed rule. CMS grossly underestimates the amount of time it will take hospitals calculate and report median charges by MS-DRG.
Moving to Value-Based Care
CMS bases its proposal on a fee-for-service system and does not take into account different arrangements in support of value-based care. As noted above, it will likely be difficult for providers to crosswalk value-based payments for purposes of reporting under this proposal. Establishing a policy that ignores value-based arrangements stymies the progression of health providers moving toward value-based payments. Instead, CMS should be focused on policies that move providers away from fee-for-service and toward value. Last fall, CMS announced its goal that 50% of Medicare payments would be tied to quality and value by 2022 and 100% of payments would be tied to these metrics by 2025. CommonSpirit supports these value-based goals and encourages CMS to focus on reforms that move the entire healthcare system away from fee-for-service and toward greater value for the patients we serve.
DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS
Since FFY 2014, hospitals that qualify for Medicare DSH payments receive two separately calculated payments. The first payment equals 25 percent of the amount they would have received under the Medicare DSH formula required by statute prior to the Affordable Care Act. The second payment is based on the remaining 75 percent of the total Medicare DSH payments that would have been paid under the old formula (Factor 1), adjusted by the change in the number of uninsured individuals since FFY 2013 (Factor 2). The amount received by a given hospital from this aggregate pool of uncompensated dollars is then based upon that hospital's share of national uncompensated care costs as calculated using the Medicare cost report Worksheet S-10.
In the proposed rule, CMS estimates that the amount available to distribute as uncompensated care will decrease approximately 6.4 percent or nearly
None of us has ever seen a health care and economic crisis like the one faced by COVID-19. Common sense tells us that Medicaid enrollment will increase in FFY 2021 as a result of the PHE. Unemployment began increasing in
The proposed rule states that "OACT [the
Factor 2 is determined by comparing estimates of the number of uninsured for FFY 2021 to the number of uninsured in calendar year 2013, before the Affordable Care Act went into effect. OACT uses estimates of the uninsured from the National Health Expenditure Accounts (NHEA) based on the latest historical data through 2018 (85 FR 32751). In an explanatory document on CMS's website dated
The models used to project trends in health care spending are estimated based on historical relationships within the health sector, and between the health sector and macroeconomic variables. Accordingly, the spending projections assume that these relationships will remain consistent with history, except in those cases in which adjustments are explicitly specified.
CommonSpirit strongly believes that the PHE has created a situation where the historical relationships between health sector and macroeconomics will be an inaccurate proxy for FFY 2021 and possibly longer.
OACT has the authority to use other data sets or more complete data for the DSH calculations. CommonSpirit urges OACT to update Factor 2 with more timely and accurate data to reflect the increase in uninsured patients throughout FFY 2020 and FFY 2021. CMS must take into consideration the dramatic and devastating effect the pandemic has had on employment, the economy, and the health sector before finalizing FFY 2021 DSH rates. To do otherwise will place hospitals in further financial jeopardy from reductions in reimbursement at a time when funds are needed most.
Distributing Uncompensated Care Payments
For FFY 2021, CMS proposes to use one year of audited Worksheet S-10 data from FFY 2017 for distributing uncompensated care payments. In the past, CommonSpirit has commented that CMS should only use audited cost report data in the distribution of uncompensated care payments. We thank CMS for being responsive to our concerns regarding auditing Worksheet S-10 data. We support CMS using FFY 2017 audited Worksheet S-10 data in the uncompensated care distribution for FFY 2021.
However, CommonSpirit does not support the proposal that beginning with FFY 2022, CMS will use the most recent single year of audited cost report data for a significant number of hospitals receiving substantial Medicare uncompensated care payments to calculate DSH Factor 3. While CMS believes that such a policy would give providers greater predictability for planning purposes, we remain concerned that the use of a single year of cost report data could result in significant year-to-year volatility in uncompensated care payments for hospitals. As CMS continues to expand its audits of Worksheet S-10 data, we urge the agency to assess the level of stability in uncompensated care payments and consider in the future if a blend of multiple years of audited data could mitigate volatility. Further, we recommend that this policy be included in annual rulemaking to allow stakeholders to address any year-specific concerns. We urge CMS not to finalize its proposal for FFY 2022 and subsequent years.
Definition of Uncompensated Care
Like in previous years, CMS does not recognize payment shortfalls from public health programs like Medicaid in its calculation of uncompensated care. We urge CMS to reconsider this position. Including Medicaid shortfalls would be a fairer way to allocate uncompensated care dollars to hospitals. Broadening the definition to include Medicaid shortfalls and other forms of unreimbursed costs of public health care programs would also help make the allocation more equitable. CommonSpirit continues to believe that uncompensated care should also include the unreimbursed costs of public health care programs, including Medicaid, the
MEDICARE BAD DEBT
CMS proposes a number of complex changes to Medicare bad debt policies that the agency says are necessary to clarify certain policies that have been the subject of litigation and generated interest and questions from stakeholders over the past several years. In particular, CMS proposes a number of changes that would codify policies included in Chapter 3, Part 1, of the Provider Reimbursement Manual (PRM) into the regulations.
Many of the changes CMS proposes would be effective both retroactively and prospectively and apply for cost report periods before, on, or after
In particular, CommonSpirit disagrees that the changes are not burdensome and that "failing to adopt the clarification and codification of longstanding Medicare bad debt policies with a retroactive effective date might lead some providers to believe that those policies did not apply to earlier cost reporting periods, and thus might cause those providers to resubmit previously submitted cost reports." In fact, retroactive adoption of such policies may have the effect that CMS is intending to avoid, as hospitals may feel obliged to resubmit their cost reports under regulatory requirements that were previously provided only in sub-regulatory guidance. CMS is changing subtle wording by making the move, and those subtle changes can have significant impact on cost reports. As a result, CommonSpirit recommends that any changes finalized for Medicare bad debt policies are done so prospectively only.
Determining Indigency
CMS proposes to codify requirements under Chapter 3, Section 312, of the PRM on how hospitals should determine the indigency of non-Medicaid patients for the purposes of claiming a beneficiary's unpaid deductible and/or coinsurance as Medicare bad debt. CMS proposes to apply these changes retroactively. Specifically, CMS proposes to require providers to independently verify a patient's indigent status, meaning:
1. hospitals will not be able to rely solely upon signed declarations by the patient;
2. hospitals must account for a patient's "total resources" in determining indigence, including assets, liabilities, income and expenses;
3. hospitals will be required to confirm that no source other than the beneficiary is legally responsible for the bill; and
4. the patient's file must contain documentation of the method by which indigence was determined in addition to all information to substantiate the decision.
Notably, CMS is proposing language that includes a key change from the PRM. Specifically, as part of the "total resources" test, the PRM states, "The provider should take into account a patient's total resources...[.]" The proposed regulation states, "the provider must take into account a beneficiary's total resources... [.]" The change from "should" to "must" is a significant change to the requirements that cannot be applied retroactively.
In addition, this proposed change is contrary to a preceding requirement under PRM Section 312 that says for non-Medicaid beneficiaries, "the provider should apply its customary methods for determining the indigence of patients to the case of the Medicare beneficiary under the ... guidelines." However, the "customary methods" for determining indigence of patients under a hospital's established financial assistance policy may not include the same total resources test that is included as a guideline in the PRM and is now proposed as a new requirement in the regulations. For example, many hospitals' charity care or financial assistance policies focus solely on a patient's income. Under the proposal, a provider would not be able to claim reimbursement for indigent bad debt unless the hospital's financial assistance policy includes the four requirements as proposed. We oppose this proposal in its entirety.
Most importantly, this proposed change will place an unnecessary burden on an already marginalized population. Individuals who claim indigency or are deemed to be indigent often face difficulty in acquiring the kind of paperwork CMS is proposing to require hospitals to collect under the FFY 2021 IPPS bad debt rules. Proving the existence or lack of various assets is complex, particularly for an individual already facing a medical crisis. We must seek the least-intrusive way to ensure that those who are truly indigent receive appropriate financial assistance without creating barriers that prevent those same people from seeking assistance. We strongly urge CMS to withdraw this change and maintain the existing policies for determining indigency.
Remittance Advice
The most complex of the bad debt policies put forth by CMS relates to dually eligible Medicare/Medicaid beneficiaries, particularly where a dually eligible beneficiary may not have full Medicaid eligibility. In these cases, hospitals are obligated to bill the beneficiary's state Medicaid plan to determine whether the state is responsible for paying Medicare deductibles and coinsurance. The state Medicaid plan would then be obligated to provide remittance advice indicating whether it is responsible beneficiary cost-sharing. CMS reports that state plans do not always fulfill their obligation to provide remittance advice. Despite the provider taking the necessary action to seek payment of coinsurance and deductibles from the state, CMS indicates that the lack of remittance advice from the relevant state agency means the hospital cannot claim the unreimbursed amounts as bad debt.
This policy seems highly unfair and punitive to hospitals who have taken the necessary action to collect deductibles and coinsurance yet have been unsuccessful due lack of state cooperation. In our experience, automated cross-over claim systems do not reliably produce Medicaid RAs in all cases. If the hospital can document that it has undertaken a reasonable collection effort to collect deductibles and coinsurance owed from the state and the state has not fulfilled its obligation to provide remittance advice or payment, CommonSpirit believes the hospitals should be able to claim the amounts as a bad debt eligible for Medicare reimbursement. We propose that CMS allow for an "auditable acceptable alternative documentation," both retroactively and prospectively, to claim bad debt without a state-provided remittance advice. This policy is both fair to hospitals and will prevent cost shifting to other payers.
Further, CMS should remove the requirement that an allowable Medicaid crossovers bad debt must be billed to the state. If providers have auditable documentation of amount Medicaid would have paid and the patient's Medicaid eligibility at the time of the stay, there is no need for the program to require the submission of this bill.
Contractual Allowances
CMS indicates that many providers are incorrectly writing off Medicare-Medicaid crossover bad debts to a contractual allowance account because they are unable to bill the beneficiary for the difference between the billed amount and the Medicaid claim payment amount. Other providers are writing these amounts off to a contractual allowance account because the Medicaid remittance advice referenced the unpaid amount as a "Medicaid contractual allowance."
These Medicare-Medicaid crossover claims amounts do not meet the classification requirements for a Medicare bad debt because the amounts were written off to a contractual adjustment or allowance account instead of a bad debt expense account. CMS is proposing to clarify that, effective for cost reporting periods beginning on or after
Thank you for your consideration of these important issues. We look forward to working with CMS to improve the final IPPS rule. If you have specific questions about our comments, please contact
View full comment at: https://www.regulations.gov/contentStreamer?documentId=CMS-2020-0052-0368&attachmentNumber=1&contentType=pdf
Thank you,
Executive Vice President and Chief Advocacy Officer
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Footnote:
1/ American Hospital Assn, et al. v. Azar, No. 19-CV-3619 (D.D.C.
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The proposed rule can be viewed at: https://www.regulations.gov/document?D=CMS-2020-0052-0002
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