Emory Healthcare Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, Feb. 11 -- Jonathan S. Lewin, president and CEO of Emory Healthcare, Atlanta, Georgia, has issued a public comment on the Centers for Medicare and Medicaid Services' proposed rule entitled "Medicaid Program: Medicaid Fiscal Accountability Regulation". The comment was written on Jan. 31, 2020, and posted on Feb. 6, 2020:

* * *

Emory Healthcare appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services' proposed rule and supplement captioned above (the "Proposed Rule"). It is our understanding that a variety of associations and organizations have commented on the Proposed Rule, including those representing constituencies from the State of Georgia and Academic Healthcare Systems. We share many of the concerns they have expressed regarding the Proposed Rule and the impacts it would have if finalized. - We feel those comments have artfully expressed many of the issues with the Proposed Rule, and we join the many comments submitted that request that CMS withdraw the Proposed Rule.

We write to you separately to highlight several aspects of the Proposed Rule that would have particular negative effects on Emory Healthcare and other providers in the State of Georgia in light of the structure of the healthcare industry in our state. As a dedicated partner and essential element in the healthcare delivery system in the State of Georgia, Emory Healthcare asks that you please withdraw the Proposed Rule or, in the alternative, significantly amend the Proposed Rule to avoid the potentially devastating consequences that it could have on the healthcare delivery system in Georgia.

Emory Healthcare is a large, non-profit academic health system in the State of Georgia consisting of, among other things, approximately ten hospitals (totaling over 2500 inpatient beds) and approximately 2000 employed physicians. Emory Healthcare is a part of Emory University, a large, nonprofit university which includes, without limitation, its School of Medicine, School of Nursing, and School of Public Health.

Emory Healthcare serves a wide swath of Georgians and residents of the southeastern United States, including beneficiaries of Georgia Medicaid and other state Medicaid programs and beneficiaries of Georgia Peachcare for Kids and other state Children's Health Insurance Program ("CHIPs"). For example, in 2018, Emory Healthcare hospitals had over 13,000 Medicaid/CHIP admissions. Emory Healthcare is a leader in Georgia and the southeastern United States for transplants and is the only provider in Georgia with an adult lung transplant program. Emory Healthcare treats over 300,000 emergency department visits annually. Emory Healthcare provides approximately 2000 open heart surgeries annually in addition to a variety of cutting edge cardiac and cardiovascular surgeries and techniques and has trained many of the other heart programs at other health care systems in Georgia. Emory Healthcare provides vital services to Medicaid beneficiaries, including complex specialty and subspecialty care that is not otherwise readily available in many areas of the state and region. As an academic health system, Emory Healthcare also serves a vital role in educating the next generation of physicians and nurses for Georgia, the southeast, and the nation.

Medicaid supplemental funding programs, such as DSH (the Disproportionate Share Hospital program), Hospital UPL Program, and Physician/Professional Services UPL Program/1 are vital to Emory Healthcare's ability to serve the communities in need in Georgia, including Medicaid patients, and its ability to educate the future healthcare workforce for our state, region, and country. Without the availability of these supplemental funding mechanisms, Emory Healthcare's ability to ensure that general hospital services and specialty and sub-specialty care remain viably available to all Georgians is threatened.

I. Non-State Government Owned or Operated Hospitals Should Be Allowed to Participate in the Hospital UPL Program, DSH Program, and Other Medicaid Supplemental Funding Mechanisms that May Be Available.

Currently, non-state government owned or operated hospitals can participate in the Hospital UPL Program, DSH Program, and other Medicaid supplemental funding programs. The Proposed Rule seeks to change and redefine this category to "nonstate government providers" in the proposed 42 C.F.R. 447.286. In order to qualify as a "non-state government provider" under the Proposed Rule, the governmental unit would have to exercise control over state funds appropriated to it or over local tax revenue, and the governmental unit would have to exercise various forms of control over the operations of the hospital (e.g. decision-making regarding hospital operations, bears risk of loss for hospital operations, control over personnel, etc.). However, this definition fails to take in to account a variety of structures that exist for local governmental units to ensure healthcare is provided to their citizens. In particular, this definition would prevent most hospitals in Georgia owned by Hospital Authorities from continuing to participate in various Medicaid supplemental funding programs.

In Georgia, Hospital Authorities are local governmental authorities established by Georgia's Hospital Authorities Law./2

The Hospital Authority structure is the main vehicle by which non-state government owned hospitals and other healthcare facilities exist in Georgia, in both urban and rural areas. There are dozens of Hospital Authority-owned hospitals in Georgia.

Hospital Authorities do not have the power to tax and generally do not receive state appropriations./3

Rather, Hospital Authorities receive or generate revenue through a variety of other sources, such as bond issuances/other debt, operation of healthcare facilities, leases of healthcare facilities/property, and contracts for services, among other methods.

Further, many Hospital Authorities lease their hospitals to non-profit entities. This allows, among other things, such non-profit entities to bring their operational expertise to the health care delivery at the hospital and in many cases provide a larger suite of healthcare services at the hospital than would have otherwise been available. It also provides the opportunity to provide more integrated care when the non-profit lessee is a part of a clinically integrated health system, such as Emory Healthcare. Such leasing arrangements are specifically contemplated by and permitted by Georgia's Hospital Authorities Law. In lease arrangements, Hospital Authorities often have certain oversight functions or mechanisms to ensure that the hospitals are serving their communities and maintaining accessibility of crucial services, such as emergency departments and community designated services, even though the Hospital Authorities themselves do not operate the hospitals, bear the financial risk for hospital operations, or have control over personnel working at the hospital.

The Proposed Rule does not take in to account the Hospital Authority structure that is present throughout the State of Georgia. The Proposed Rule would effectively prohibit these Hospital Authority hospitals as currently structured from continuing their participation in various Medicaid supplemental funding programs. This would impact dozens of hospitals in Georgia, many of which are located in and/or which serve rural areas and many that serve a large number of Medicaid and indigent/charity care patients and other vulnerable and needy patient populations.

The Proposed Rule's new definition is too narrow. Emory Healthcare believes that the existing participation category, i.e. non-state government owned or operated hospitals, is appropriate and allows states like Georgia the ability to structure their healthcare delivery systems in a way that meets local needs and serve Georgia's Medicaid and vulnerable patient populations.

II. All Legitimate Sources of Revenue, Such as Lease Payments and Money from Operations, Should Remain as Permissible Sources of IGT Funding.

IGTs (intergovernmental transfers) are a permissible source of funding for a state's share of certain Medicaid expenditures. The Proposed Rule seeks to severely limit the use of IGTs by restricting the source of IGTs to state or local taxes (or funds appropriated to State university teaching hospitals) in the proposed 42 C.F.R. 433.51(b) and (d). Although CMS indicates in the Proposed Rule that this is largely consistent with existing policy, it actually represents a sea change from the current IGT landscape. Such a broad restriction would proscribe states' ability to have and maintain a healthcare industry and structure in their states that takes in to account each state's unique needs and structure.

Local governmental units or authorities may have a variety of funding sources available to them, such as lease payments, revenues from operations, contracts for services, joint ventures, or investments. There is no compelling policy reason to restrict a local governmental unit's or authority's ability to use these funding sources to make an IGT. This is especially true in Georgia where Hospital Authorities do not themselves have the power to tax. All legitimate funding sources should be available to a local governmental unit or authority to make an IGT. For example, if a Hospital Authority or county receives lease payments from a lessor of a healthcare facility, then that Hospital Authority or county should be able to use those lease payments to make an IGT. Or, for example, if a Hospital Authority or county receives all or some of the net revenue from the operations of a healthcare facility or other enterprise it owns or from services it provides under a contractual arrangement, then that Hospital Authority or county should be able to use those net revenue funds to make an IGT.

Certain local governmental units or authorities, like Hospital Authorities in Georgia, do not have tax power available to them; a fact which the Proposed Rule does not take in to account. Further, local governmental units that do have tax power may not have a robust enough local tax base to levy local tax revenue to be used as a source of an IGT but may have other funding sources, such as those mentioned above, that could be used for an IGT. Again, the Proposed Rule does not take this in to account.

Although we can appreciate CMS' concerns expressed in the Federal Register preamble accompanying the Proposed Rule, the effect of the Proposed Rule itself goes well beyond addressing those concerns by imposing broad restriction on legitimate arrangements and revenue sources available to a governmental unit or authority to make an IGT, and the Proposed Rule fails to consider or have flexibility to take in to account state-specific structures of the healthcare industry in states like Georgia. The Proposed Rule would materially and negatively impact the ability of a variety of hospitals, physician groups, and others from participating in Medicaid supplemental funding programs. Without access to the Medicaid supplemental funding programs, these healthcare providers would not be able to continue to offer the level of services currently offered, especially in economically disadvantaged parts of the state.

Emory Healthcare believes that the Proposed Rule's restrictions are over-reaching in nature, and that all legitimate funding sources available to a local governmental unit or authority should be permitted to be used to make an IGT.

III. Physician UPL Supplemental Payments Should Not be Capped at 50% of Medicaid Base Payments.

The Proposed Rule seeks to cap payments made under a Physician UPL Program payments at 50% of the base rate (see proposed 42 C.F.R. 447.406). We do not believe such a cap is warranted. Georgia's State Plan Amendment for Georgia's Physician UPL Program was reviewed and approved by CMS. CMS exercises significant oversight ability when reviewing and approving new state plan amendments, which should be sufficient to meet any concerns CMS may have regarding calculation methodologies for Physician UPL Programs. Further, there are periodic UPL demonstrations that provide further on-going transparency and information with respect to Physician UPL Programs. As CMS notes in the preamble to the Proposed Rule, ACR methodologies are permissible under relevant statutory standards.

In addition, the Proposed Rule essentially ties the ceiling to the floor by basing the cap on Medicaid base rates rather than on Medicare rates or ACR. This is inconsistent with the purpose and concept of an upper payment limit. An upper payment limit is supposed to establish a reasonable ceiling for Medicaid expenditures which is not tied to existing Medicaid base rates precisely because those Medicaid base rates are abnormally low for the healthcare industry and in many instances are below the costs of providing services./4

Physician UPL Programs, like Georgia's, are long-standing and have become an integral part of the Medicaid healthcare delivery system. We are concerned that the Proposed Rule would deprive our physician practices and other physician practices in Georgia significant funding to be able to provide substantial levels of services to Medicaid beneficiaries.

While Emory Healthcare believes a percentage cap on Physician UPL Programs is not warranted, if CMS is not inclined to withdraw the concept of a proposed percentage cap, then an alternative might be to grandfather existing Physician UPL Programs as being exempt from the cap and for new Physician UPL Programs to base a percentage cap on Medicare rates or ACR rather than on Medicaid base rates.

Although for brevity we only highlight in this comment letter three aspects of the Proposed Rule, we join the American Hospital Association (AHA), Association of American Medical Colleges (AAMC), Georgia Hospital Association (GHA), and other commenters in expressing overall concern with the entirety of the Proposed Rule and respectfully ask for its withdrawal in its entirety. In the alternative, we ask that CMS significantly amend the Proposed Rule to avoid the potentially devastating consequences that it could have on the healthcare delivery system in Georgia and other states. Emory Healthcare appreciates CMS' consideration of this comment letter and CMS' consideration of the other comments from industry stakeholders.

Sincerely,

Jonathan S. Lewin, MD

President, CEO, and Chairman of the Board

Emory Healthcare

For questions or further information, or if CMS would like to discuss these topics further, please contact:

Jessica Davis

Director, Federal Affairs

Office of Government and Community Affairs

Emory University

[email protected]

478-361-8519

* * *

Footnotes:

1/ Various portions of Emory Healthcare participate in each of these supplemental funding programs.

2/ See Georgia Code, Title 31, Chapter 7, Article 4.

3/ Although a county or municipality can levy local taxes that they can use to pay a Hospital Authority for services, the payment received by a Hospital Authority would be for services or other arrangements pursuant to a contract. More important, many Hospital Authorities receive no such payment from a county or municipality.

4/ In addition, the Proposed Rule does not provide any explanation for how the proposed 50% cap was calculated/determined.

* * *

The proposed rule can be viewed at: https://www.regulations.gov/document?D=CMS-2019-0169-0001

TARGETED NEWS SERVICE (founded 2004) features non-partisan 'edited journalism' news briefs and information for news organizations, public policy groups and individuals; as well as 'gathered' public policy information, including news releases, reports, speeches. For more information contact MYRON STRUCK, editor, [email protected], Springfield, Virginia; 703/304-1897; https://targetednews.com