Memorial Healthcare System Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule
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Thank you for this opportunity to comment on the proposed rule revising Medicare inpatient hospital payments for federal fiscal year 2021.
Each year, the
We are concerned that a number of the changes contained in this proposed rule run counter to this objective and risk jeopardizing Medicare beneficiaries' continued access to high-quality patient care services. We have stated our concerns in the attachment to this letter. Thank you for this opportunity to submit these comments on the proposed rule. If you have any questions about these comments, please feel free to contact me.
Sincerely,
Administrative Director, Reimbursement & Revenue Integrity
(954) 265-5105
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Detailed Comments to Changes to the Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; FFY 2021 Proposed Rule
I. DRG Assignment and Payment Rate for CAR-T Services
II. Effect of DRG Changes on CJR Bundled Payment Program
III. MS-DRGs for Kidney Transplant with Dialysis
IV. Low Wage Index Policy
V. Uncompensated Care DSH
VI. Change in Method for Calculating MS-DRG Relative Weights
VII. Bone Marrow Transplant Reimbursement
VIII. Revisions to Medicare Bad Debt Policy
I. DRG Assignment and Payment Rate for CAR-T Services
We appreciate and support CMS establishing a separate MS-DRG assignment for CAR-T services. We agree that the data shows such cases are significantly different and cost substantially more than cases in MS-DRG 016.
While we do agree that investigational cases have to be considered in the establishment of a relative weight for this new MS-DRG, we have concerns about whether CMS took the best available approach in this proposed rule. Instead of following the existing process established for procedures using investigational devices, CMS devised a totally new process, so we reviewed the description of that new process and the resulting proposed payment rates for reasonableness compared to the cost of providing this service. Our objective here is to ensure that payment is adequate to provide reasonable access to these services for Medicare patents.
CMS proposes to exclude clinical trial claims when calculating the relative weight for this new MS-DRG. This helps ensure that the weight includes the cost of the CAR-T-cell therapy drug, but it might underestimate the relative weight by under-representing the total number of cases. The proposed rule addresses this by treating clinical trial cases similar to transfer cases in other MS-DRGs, in this case as 15 percent of a case. CMS also proposes to make the same percentage payment adjustment for clinical trial cases, based on the relative cost of clinical-trial vs non-trial cases.
We have a minor technical question regarding the proposed average cost calculation. In determining the average cost across all MS-DRGs, CMS proposes to compute an adjustment factor to be applied to the clinical trial cases. In that description CMS states:
"Apply the adjustor calculated in step 3 to the cases identified in step 1 as clinical trial cases, then add this adjusted case count to the non-clinical trial case count prior to calculating the average cost across all MS-DRGs."
Should CMS instead apply the adjustor calculated in step 3 to the case cost identified in step 1, then add this adjusted cost and trial case count to the non-clinical trial case cost and count, respectively?
CMS makes a point of noting several times that the average sales price of these drugs is
II. Effect of DRG Changes on CJR Bundled Payment Program
CMS is proposing to create new MS-DRGs 520 and 521 for Hip Replacement with Principal Diagnosis of Hip Fracture. Comment was requested on the effect these new MS-DRGs would have on the
First, in our comment letter on the proposed three-year extension, we suggest that the CJR model be sunsetted. Our experience is that commercial market forces have already stepped in to address the total episode cost of such cases and have provided higher incentives to providers meeting "center of excellence" or similar criteria. This includes the adoption of practices to reduce both in-hospital costs and post-acute costs through practices such as preferred provider networks. The added complexity of the CJR reporting and tracking is not commensurate with the financial risks and rewards of that program. Modification of Medicare coverage policies to increase adoption of best clinical practices for these cases should capture the program savings achieved by the best performers under the CJR model.
However, assuming that the CJR model does continue, it appears that the new DRGs represent an appropriate crosswalk from the CJR "with fracture" subsets of MS-DRGs 469 and 470.
III. MS-DRGs for Kidney Transplant with Dialysis
CMS has proposed two new pre-MDC MS-DRGs for kidney transplant cases involving hemodialysis. We appreciate the recognition of the higher cost involved in these cases and the effort to make kidney transplant services more accessible. As a hospital that is attempting to expand transplantation as recommended in the President's Executive Order on
We encourage CMS to continue to review other transplant cases that end up in MS-DRGs 981 through 983 to a more appropriate MS-DRG. Once patients are in organ failure it is not uncommon for other organ systems complications or weakening to occur. CMS should consider whether these patients belong in their own grouping for a proper assessment of resource cost of care. More refined MS-DRG assignment of all transplant cases will assist CMS in future policy development concerning transplant patients.
IV. Low Wage Index Policy
CMS is proposing to continue the low wage index policy adopted last year, which was established for a four-year period in order to give time for the affected providers' data to show up in the wage index calculations. While it is too soon to know if this policy is having its intended effect, it is not too soon to begin establishing data tracking and reporting policies so that providers and CMS are prepared to address the outcome accurately.
Effectively, CMS is prepaying providers with the expectation that the higher payments will be used in a specific manner, and with no penalty for not doing so. Providers could, in theory, take the four-year windfall and make no changes at all. While the data are too new to establish new wage index values, CMS could implement some form of early reporting or analysis to identify whether average hourly wages are in fact increasing at the providers affected by this policy. The first full-year cost reports affected by this policy should be filed by
An increase in the average hourly wage of the affected providers does not necessarily mean that wage rates increased for the lowest-paid employees, but could instead have been directed to executives and department leaders. Additional detail in the wage survey form (Worksheet S-3 Part II) should be requested from these providers to establish that wage changes were broad-based.
V. Uncompensated Care DSH
CMS has proposed updates to the calculation of Uncompensated Care (UCC) disproportionate share hospital (DSH) payments similar to those made in prior years. We question whether the methodology for fiscal year 2021 should be modified to reflect the impact of the COVID-19 pandemic.
The Factor 2 calculation
This factor regarding the rate of uninsured persons, as proposed, does not take into account the number of persons who lost insurance coverage due to lost jobs during this emergency. Even net of those who added coverage under the health exchanges, and considering the temporary cancellation of elective services, the proportion of uninsured patients we have experienced doubled in May and has tripled so far in June. We are also likely to see increases in bad debts related to outstanding patient account balances, even for services furnished prior to the pandemic. An adjustment to Factor 2 to reflect the current change in insurance status seems appropriate.
This also raises questions for us about how CMS intends to treat relief payments furnished by
Finally, we also ask whether it is more appropriate to make an adjustment to UCC DSH payment this year, rather than to wait until 2024 or 2025, when we expect CMS to use the current year data for UCC DSH calculations. While we cannot predict the end of the current public health emergency, we ask that CMS consider making an adjustment to the proposed UCC DSH factors to more timely address the higher UCC costs being currently incurred.
The Factor 3 calculation
We agree with CMS that the use of audited S-10 information is more accurate than the proxy information used in earlier years, and we appreciate the update to 2017 data. However, we are concerned that the use of a single year of data may introduce swings in payment that are not reflective of actual trends in uncompensated care, but may simply be due to single ad hoc events, such as a change in accounting system, a local economic event, or other circumstances.
We would ask that CMS consider using a multi-year calculation, such as three years, to compute Factor 3 to smooth out the variation. Additional steps such as rimming outliers or stop-loss thresholds would also be welcome.
VI. Change in Method for Calculating MS-DRG Relative Weights
The proposed rule includes a provision to include in the calculation of MS-DRG weights reference to "market pricing" in an effort to reflect the market value of each MS-DRG payment rate. We believe that this will not improve the accuracy or meaningfulness of Medicare payments for reasons we describe more fully below.
Lack of Need
CMS has not established why negotiated rate information is necessary to help set relative weights that are supposed to reflect relative resource consumption. While charge master rates do not generally reflect the market rates paid by various payors, including Medicare Advantage plans, the billed charges based on those charge masters are the rates that are expressed in cost report cost-charge ratios, which CMS uses to adjust charges to cost today. Negotiated rates would not better reflect resource costs.
Circular Logic
Relatively few commercial healthcare plans negotiate payment rates for non-Medicare patient populations using the Medicare MS-DRG system as the contracted payment methodology. Where such plans do adopt that methodology, using the negotiated rates to measure the relative value the plans place on each MSDRG is simply circular logic.
The Relative Market Value for Commercial Populations Is Not Appropriate for the Medicare Population CMS's assertion that rates paid by non-Medicare plans are representative of the market value of those services furnished to Medicare patients is flawed.
Commercial payment rates that do make use of some diagnosis-related group methodology are not representative of the relative resource use for providing care to a Medicare population. Studies cited by CMS rely on anecdotal information that is at best incomplete, and that demonstrates a lack of understanding of how healthcare contracts are negotiated. That they failed to find an empirical basis for the different rates paid for cases assigned to the same DRG is not surprising. Many of those differences are not based on purely empirical reasons, but can reflect other agreed-upon (i.e., market value) considerations which apply to that plan's population but which would not apply to a Medicare population. The plan and provider may agree upon reasons for specific differences in specific types of cases, such as to include the use of carve-out payments for implants in orthopedic or cardiac cases, or leveraging a price-sensitive population (e.g., labor and delivery) to obtain a higher rate for a premium population (e.g., neonatal intensive care), or other proprietary terms included in contracts. What one plan finds of value in contracting with one provider may not be what that same plan negotiates with other providers in the same market or applies in other markets nationally. There is no reliable comparability achievable by simply and arbitrarily selecting a median measure of a large set of data.
Commercial Populations Are Not Medicare Populations
The base non-Medicare population itself includes volumes in clinical categories that do not reflect the same distribution as a Medicare population. Treatment protocols vary. Coverage of specific treatment modalities varies. The incidence of complications and comorbidities varies. The distribution of consumed resources is thus significantly different for these populations as well.
Conversion of Non-DRG Based Rates To DRG Rates Is Unsound
A substantial portion of negotiated rates are paid on a basis other than a DRG-based methodology, including per diem rates, case rates, and percent-of-charge contracts. Conversion of those payments into a DRG type of rate requires much more than simply assigning the median payment of all cases to a DRG based on claims data.
For example, the terms for outlier payments also can vary significantly from the Medicare payment methodology. Individual cases would need to first be neutralized for outlier amounts before rank-ordering to select a median base rate.
That conversion becomes more complicated when contracted outlier provisions override the base payment calculation, such as eliminating carve-out payments when the case converts to outlier status. The terms that would have to be neutralized will vary from contract to contract, and the results presented by providers will be inconsistent and require a major audit effort to ensure reliability and comparability.
Not all providers assign MS-DRGs to all patient accounts, either. A great amount of effort will need to be expended to apply the MS-DRG grouper/editor logic to the ICD10 data on claims to assign cases, including adjustments for hospital-acquired conditions when assigning complications and comorbidities.
The degree of effort required to re-analyze individual cases to establish a clean base rate is far beyond the what CMS has estimated, which is a large part of the reason providers are still challenging the rule to post negotiated rates starting
Using Relative Market Value to Adjust Weights Violates the Medicare Statute
Even if one could ever compute a consistent and reliable median market value for each MS-DRG, use of that information in setting the relative MS-DRG weights would be an ultra vires exercise. The Social Security Act, Sec. 1886(d)(4)(B) provides that "For each such diagnosis-related group 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." [emphasis added.]
There is no provision for consideration of relative market value in the statute, nor for any discretion on the part of the Secretary in the selection of adjustments to those factors except those "...other factors which may change the relative use of hospital resources." [SSA 1886(d)(4)(C)(i), emphasis added.]
VII. Bone Marrow Transplant (BMT) Reimbursement
We agree with CMS proposal of a Standard Acquisition Charge based on the average acquisition costs of all cases similar to the solid organ acquisition charge. The determination of "reasonable cost reimbursement" should be identical in regulation and computation as other solid organs, except that cost report Worksheet D-4 section IV (Statistics) would count the number of transplant episodes rather than a number of "organs."
The operational process for a BMT allogeneic patient is very similar to the solid organ process up until the time of admission for the transplant. As with solid organ patients there is a search for a donor requiring tissue typing, there is evaluation and testing of both donors and recipients for successful transplantation, and there is even a national organ bank to achieve the most effective and efficient donor selection. There are also patients who never reach transplant status.
These processes are part of the organ acquisition cost, with the average cost of all these services for all patients being computed and averaged to create the average acquisition costs.
CMS very wisely acknowledges that section D-4 is suited for computed reasonable acquisition cost and we urge CMS to finalize this portion of the rule using all sections of D-4, with appropriate revision to Part IV (Statistics). This also means that CMS must modify CMS Manual 15-1 to accommodate this change, as well as the cost report forms and instructions. We believe that Chapter 31 does not adequately describe the BMT Allogeneic Cell Acquisition process and request that CMS consider adding a section to Chapter 31 for BMT or create a new chapter in the manual.
VIII. Revisions to Medicare Bad Debt Policy
We agree with CMS that Medicaid unpaid deductibles and coinsurance are not technically a contractual allowance. The Medicare deductible and coinsurance/copay are part of the initial expected payment on the account and therefore does not qualify as Medicare Contractual Allowance. However, the ministerial task of posting an adjustment in the financial records of the provider does not change the fact that an unpaid amount, after reasonable collection effort, is in fact a bad debt. So long as collection efforts have been completed, the amount should be allowable regardless of how the account adjustment was recorded.
When Medicaid does not cover the deductible and or coinsurance amount for a dually eligible patient, providers generally have no other avenue for collection because, due to the patient's Medicaid eligibility, they meet the provider's financial assistance definition of "indigent". It is clerically very difficult to design and implement a process that accurately records charity adjustments for all patients, but which makes an exception for Medicare/Medicaid dual eligible patients, without triggering a referral to collections (which is not required for indigent patients).
Charity/Indigent write offs are reductions from revenue and under PRM 15-1 section 312 they are considered uncollectible write offs: "Once indigence is determined and the provider concludes that there had been no improvement in the beneficiary's financial condition, the debt may be deemed uncollectible without applying the Sec. 310 procedures." Again, the ministerial task of recording that write off does not change the determination that the amount is uncollectible.
It can be difficult at times to discern from a Medicaid remittance whether a disallowed payment amount is a contractual adjustment reduction (difference between charges and payment) or a denial for coordination of benefit or other purposes (leading to a charity or bad debt determination). Holding providers accountable to that level of precision in recording uncollectible amounts in their financial records yields no benefit to the Medicare program nor its beneficiaries. So long as indigence has been appropriately determined, the other requirements should be bypassed, including financial statement presentation. Accurate bad debt logs should suffice as evidence of the provider's determinations.
We can accept CMS's position with regard to accounts held at a collection agency or elsewhere after meaningful collection efforts have ceased. This "warehousing" of accounts occurs just in case an unknowable event reverses the likelihood of recovery in some future period. It only benefits the Program, which gets credit for those recoveries that do happen. Having the account present at an agency "just in case" does not demonstrate any reasonable likelihood of collection. Rather it is to prevent the impossibility of collection should an unlikely opportunity arise. The effect of this policy by CMS will only be that providers have accounts all returned from agencies, and CMS gets no benefit from future recoveries on those accounts.
We do appreciate CMS's extension of "timely" billing of the patient to consider the need to determine the patient's actual responsibility. Allowing for the receipt of the Medicare explanation of benefits or a secondary payor's remittance improves ability of providers to accurately bill the patient.
However, CMS must withdraw its proposed revision extending the 120-day collection effort whenever a payment is received on an account. An ad hoc partial payment by a patient is not a good basis for restarting the 120-day clock. Partial payment is not evidence that the full debt will be paid within 120 days of the original demand for payment. Nor is it evidence that any additional amount is collectible.
Entering into an agreed-upon payment plan is different, and we would expect the 120-days to begin no earlier than the date of default on any scheduled payment under the plan. Otherwise, incentive is to reject all but full payment.
CMS makes a logically faulty argument - the "corollary" that CMS argues is that writing off the remaining amount prior to 120 days for non-indigent bad debt is not appropriate, because the collection effort is ongoing. This should only apply to the balance of the "ongoing" 120-day collection effort.
In making its case, CMS misquotes 310.2 "310.2 Presumption of Noncollectibility.--If after reasonable and customary attempts to collect a bill, the debt remains unpaid more than 120 days from the date the first bill is mailed to the beneficiary, the debt may be deemed uncollectible." There is no reference in this section to whether "a" payment is received.
Adding a new requirement to restart the collection process is burdensome to the provider. The status of the account in the provider's records bears no effect on the amount of effort required to track which accounts have to remain in collection efforts versus which accounts can now be deemed uncollectible.
In any event, this policy is a substantive change in the rules, not merely a clarification of longstanding policy that has never before been applied. Retroactive application is clearly unwarranted.
We agree with CMS that recoveries reported in subsequent periods should not exceed the amount reimbursed originally. It remains the provider's responsibility to accurately compile its bad debt logs and recovery listings to ensure that recoveries are appropriately limited.
With regard to determining indigence, we have a question about the appropriate treatment of accounts for patients determined indigent due to enrollment in medically needy Medicaid, where the patient may not have yet met spend-down requirements. Can we still consider them indigent without reference to income and net assets? We note that spend down does not require that the patient has paid those costs, but only that they have incurred such costs. Since tracking eligibility occurs at the State level across potentially many providers, timely determining spend down status can be very difficult. We would ask that enrollment in Medicaid under a medically needy category be sufficient to qualify as indigent so long as such qualification is included in the provider's financial assistance policy.
We also have concerns over what is considered "proof" of no source of income. This can be especially difficult if there is no tax return, no pay stub, no bank account or credit history. In such cases, a patient self-attestation of no income (signed, witnessed, and subject to penalty of perjury) may be all we have to rely upon in qualifying a patient as indigent. We also use a Homeless affidavit or letter of support if someone else is covering living expenses for the patient. To date, these have generally qualified as documentation of proof of indigence, but the language proposed by CMS suggests that such self-attestations are at risk.
CMS requested specific comments regarding the "must bill" requirements and potential alternative documentation of a State's liability, or lack thereof.
Billing another State Medicaid program is not the only means to know if that State has a payment liability. One can also reference the State's Medicaid State Plan documents and determine what the coordination of benefits result would be. For example, a State plan which includes terms that inpatient coinsurance or outpatient deductibles are never paid would indicate that such amounts are not a State liability and billing would be futile and a wasteful cost.
A fair explanation is provided regarding the expected State treatment of Qualified Medicare Beneficiaries (QMBs). We agree that States should be held to account for properly processing crossover claims related to these beneficiaries. However, not all dually eligible beneficiaries are QMBs. CMS must also direct Sates to process bills and remittances for non-enrolled out-of-State providers related to these non-QMB cases. It is not reasonable to expect providers to enroll in all State Medicaid programs on the off chance that a patient will arrive from there, incurring all the costs of maintaining compliance with the whole State plan simply to be able to collect on these crossover amounts.
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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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