Tufts Medical Center Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, July 18 -- Kathleen Farren, director of revenue and reimbursement at Tufts Medical Center, Boston, Massachusetts, has issued a public comment on the Centers for Medicare and Medicaid Services' proposed rule entitled "Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2021 Rates; Quality Reporting and Medicare and Medicaid Promoting Interoperability Programs Requirements for Eligible Hospitals and Critical Access Hospitals". The comment was written on July 10, 2020, and posted on July 14, 2020:

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Tufts Medical Center appreciates this opportunity to comment on the Centers for Medicare & Medicaid Services' (CMS) hospital inpatient prospective payment system (IPPS) proposed rule for fiscal year (FY) 2021.

Proposal to Require Hospitals to Report Median Payer-specific Negotiated Charges by MS-DRG and Incorporate that Information in Relative Weights

In its FY 2021 IPPS proposed rule, CMS proposes to require hospitals to include on the annual Medicare cost report what the agency calls "market-based payment rate information."/1

This 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 by MS-DRG; and (2) the median payer-specific negotiated charge the hospital has negotiated with all of its third-party payers, which would include MA organizations, by MS-DRG."/2

The agency also requests comment on incorporating this information in the IPPS MS-DRG relative weights beginning in FY 2024. We support comments submitted by the American Hospital Association (AHA) that both proposals are unlawful and urges CMS not to finalize them.

CMS cites no authority to require hospitals to furnish median payer-specific negotiated charge information by MS-DRG. Instead, CMS relies exclusively on the "Hospital Price Transparency Final Rule,"/3 to require disclosure of negotiated charge information by MS-DRG. The price transparency final rule is scheduled to go into effect on January 1, 2021, but it has been challenged by the AHA and others on statutory, procedural and constitutional grounds. Although the district court ruled against the AHA, hospitals have appealed that decision and are hoping for a quick decision. If the final rule is found unlawful, then CMS's requirement for disclosure of median payer specific charge information by MSDRG would similarly be unlawful.

As noted in AHA's comments, we also have concerns regarding the potential approach to change the method of calculation for MS-DRG relative weights beginning in FY 2024. CMS says that it is considering adopting in the 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 FY 2024."/4

But if it is unlawful to require disclosure of median payer-specific negotiated charge information by MSDRG, then CMS could not use that information to change relative weights.

It should also be noted that relative weights are intended to reflect the relative hospital resources used and not the relative price paid. 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. Instead, the agency appears to conflate market price with cost. It would be arbitrary and capricious to use median payer-specific negotiated charge information by MSDRG to change relative weights. Medicare's current methodology for updating relative weights each year is based on the national average cost of each MS-DRG relative to the national average cost of all MSDRGs. CMS criticisms of the chargemaster are valid, but the methodology CMS uses to "cost out" each claim aggregates charges at the hospital department level to create a mechanism it uses uniformly across hospitals to estimate the cost of each item and service on a hospital claim. We believe this uniform costing methodology provides, and will continue to provide, an efficient, stable, reliable and objective measure of the average relative resources required to provide care for each MS-DRG and, therefore, a sound basis of relative payment for the Medicare program. Replacing cost-based weights with market-based weights will not improve and may confuse for the following reasons:

* Market distortions: While hospitals' relative pricing is based on relative resource use, other market factors distort this: market share, strategic pricing, single case agreements. We do not see the value added in a relative, "zero-sum" weighting mechanism.

* Compounding weighting systems: Rates for a considerable portion of the private payer negotiated inpatient volume are determined by the product of a negotiated base rate and a negotiated weighting system. Using these rates to set Medicare relative weights will essentially be substituting a set of relative weights based on the resource use for the entirely different - younger, healthier - population served by the private payers, for Medicare's weights based on its own population, with additional "noise" created by the variances in base rates across private payers.

* Market variability: Significantly different methods of payment and value of payment exist in non-Medicare contracts in regions of the U.S. That lack of consistency and standardization, different from the past Medicare methodolgy, we believe will significantly distort application of CMS' new suggested MS-DRG relative weights, if these non-Medicare payments are used in the future.

CMS estimates the annual burden of this proposed reporting requirement will be minimized by each hospital's compliance with the final Hospital Price Transparency Rule. We believe that we will be able to leverage our efforts to comply with this Rule only to the extent that items and services across a set of payers are defined the same, in this case, by the same DRG classification system. Even in this case, we believe CMS' estimate of a total of 15 hours annually - 10 hours to report and 5 hours of recordkeeping - is a gross underestimation. The analytics alone - data procurement, programming, manual adjustments, quality checks - of determining medians by DRG across multiple payers using the same DRG classification system, will take the average hospital considerably more time than 15 hours.

We are hopeful that the appeals court will rule on the challenge to the hospital price transparency final rule before the end of this year. Should the rule be found unlawful, CMS would have no legal basis for requiring hospitals to disclose their median payer-specific negotiated charges by MS-DRG. If, despite the concerns about CMS's proposals to collect data and base IPPS MS-DRG relative weights on median payer-specific negotiated charges, the agency nevertheless elects to finalize them, 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.

Payment Stabilization for MS-DRG 215

In the proposed rule, CMS solicited comments on policies to adjust the relative weight for MS-DRG 215 ("Other Heart Assist Implant"), to prevent a 26 percent reduction in FY 2021, which would result in a cumulative decline of more than 40 percent over four years. A decrease of this magnitude would have a significant negative impact on hospitals that care for critically ill cardiovascular patients who require the implantation of a heart pump in the operating room or cardiac catheterization laboratory after heart attacks or decompensating heart failure. The impact of such a decrease will be particularly acute during the COVID-19 pandemic, as severely ill COVID-19 patients with cardiac or multi-organ failure are mapped to MS-DRG 215.

We urge the agency to phase in substantial fluctuations in payment rates in order to promote predictability and reliability. We appreciated that the agency limited the payment decrease for MS-DRG 215 in FY 2019 and FY 2020, and we urge that for FY 2021 the agency average the FY 2020 relative weight for MS-DRG 215 with the otherwise applicable FY 2021 relative weight. We also recommend that CMS evaluate potential long-term solutions to stabilize payment for hospitals that treat the critically ill cardiovascular patients included in MS-DRG 215.

Quality Reporting

CMS proposes two changes affecting the reporting and public display of Electronic Clinical Quality Measures (eCQMs). The first proposal is to progressively increase reporting requirements to two, three and then four quarters per year over a 3-year implementation period in both the Inpatient Quality Reporting Program and the Promoting Interoperability Program. Second, CMS proposes to begin public display of eCQMs for the Inpatient Quality Reporting Program.

We request that CMS provide additional transparency into the eCQM validation process before increasing the number of quarters reported per year or starting the public display of eCQMs. We suggest additional transparency to further the journey toward ensuring the validity of eCQMs, including:

* CMS to provide 1) eCQM agreement rates per measure, 2) national eCQM scores, and 3) how the invalidated data may be increasing or decreasing the national and hospital-specific scores.

* CMS to provide comparisons of the current eCQM data (including all 3 elements in the above bullet) to prior data collected when the measures were chart abstracted only. With this analysis, CMS should describe how validating eCQMs using the measure specifications and algorithm for chart abstracted measures affects eCQM scores.

* CMS to provide analysis of how self-selection of individual eCQMs by each hospital affects the national averages and the number of hospitals reporting each measure.

In addition, the agency should provide hospitals 18 months to implement measure changes. The required updates to the electronic health record often take significant implementation resources before hospitals are able to report an end-of-year self-selected quarter up to 18 months after the initial release.

FY 2021 Proposed Uncompensated Care DSH Adjustment

Factor 1: For the first time since the implementation of the ACA methodology, the factor 1 in the proposed rule is inexplicably lower than the previous year's factor 1. In the proposed rule, CMS revises downward the discharges, case-mix, and other factors for FYs 2018 through 2021. CMS should clarify what additional data and assumptions led the agency to adjust these factors downward. In particular, the "other" category for FY 2020 decreased in year's proposed rule compared with last year's final rule. Because the "other" category is driven by many assumptions, CMS should describe the reasons for the drop in the "other" factor, as well as the case-mix and discharge factors. We request that CMS publish a detailed methodology explaining how it estimated total UC-based DSH payments, specifically Factor 1.

Factor 2: CMS should ensure its estimates of the uninsured rate are up to date and incorporate the effects of regulatory or legislative changes that could drive up uninsured rates. CMS also should account for other external factors, such as changes in the economy and the COVID-19 emergency that resulted in changes in the uninsured rate. The NHEA figures used to calculate the uninsured rate for FY 2021 are projections using historical data from 2018 that do not consider late-breaking developments, such as the effect of COVID-19.

Enrollment into health coverage has been severely disrupted during the pandemic. During the shutdown of non-essential services in Massachusetts that extended more than two months, it was very difficult for uninsured individuals to engage with financial counselors for assistance in applying for Medicaid and subsidized coverage in a timely manner. Counselors were working from home and the exchange of information between applicants and counselors was limited. Individuals without health insurance coverage, including due to the loss of employer coverage continue to delay seeking coverage and care due to concerns with visiting medical facilities during a pandemic. We and other Massachusetts hospitals have worked collaboratively with our state Medicaid program to address these challenges but the reality is new applications for Medicaid coverage have been significantly affected by the circumstances of the COVID-19 emergency.

The Office of the Actuary can update its NHEA projections for 2020 and 2021 to account for the economic downturn and the resulting increase in uninsured rates that were not included in projections used to calculate the proposed rule Factor 2. For the final rule, CMS must ensure significant external factors, such as the COVID-19 pandemic and the resulting recession, are included in its Factor 2 estimates. Failing to do so will produce an artificially low uninsured rate, which will result in a low aggregate UC-amount. We urge CMS to revise its methodology to incorporate the effects of COVID-19 on the uninsured rate in FY 2021 and similar occurrences in future years.

Effect of anomalies in FY 2020 cost report data: Hospitals are likely to have seen substantial changes in their usual payer mix during the pandemic. Hospitals with predominantly uninsured and public-payer patients likely experienced a drop in the number of these patients seeking care, as well. It is probable that the drop in volume will have reduced the amount of UC many hospitals provided this year, compared with what they typically provide. These changes in UC will vary by geographic region and differences in the severity of COVID-19 in various locations. While it is too early to know the exact variation in UC provided by each hospital, CMS should begin to consider policies that will mitigate any atypical drops in UC that some hospitals likely will experience. The cost report data from FY 2020 that coincides with COVID-19 likely will be used for FY 2024 rulemaking, and CMS should begin considering steps to dampen the effect of large downward swings in UC attributable to COVID-19 that will have large re-distributional effects on UC-based payments.

Worksheet S-10 Audits: Given the relative and re-distributive nature of Medicare DSH payments, we urge CMS to ensure audits are conducted consistently and equitably. Any inaccurate audits or audits conducted selectively for some hospitals but not others will skew Medicare DSH payments across the board. The selection of hospitals for audits should be done in an equitable and systematic way.

Further, for its audits thus far, CMS and Medicare Administrative Contractors (MACs) worked with external auditing firms to review data for a subset of all hospitals receiving Medicare DSH payments. These audits include extremely burdensome documentation requests by MACs, requiring hospitals to compile and turn over large amounts of information not already available in their financial recordkeeping systems. Some of the requested data elements were also unnecessary for this type of audit, including patient social security numbers, dates of birth, gender, names, and admission and discharge dates. Supplying this level of detail can be especially challenging for bad debt cases. Hospitals' administrative burden is a sizable and a major obstacle in reducing hospital cost growth; significant staff time is devoted to the many operational and financial duties related to Medicare and all other payers. We respectfully request future S-10 audits be done with more advance notice to allow us an opportunity to address adverse findings. We also request CMS revisit the scope of the audit to minimize burden associated with audit documentation requests.

Publishing audit protocols in advance will allow the hospital community more time and opportunity to respond to audits and address any findings. CMS should review audit findings to ensure MACs and subcontractors consistently apply audit protocols across hospitals nationwide. Finally, CMS should complete audits well in advance of its rulemaking for a given year to ensure the cost report data used is accurate and final.

Recommended Changes to Worksheet S-10

Medical Education: CMS should include medical education costs when using the S-10 to determine UC costs. The cost-to-charge ratio in line 1 currently does not include medical education costs. We respectfully recommend including these costs, which can be derived from Worksheet B, column 24, line 118. Graduate medical education should be recognized as it is a significant cost incurred by teaching hospitals that care for all patients, including low-income Medicare, Medicaid, and uninsured patients.

Out-of-Pocket Expenses: We respectfully request that CMS clarify the instructions on line 29 regarding non-Medicare bad debt for insured patients. For accuracy purposes, CMS should allow hospitals to include coinsurance and deductibles on the S-10 without multiplying these amounts by the cost-to-charge ratio (CCR). CMS cost report instructions and guidance, as revised last year, dictate hospitals do not have to multiply non- reimbursed Medicare bad debt by the CCR, because coinsurance and deductibles are actual amounts expected from the patient (as opposed to charges, which are not the actual amounts a patient is expected to pay). However, the CMS September 2017 transmittal states that hospitals still should multiply their non-Medicare bad debt by the CCR. The different treatment of non-reimbursed Medicare bad debt and non-Medicare bad debt is inconsistent and we believe there is no justification to reduce co-insurance amounts for one payer and not the other. Hospitals should be permitted to list unpaid co-insurance and

deductible amounts as bad debt in their entirety and CMS should not reduce those amounts by the CCR. Making this change would be consistent with the way CMS treats charity care amounts for insured patients.

DSH Reduction Stop-loss: We are very concerned with the implementation of the relatively new policy of distributing Medicare DSH funding from a uniform data point (a hospital day) to one that is nonstandard and defined uniquely by every hospital across the country (hospital charity care and bad debt). The amount of uncompensated care reported by a hospital is dependent on how that hospital individually defines and writes-off care provided to patients who are unable to pay and who meet certain financial criteria as defined by the hospital. We believe that hospitals across the country are reporting uncompensated care inconsistently given that charity care and accounting practices vary between hospitals. Even with the audits, our opinion is the S-10 data on hospital uncompensated care remains questionable and there should be caution in using this data for distributing billions of DSH dollars. Alternative methods should be considered in the future in consultation with hospitals. In the meantime, we respectfully request CMS implement a stop-loss policy to protect hospitals that lose more than 10 percent in DSH payments in any given year given the transition to this new data set. This protection will also help hospitals with decreasing uncompensated care payments adjust to their new payment levels.

Thank you for your attention to these important issues. Please contact me at 617-999-3566 if you have any questions about our comments.

Sincerely,

Kathleen Farren

Director, Revenue & Reimbursement

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Footnotes:

1/ 85 Fed. Reg. 32,460, 32,464 (May 29, 2020).

2/ 85 Fed. Reg. at 32,791.

3/ 84 Fed. Reg. 65,524 (Nov. 27, 2019).

4/ 85 Fed. Reg. 32,460, 32,465 (May 29, 2020).

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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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