University of Michigan Medical School Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, July 21 -- David A. Spahlinger, executive vice dean for clinical affairs, and Marschall S. Runge, dean, at the University of Michigan Medical School, Ann Arbor, have 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 15, 2020:

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Thank you for the opportunity to comment on the Centers for Medicare & Medicaid Services (CMS) proposed rule to update the hospital Inpatient Prospective Payment System (IPPS) for Fiscal Year (FY) 2021.

Michigan Medicine (MM) is known nationally and around the world for excellence in patient care, education, and research. MM is located in Southeast Michigan and is composed of the University of Michigan Health System (UMHS) and the University of Michigan Medical School, which includes more than 3,000 faculty members in 21 clinical specialties through the University of Michigan Medical Group. UMHS operates three facilities that all fall under CMS certification number 23-0046: University Hospital and Frankel Cardiovascular Center, C.S. Mott Children's Hospital (Mott Hospital), and Von Voigtlander Women's Hospital. Collectively, these facilities include 1,043 licensed beds and perform more than 53,000 annual inpatient discharges and 2,450,000 outpatient visits. In total, MM employs more than 28,000 faculty and staff.

MM's facilities have received many honors. University Hospital was recognized as the number 15 hospital in the world and fifth in the nation in 2020 Newsweek's World's Best Hospitals list. UMHS has achieved Magnet status, which is the highest institutional honor awarded for nursing excellence from the American Nurses Credentialing Center. In addition, Mott Hospital is nationally ranked in 10 areas of pediatric care that US. News & World Report rated for 2019-2020.

Although MM is the region's provider of choice, running routinely at very high occupancy levels and one of the top hospitals in the nation, it has struggled to generate the necessary operating margins to sustain this high quality of care for the future treatment of Medicare and other patients.

One of the most significant financial challenges is the large and growing Medicare "shortfall" (i.e., operating expenses for the Medicare program exceeding Medicare net revenues). In our fiscal year ending June 30, 2019, our calculated Medicare shortfall was approximately $433 million. We expect to surpass that amount for our fiscal year ending June 30, 2020 due in part to the COVID19 crisis. It is important to note that this loss is not due to inefficient operations, as we remain competitive to our peers in routine benchmarking studies when adjusted for several key factors such as teaching adjustments, case mix, organ acquisition, and outliers.

Our comments on the proposed rule focus on the following areas:

* Partial restoration of the previous reduction of the American Taxpayer Relief Act (ATRA) (Section II, C.3, page 32471)

* Payment for Allogeneic Hematopoietic Stem Cell Acquisition Cost (Section IV, H, pages 32762-32764)

* Chimeric Antigen Receptor (CAR)-T Cell Therapy (Section IV, I, pages 32764-32765)

* Outlier Payments (Addendum Section II, A.4.j, pages 32905-32910)

* Hospital Value-Based Purchasing (VBP) (Section IV, L, pages 32768-32780)

* Hospital Acquired Conditions (HAC) Program (Section IV, M, pages 32781-32784)

* Hospital Inpatient Quality Reporting (IQR) (Section VIII, A.9, pages 32836-32838)

* Medicare Promoting Interoperability Programs (Section VIII, D, pages 32852-32858)

* Revision of the Medicare Bad Debt Policy (Appendix A, H.13, Page 32957)

* MS-DRG Weights and coding changes (Section I, D.1, page 32468)

PARTIAL RESTORATION OF THE PREVIOUS RATE REDUCTION DUE TO THE ATRA (PAGE 32471)

Section 631 of ATRA amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS--DRG documentation and coding that do not reflect real changes in case-mix, totaling $11 billion over a four-year period (FYs 2014, 2015, 2016, and 2017). These cuts resulted in a 3.9 percent reduction to the standardized update amount.

MM appreciates CMS's effort to continue the multi-year process of returning this rate reduction related to the mandated coding adjustments to hospitals, with the proposed 0.5 percent return in the FY 2021 proposed rule. However, at the current proposed rate of return, hospitals will not be made whole by the end of this six-year process. Only 2.9588 percent will have been returned by FY 2023 (.4588 percent for 2018, 0.5 percent for 2019, 0.5 percent for 2020, .05 percent for 2021 as proposed, and .05 percent for 2022 and 2023, projected). This results in a .9412 percent revised projected shortfall of the ATRA mandate.

MM requests that CMS adopt a method for full repayment of this reduction to all providers by FY 2023 in the final rule.

PAYMENT FOR ALLOGENEIC HEMATOPOIETIC STEM CELL ACQUISITION COST (PAGES 3276232764)

Hematopoietic stem cell transplants involve collecting or acquiring stem cells from a healthy donor's bone marrow, peripheral blood, or cord blood for intravenous infusion to the recipient. Currently, acquisition costs associated with these services are included in the operating costs of inpatient hospital services. IPPS payments for such acquisition services are included in the MS-DRG payments for the allogeneic hematopoietic stem cell transplants when the transplants occur in the inpatient setting. The Further Consolidated Appropriations Act of 2020 requires, for cost reporting periods beginning on or after October 1, 2020, that payment to inpatient hospitals for hematopoietic stem cell acquisition be made on a reasonable cost basis, rather than be included in operating costs.

The Further Consolidated Appropriations Act of 2020 also requires that the reasonable cost-based payments for allogeneic hematopoietic stem cell acquisition costs be made in a budget neutral manner, so CMS is proposing to apply a budget neutrality adjustment to the standardized amount to account for these payments.

As a transplant center providing allogeneic hematopoietic stem cell transplants (HSCT) to Medicare patients, MM appreciates that Medicare provides cost-based reimbursement for donor search and cell acquisition for MS-DRG 014 cases. Cost-based reimbursement for donor search and cell acquisition is a meaningful change for MM and we are appreciative of the work involved in implementing this policy change.

Regarding the implementation of Section 108, MM asks CMS to remove and not finalize the very specific language about creating a standard charge based on the average of all HSCT donor search and acquisition services for all allogeneic HSCT recipients. A standard charge would require MM to create this charge across all payers, which would be complicated and could have dramatic consequences for how MM bills commercial insurances and how those insurances pay for donor search and cell acquisition services pursuant to the terms of our negotiated contracts.

MM respectfully encourages CMS to remove the standard charge language based on the average of all allogeneic HSCT donor search and cell acquisition costs. We believe this change will enable CMS to achieve appropriate implementation of Section 108 (paying reasonable cost for allogeneic donor search and cell acquisition) while allowing MM to continue billing all payers in our current methodology, without negative impacts to our billing and reimbursement from commercial payers.

CAR T THERAPY (PAGES 32764-32765)

In the 2021 IPPS proposed rule, CMS is proposing to create MS-DRG 018 and assign cases reporting ICD-10-PCS XWO33C3 or XWO43C3 to this new code. The proposed rule states that a large percentage of the cases that would now group to this new MS-DRG 018 for CAR T- cell therapy would be "clinical trial cases, in which the provider typically does not incur the cost of the drug. By comparison, for non-clinical trial cases involving CAR T-cell therapy, the drug cost is an extremely large portion of the total costs." As a result, CMS is proposing to modify its relative weight methodology for MS-DRG 018 to make its relative weight reflective of the typical costs of providing CAR T-cell therapies by excluding clinical trial claims from the calculation of the average cost. As providers do not typically pay for the cost of a drug for clinical trials, CMS is proposing to apply an adjustment to the payment amount for clinical trial cases that would group to MS-DRG 018. CMS is proposing to apply an adjustment of 0.15 to the payment amount for clinical trial cases that would both group to MS-DRG 018 and include ICD-10-CM diagnosis code Z00.6 or contain standardized drug charges of less than $373,000.

MM fully supports CMS and the creation of this new MS-DRG as well as the agency's efforts to address the issue related to the cost of clinical trial cases. However, MM still is concerned about the level of payment this new DRG would provide. Since this is a relatively new therapy, it seems that there is not enough data to set the DRG weight at the proper amount to fully pay providers of this service.

In order to develop clinical practices for these new therapies, running clinical trials helps transplant centers understand new issues as they present. MM normally does not have transplant trials that cover the costs for all care; there is often a portion of the care that is the responsibility of the patient's insurance. Having adequate payment for this part of the trial will help centers deal with both pharmacy and hospital costs, will encourage more research in this new area and will provide an alternative treatment for patients. Physicians who use these cell therapies want to continue to advance the science with the aim of reducing the price of manufacturing cells (i.e. in-house cell production).

MM encourages CMS to monitor the proposed .15 adjustment factor closely and increase the value if it becomes apparent that the level of reimbursement is creating barriers for patient access. MM is concerned that inadequate payments can stifle growth in this field, reduce treatments for a patient population that has few alternatives and creates barriers for patient access.

OUTLIER THRESHOLD AND OUTLIER RECONCILIATION PROCESS (PAGES 32905-32910)

CMS is proposing a 13.35 percent increase in the cost outlier threshold to maintain total outlier payments at the CMS stated goal amount of 5.1 percent of total IPPS payments. This would increase the threshold from the current $26,473 to $30,006, thereby decreasing the number of MM cases eligible for an outlier payment. MM estimates this will reduce its Medicare inpatient payments by $1 million during FY 2021. CMS estimates that FY 2019 outlier payments will be approximately 5.38 percent of total IPPS payments, slightly higher than the targeted 5.1 percent. MM notes that in many recent years, the outlier payments have been below the 5.1 percent target.

Given the significant challenges faced by health care providers due to the COVID-19 pandemic, MM encourages CMS to maintain the FY 2021 outlier threshold at the same amount as FY 2020.

Hospital VBP (Pages 32768-32780)

Section 1886(o) of the Social Security Act (the "Act") requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year.

In this FY 2021 IPPS proposed rule, CMS is providing estimated and newly established performance standards for certain measures for the FY 2023 program year, the FY 2024 program year, the FY 2025 program year, and the FY 2026 program year.

MM appreciates the merits of value-based purchasing and the measures CMS has used in past years to support outcomes-based performance by hospitals. MM supports all the proposed changes suggested by CMS related to VBP.

HAC Program (Pages 32781-32784)

Section 1886(p) of the Act establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals, effective for discharges beginning on October 1, 2014. This one percent payment reduction applies to hospitals that rank in the worst-performing quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital's discharges for the specified fiscal year.

In the FY 2021 proposed rule, CMS is proposing to change applicable period for two HAC measures, align the validation process to the proposed methodology in the Inpatient Quality Reporting program, and require digital files for medical record requests beginning in 2024.

MM is supportive of the changes proposed to the HAC program and appreciates CMS's focused efforts to reduce HACs.

Hospital Inpatient Quality Reporting (IQR) (Pages 32836-32838)

Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) hospitals are required to report data on measures selected by the Secretary for a fiscal year in order to receive the full annual percentage increase that would otherwise apply to the standardized amount applicable to discharges occurring in that fiscal year.

In the proposed rule, CMS is proposing to increase the number of quarters that electronic clinical quality measures (eCQMs) need to be submitted for the IQR program. The proposal also allows CMS to publish eCQM data on the Hospital Compare website. MM supports both of these proposed changes as written. CMS is proposing that electronic health record technology certified to the 2015 edition must be used to submit all hybrid eCQM measures.

CMS is proposing several changes to the eCQM validation process, including reducing the number of hospitals selected for validation annually. MM is supportive of this change that will reduce burden on hospitals.

MM is supportive of all changes proposed to the Inpatient Quality Reporting program. Medicare Promoting Interoperability (PI) Programs (Pages 32852-32858 CMS is proposing several changes to the Medicare Promoting Interoperability (PI) Program.

CMS is proposing to continue the 90-day continuous reporting period for CY 2022. MM is supportive of this proposal. CMS is proposing to match the Medicare PI eCQM reporting requirements to the proposed IQR reporting requirements. As with the proposed changes to IQR, MM is supportive of the progressively increasing eCQM reporting structure as outlined in the proposed rule.

MM is supportive of the changes proposed to the Medicare Promoting Interoperability Program as written.

Revision of Medicare Bad Debt Policy (Page 32957)

In section IX.C. of the preamble of this proposed rule, CMS is proposing revisions of certain longstanding Medicare bad debt reimbursement provisions and requirements for all Medicare providers, suppliers, and other entities eligible to receive Medicare payment for bad debt by revising 42CFR413.89.413.89, bad debts charity and courtesy allowances.

Included in these clarifications are required documentation of Medicare dual eligible accounts, proper collection efforts on charity accounts, and a focus on proper treatment of bad debt as an expense rather than a contractual allowance. MM believes the bad debt policy needs to be modernized.

Alternatively, MM encourages CMS to update the agency's Medicare bad debt payment process and consider creating a reimbursement mechanism that mirrors the approach of commercial payers. Specifically, Medicare could provide a small percentage of charges as a payment in provider rates to address bad debt. This method would allow providers a greater level of predictability in their payment and would be consistent with commercial payers across the country. This approach would have the benefit of reducing CMS' need to audit bad debt expenditures and would produce administrative cost savings for the Medicare program.

MS DRG and Coding Changes (Page 32468)

In the proposed rule, CMS is proposing recalibration of the MS-DRG relative weights. The DRG shifts proposed by CMS appear to make DRG assignment more specific for orthopedic and otolaryngology procedures without shifts in the case mix index weight; basically one-to-one shifts or DRG additions. MM agrees with the shifts and additions proposed in these procedures.

However, MM notes that DRG 652, kidney transplant, has been split into three MS-DRGs: 652, 650 and 651 -- kidney transplant with hemodialysis and without or with complications and commodities. MM is adversely affected by this change. MM has a low volume of admissions with both hemodialysis and kidney transplant with only approximately 21 out of our total of 110 kidney transplants having such a combination. MM requests that CMS reconsider the spirit of DRG 652, and maintain the single DRG for kidney transplant.

Thank you again for the opportunity to comment on the 2021 Medicare Inpatient Proposed Rule. We also very much appreciate CMS's efforts in furtherance of promoting regulatory flexibility and efficiency, so health care providers like MM can focus on providing high-quality, high-value care to our Medicare beneficiaries. Please let us know if you have any questions, by contacting Kimberly Ross, the Government Relations Officer for MM via email at [email protected].

Sincerely,

David A. Spahlinger, M.D., Executive Vice Dean for Clinical Affairs, University of Michigan Medical School, President, University of Michigan Health System

Marschall S. Runge, M.D., Ph.D., Dean, University of Michigan Medical School, Executive Vice President for Medical Affairs, Chief Executive Officer, Michigan Medicine

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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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