University of Virginia Health Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, July 23 -- Doug Lischke, CFO at the University of Virginia Health, Charlottesville, 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 9, 2020, and posted on July 17, 2020:

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University of Virginia Health (UVA Health) welcomes this opportunity to comment on the Centers for Medicare & Medicaid Services' (CMS) Medicare Programs: Hospital Inpatient Prospective Payment Systems (IPPS) for Acute Care Hospitals and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) and Proposed Policy Changes and Fiscal Year 2021 Rates. This letter addresses certain aspects of the IPPS and LTCH PPS proposed rules, including: the indigent care Medicare Bad Debt Policy, reimbursement for Chimeric Antigen Receptor (CAR) T-cell therapy; price transparency, proposed quality measures for the IPPS Hospital Inpatient Quality Reporting (IQR) and Promoting Interoperability Programs; lack of proposed changes to the STAR Ratings methodology, technical changes to graduate medical education policies; and site neutral reimbursement for Long-Term Care Hospitals.

UVA Health is an academic medical center located in Charlottesville, Virginia and includes: UVA Medical Center (UVAMC) with a Level I trauma center, neonatology intensive care unit, organ transplant program, nationally recognized cancer and heart centers; primary and specialty clinics throughout Central Virginia; and UVA Transitional Care Hospital, a 40 bed long-term acute care hospital. Relative to most of the state's other hospitals, UVAMC provides a disproportionate share of services to Virginia's indigent and Medicaid beneficiaries, thus serving as a key component of Virginia's safety net providers. Approximately 68 percent of our patients are Medicare or Medicaid beneficiaries, or are uninsured.

Verification Criteria for Determining Indigent Patients and Reporting Bad Debt

CMS is proposing to amend its bad debt regulation at 42 C.F.R. Sec. 413.89 to codify the bad debt policies contained in Chapter 3 of the Provider Reimbursement Manual (PRM), effective for cost reporting periods beginning on, before, and after October 1, 2020. The proposed change includes policies pertaining to traditional, charity, and crossover bad debts.

Of specific concern to UVA is CMS' proposal to retroactively codify a modified version of Sec. 312.B of the PRM. Section 312.B says that a provider "should" consider a patient's total resources, including income, assets, liabilities and expenses, in determining indigency. CMS's proposed regulation almost mirrors section 312.B, except that it replaces the word "should" with "must". In addition, CMS proposes requiring providers to confirm that no source other than the beneficiary is legally responsible for the bill and to consider extenuating circumstances that could affect a patient's eligibility for charity care.

As one of two state safety net health care institutions in Virginia, the Medical Center is subject to the state Eligibility Guidelines for Health Care Services at the State University Teaching Hospitals promulgated by the Virginia Department of Medical Assistance Services, as required by the Virginia General Assembly. These Guidelines require the Medical Center to ascertain both the income level as well as the financial assets of the patient in order to determine indigency or medical indigency. The guidelines do not authorize UVAMC to take into account a patient's liabilities and expenses, except in so far as determining countable assets, such as real property.

UVA Health opposes the proposal. We believe the indigent bad debt proposal to be a significant change, not a clarification and codification of longstanding policy. Currently, section 312.B of the PRM states explicitly that providers "should" consider a patient's total resources -- including income, assets, liabilities and expenses -- in determining indigency. Nowhere does this Manual section -- let alone any provision of statute-- require that providers consider all of those factors in making indigency determinations. In fact, two federal courts have rejected a CMS interpretation that section 312.B is a prerequisite for claiming indigent bad debt precisely because the word "should" is noncompulsory./1

UVA questions whether CMS has the authority to alter its policy given these court decisions.

UVA also questions CMS's authority to adopt this rule retroactively. The Medicare statute only permits CMS to adopt retroactive rules in two narrow circumstances: (1) when necessary to comply with statutory requirements, and (2) when failure to do so would be contrary to the public interest. Relying on the latter, CMS claims that these policies "have existed in Medicare guidance, including the PRM, for several decades and providers and beneficiaries are familiar with and rely upon them."/2

Even if this were true (it is not), it is at best a reason why it would not be contrary to the public interest to adopt the rule retroactively. But the statute requires a showing that failing to adopt the rule retroactively would be contrary to the public interest.

Furthermore, the PRM has never said that providers "must" consider a patient's total resources-only that they "should" do so.

CMS also claims that retroactive codification will avoid confusion as to which of CMS's longstanding bad debt policies apply to which cost reporting periods, so as to spare providers the expense of resubmitting previously submitted cost reports. But the cost of safeguarding this public interest would far exceed the benefit. UVA Health would prefer to assume the risk and expense of erroneously resubmitting previously submitted cost reports if the alternative is the retroactive application of a policy that has never before existed, because the cost and burden of the latter far exceeds the former. Furthermore, the result that CMS seeks to prevent is inevitable because several of CMS' bad debt proposals would only apply on a prospective basis. Finally, Congress could not have intended to authorize CMS to adopt retroactive rules whenever there is risk of provider confusion over what policy applies to what cost reporting period because this risk is present every time the agency adopts a change in policy. Indeed, out of the countless occasions that CMS has adopted changes in policy, UVA Health is not aware of any instances in which CMS has previously invoked its retroactive authority for the purpose of avoiding provider confusion.

Even if CMS could demonstrate that failing to adopt its policies retroactively would be contrary to the public interest (it cannot), the Medicare statute shields providers from retroactive rules that contradict CMS's own written guidance./3

PRM section 312.B says that providers "should" consider a patient's total resources. And, as previously explained, two federal courts have rejected CMS's attempt to enforce section 312.B as a condition for claiming bad debt. Based on those decisions, and CMS's failure to subsequently modify section 312.B to conform to its preferred interpretation, it was reasonable for providers to believe that section 312.B is non-compulsory.

Should CMS implement this policy, UVA Health expects it will lose a minimum of $7.8 million. Because the policy would be applied retroactively, the policy could cause disallowances in six years of unsettled cost reports (2013-2018). In fact, our Medicare Administrative Contractor Palmetto, GMA, is currently auditing our 2013 cost report and proposing to disallow $1.3 million in indigent care debts claimed for reimbursement precisely because UVAMC's charity care policy does not consider patient expenses and liabilities when making patient indigency determinations. One could also expect our MAC to disallow our indigent care debt claims for reimbursements on our 2014-2018 cost reports upon those significantly delayed MAC audits. We fear we could also be at risk for additional disallowances should Palmetto reopen prior settled cost reports.

In addition, a mandatory interpretation of the guidance would make federal policy inconsistent with our required state guidelines for determining indigency (see above). We would need to alter our financial assistance policies and seek approval from the state to change its approved guidelines so as to incorporate the revised federal requirement. Given the variability in state charity care policies, federal policy should remain more accommodating and flexible.

If finalized, we would also need to alter the application and process by which patients apply for financial assistance. The current application is used to not only determine eligibility but also eligibility for Medicaid and/or other government assistance. We fear the additional information and paperwork required of patients would be too cumbersome and create barriers to completing the application, resulting in fewer patients enrolling for either government health care insurance or financial assistance. Hospitals would also incur increased administrative expenses to process and verify the additional information. Such changes would have to occur for all patients because Medicare has said that providers must use the same indigent care criteria for Medicare and non-Medicare beneficiaries.

We urge CMS to withdraw the indigent care bad debt proposal. It should not be finalized and applied retroactively to any cost reporting years.

As an alternative, we ask CMS to review and endorse use of automated presumptive eligibility as a highly viable and better alternative. The progressive development of automated financial analysis tools over the last twenty years present CMS the opportunity to support presumptive eligibility as a proven and effective means in determining indigence status of Medicare beneficiaries. Adoption of presumptive eligibility would create substantial administrative cost savings for providers and CMS and represent an effective and practical management solution to help offset future costs, as the presumptive eligibility may be automated with statistically validated testing to ensure high certainty of accurate scoring and reliability of cost report submissions.

Payments for CAR T-cell Therapy

CMS proposes creating a chimeric antigen receptor (CAR) T-cell therapy Medicare Severity-Diagnosis-related Group (MS-DRG) to help reimburse hospitals for their costs in delivering necessary care to Medicare beneficiaries and provide payment flexibility as new CAR T-cell therapies become available. The new MS-DRG 018 (Chimeric Antigen Receptor T-cell Immunotherapy) will include any cases reporting existing CAR T-cell ICD-10 procedure codes XW033C3 or XW043C3.

CAR-T is a cell-based gene therapy that genetically engineers a patient's own T-cells to attack certain cancerous cells. UVAHS is proud to be leading the way for patients needing CAR T-cell therapy thanks to the pioneering work of Dr. Daniel "Trey" Lee, a pediatric oncologist at UVA's Children's Hospital, the UVA Cancer Center and UVA's Carter Immunology Center. Dr. Lee was among one of the early groups of researchers worldwide to infuse children with multiply relapsed or refractory leukemia with CAR T-cells. UVA is the only center in the state of Virginia that offers both FDA-approved CAR T-cell therapy and next-generation CAR-T therapies through clinical trials.

UVA Health is encouraged that CMS continues to take additional steps to address the extraordinary high cost of CAR-T and other new technologies by creating a new DRG.

Specifically, we appreciate that CMS' proposal remains consistent with the current DRG payment system and adjusts the CAR-T DRG payments based OD a hospital's geography, its teaching status, and whether a hospital treats a high-percentage of low-income patients. In addition, we support that CMS has chosen to exclude clinical trials cases from the set of claims when determining the relative DRG weight. That being said, the new DRG will not eliminate the significant financial burden shouldered by hospitals and health systems to ensure access to these life-saving therapies. The proposal still does not cover the full cost of CAR-T therapy and makes delivering these therapies to Medicare patients unsustainable for centers like UVA. We urge CMS to continue to monitor the claims associated with the critical treatment and seek opportunities to improve reimbursement.

Price Transparency

Beginning January 1, 2021, CMS is requiring hospitals to publically report its gross charges; payer-specific negotiated charges; de-identified minimum negotiated charges; de-identified maximum negotiated charges; and discounted cash prices under the Hospital Price Transparency Final Rule (84 FR 65524).

In the proposed FY 21 IPPS rule, CMS expands such reporting requirements and proposes that hospitals would be required to report the median payer-specific negotiated rates for inpatient services, by MS-DRG, for Medicare Advantage organizations and third-party payers. Hospitals would be required to report this information on their Medicare cost report for cost reporting periods ending on or after January 1, 2021, to be used in potentially setting the IPPS MS-DRG relative weights beginning in FY 2024.

While we share CMS's goal that patients should have the information they need to make informed health care decisions, UVA Health strongly opposes requiring hospitals to report our payer-negotiated rates. We are very disappointed that CMS continues down the path of requiring hospitals to disclose privately negotiated contract terms. The price transparency requirements are extremely burdensome for hospitals, particularly in a time when hospitals are responding to a public health epidemic. To ask hospitals to divert financial resources and staff time that we cannot afford to spare seems unnecessary given our focus on COVID-19 patient care and recovering from significant revenue losses due to patients forgoing both non-emergent and emergent care.

The disclosure of privately negotiated rates will not further CMS's goal of paying market rates that reflect the cost of delivering care. Negotiated rates take into account any number of unique circumstances between a private payer and a hospital and simply are not relevant for fixing fee-for-service Medicare reimbursement. Additionally, private commercial rates are an important source of funds to help offset losses healthcare organizations incur from Medicare reimbursements which do not cover the cost of care.

We continue to question whether the Administration has the authority to proceed, given Section 2718(e) of the Public Health Service Act's plain language speaking to "standard charges." Payer-specific negotiated rates are in no way standard, as they vary by year, payer and health plan. CMS' proposal also violates the current non-disclosure agreements we have with private payors. Given such agreements are confidential trade secrets, the proposal violates the First Amendment by compelling hospitals to publicly post confidential and proprietary information.

We also do not support incorporating this information into the methodology for calculating inpatient PPS MS-DRG relative weights, beginning FY 2024. Among other concerns, commercial patients are typically younger and have fewer chronic conditions than Medicare patients, and we believe CMS' use of commercial DRG reimbursement will inappropriately skew the Medicare weights, which are designed to reflect the relative intensity of resources.

We urge CMS to withdraw this expanded proposal. In addition, we urge you to delay the implementation of the January 2021 deadline of the larger price transparency requirement as the issue is being settled by the courts. The Administrative Procedure Act (APA) specifically contemplates an agency's postponing the effective date of action taken by it pending judicial review.

ECQMs: Hospital Inpatient Quality Reporting (IQR) and Medicare and Medicaid Promoting Interoperability Programs

The IQR and Medicare and Medicaid Promoting Interoperability programs includes a requirement to report on certain electronic clinical quality measures (eCQMs) from electronic health records (EHR) using CMS-mandated reporting standards. The 1QR eCQM reporting requirements align with the eCQM reporting requirements in the Promoting Interoperability Program. CMS retains the current IQR measure set, but proposes significant changes to the program's eCQM reporting requirements. CMS is proposing reporting, submission, and public display requirements for eCQMs, including policies to: progressively increase the numbers of quarters of eCQM data reported, from one self-selected quarter of data to four quarters of data over a 3-year period.

While UVAHS supports the development of eCQMs and the work of CMS to identify measures that appropriately assess performance, promote quality of care, and improve outcomes, our current version of our electronic medical record system (EPIC) does not support the ability to submit eCQMS as proposed and should the proposal be finalized, additional investments in EPIC would need to be made and incorporated into our already planned EPIC upgrade schedule. Currently, our IT investments are focused on caring for our patients (COVID-19 and non-COVID-19) via telehealth and making needed IT changes in order to implement CMS' promoting interoperability regulation. Successful compliance with the proposal will also rely on EHR vendor EPIC and their operational schedule. As we have incurred significant losses due to lost patient revenue due to Virginia's stay-at-home orders March-May during the COVID-19 public health emergency, we ask CMS to be mindful of the additional administrative and financial burdens asked of hospitals with needed IT investments.

Hospital Compare STAR Ratings Methodology

We note with disappointment that CMS did not propose changes to the Hospital Compare Star Rating Methodology in order to improve the accuracy and meaningfulness of the hospital ratings program. Earlier this year, CMS announced it intended to include methodology proposals in the FY 2021 Hospital Inpatient Prospective Payment System proposed rule as a result of critical information received from CMS participation in national quality conferences, CMS listening sessions, and CMS solicitations from experts. As part of this activity, UVA Health leadership Chief of Quality and Performance Improvement Tracey Hoke, MD, and colleagues have published recommendations to improve the STAR Ratings methodology (https://webalyticos.home.blog/2019/01/21/overall-star-ratings-challenges-to-credibility-new-insights), including: aligning adjustment for Socioeconomic status in the Stars program to that of the HRRP; capping the impact of volume on adjustment and incorporating confidence intervals would address issues with volume impacting rates; remove the impact of outlier readmissions on the readmission measure; and abandon the latent variable model in the composite rating for the Overall Rating.

While we can appreciate that the agency has been sidelined by the COVID-19 public health emergency, we continue to urge CMS to propose STAR Ratings methodological changes to the program in upcoming payment rulemakings.

Graduate Medical Education

CMS is proposing to expand its definition of a "displaced resident" when residents transfer to other teaching hospitals in the event of a hospital or program closure. If finalized, a resident would be considered "displaced" for Medicare temporary full-time equivalent resident cap transfer purposes beginning on the day a hospital announces publicly that it is closing and/or that it is closing a residency program. Residents would not be required to be at the hospital on the day before or the day of the hospital or program closure. Currently, a resident is only considered "displaced" if they are physically present at the hospital on the day before or the day of the hospital or program closure.

UVA Health supports this proposed change, which will facilitate the transition and needed continuity in training by resident physicians' who are affected by hospitals' program closures. As UVAMC agreed to temporarily take on residents from Hahnemann University Hospital in 2019, such clarification would have accelerated the process we needed to follow in order to be been eligible for Medicare payment for the added residents.

Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2021

For the 25 percent of LTCH cases expected to be paid an LTCH site-neutral rate in FY 2021, CMS finalized a decrease of 21 percent (or $105 million) compared to FY 2020. These cases either have a principal LTCH diagnosis related to a psychiatric or rehabilitation condition; or are not transferred within one day from a general acute-care hospital to a LTCH; or lack either three or more days of care in an intensive care unit or coronary care unit during the prior hospital stay, and a qualifying procedure code for 96+ hours of ventilator care in the LTCH.

At INA's long term acute care hospital (UVA Transitional Care Hospital), patients receive comprehensive long term care delivered by physician-led interdisciplinary teams of medical professionals who help transition patients to the next phase in their recovery. Our services are focused around the patient and involve their families and significant others, which are important aspects of the healing process, UVA Transitional Care Hospital was opened with the intent to alleviate bed capacity pressure at UVAMC and provide a needed continuum of care for patients requiring long-term acute care outside the short-term acute care environment. Such care does not mirror a nursing home or a rehabilitation facility.

LTCHs are important because they provide specialized care to this special niche of patients who are medically complex and may suffer from multiple acute or chronic conditions and require longer lengths of stay than most acute care patients. These patients are too ill to be discharged to home, a nursing facility, or a rehabilitation facility. In the LTCH these patients are able to receive the right care in the right setting and at the right time--all at a less expensive cost than in an acute care hospitals, thus providing savings to the Medicare program.

We estimate the reduced site-neutral rate will reduce our overall payments by $569,000. Such losses strain our ability to care for patients in this lower-cost setting at a time when Medicare payment for these patients already fails to cover the cost of their care and services.

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In conclusion, thank you for allowing UVA Health to weigh in on these important policies. Should you have additional questions or would like additional information, please contact the Office of State and Federal Government Relations at 434-243-5920.

Sincerely,

Doug Lischke, CPA, MBA

Chief Financial Officer

UVA Health

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Footnotes:

1/ See Baptist Healthcare System v. Sebelius, 646 F. Supp. 2d 28 (D.D.C. 2009); Harris County Hospital District v. Shalala, 863 F. Supp. 404 (S.D. Tex. 1994).

2/ 84 Fed. Reg. 32460, 32866 (May 29, 2020) ("The clarification and codification of longstanding Medicare bad debt policies into the regulations with a retroactive effective date does not affect prior transactions or impose additional duties or adverse consequences upon providers or beneficiaries.")

3/ 42 C.F.R. Sec. 1395ww(e)(2)(A).

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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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