fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

FAH Submits Comments to CMS on Proposed FY2019 IPPS & LTCH Payment Rule

June 25, 2018 | FAH Policy Blog Team

Category: Financing, HIT, Medicaid, Medicare, Quality, Rural, Transparency

Today, the Federation of American Hospitals (FAH) submitted comments to the Centers for Medicare & Medicaid Services’ (CMS) FY 2019 Inpatient Prospective Payment System (IPPS) proposed rule.  The FAH’s comments were highlighted by responses to CMS’s proposals on Medicare Disproportionate Share Hospital (DSH) payments, payments for new and costly CAR T-Cell therapy, CMS’s quality and payment reporting programs, interoperability, long-term care hospital policies, and price transparency.

Medicare Disproportionate Share Hospital (DSH) Payments

The FAH noted its support for CMS’s proposed policies and commended the Agency for its efforts over the past year to better define the costs of uncompensated care (UC) by including the cost of uninsured patient discounts into the definition of charity care while taking a number of administrative steps that will result in improving both the processes and data for UC-DSH disbursements.  The comments also note that while CMS has done much in the last year to cause the data to be more usable to distribute UC-DSH payments, CMS still needs to take steps to cause hospitals to more accurately report that data.  This includes further educating providers about the correct way to report and actually auditing the data rather than just preparing edits to identify gross aberrations in reported data. 

CAR T-Cell Therapy

The FAH recommended to CMS that the Agency provide for the applicable MS–DRG payment plus the blended average sales price (ASP) for substantially similar CAR T-cell therapies.  CAR T-cell therapy represents a significant medical advancement for beneficiaries who previously had limited to no treatment alternatives.  But, the FAH noted, because of the extraordinary drug costs, CAR T-cell therapy also threatens to disrupt IPPS reimbursement through underpayment of CAR T-cell therapy cases (particularly in rural markets) and/or the redistribution of payment from basic hospital services to CAR T-cell therapy drugs unless an adequate add-on payment is provided.  In order to preserve access to care while also maximizing price-based competition among CAR T-cell therapy drug manufacturers, the FAH recommended adoption of an alternative new-technology add-on payment that is set based on the blended ASP for substantially similar CAR T-cell therapy drugs.  Applying this add-on payment in FY 2019 will provide an opportunity for competition to reduce current prices, for CMS to develop experience with CAR T-cell therapy claims, and for Congress to explore any appropriate legislative approaches to CAR T-cell therapy payment, if appropriate and necessary.

Quality Payment and Reporting Programs

The FAH commended CMS for its proposed application of the Meaningful Measures initiative to the hospital inpatient quality reporting and pay-for-performance programs.  The FAH noted that prioritizing and reducing the number of quality measures across these programs addresses FAH’s previously expressed concerns about the burden of managing many measures and the unnecessary duplication of measures across programs.  The FAH also commented that, in its review of the hospital quality programs, it is appropriate that CMS takes a holistic approach to evaluate each of the pay-for-performance program measures in the context of all three programs (readmissions reduction, hospital-acquired conditions reduction, and value-based purchasing).

Promoting Interoperability Programs and Request for Information

The FAH expressed appreciation that the proposed modifications to the requirements that eligible hospitals and critical access hospitals (CAHs) must meet to demonstrate meaningful use of certified electronic health record technology (CEHRT) address concerns about the feasibility of operationalizing current requirements.  The FAH also expressed support for CMS’s desire to provide additional flexibility for eligible hospitals and CAHs and the focus on interoperability.  However, the FAH commented that while the proposed scoring changes are an improvement over retaining the current Stage 3 scoring requirements, it will take time to implement.  Thus, the FAH requested more flexibility to select measures, and asked that the points required for meeting meaningful use be adjusted to reflect these implementation issues.  Additionally, while noting its functionality, the FAH highlighted the concerns across stakeholders about API readiness, as well as the security of Application Programming Interfaces (APIs) and third-party applications.  The FAH urged CMS to work with the Office of the National Coordinator for Health Information Technology (ONC) to establish a trust framework for third party applications, including security standards, terms of use, and an overall validation process.

In response to the Proposed Rule’s Request for Information on promoting interoperability, the FAH noted its long support for efforts to achieve comprehensive interoperability and data liquidity.  However, the FAH commented that it does not support the proposed revision of the Conditions of Participation (CoPs), Conditions for Coverage (CfCs), and Requirements for Participation (RfPs) related to interoperability and the exchange of health information.  The FAH cautioned that the ecosystem is simply not mature enough to facilitate the movement of this information, as evidenced by the obstacles that currently prevent seamless information exchange and would make it exceedingly difficult for hospitals and other providers to comply with the requirements.  For example, post-acute providers and behavioral health providers have not been able to adopt Health IT to the extent of hospitals and CAHs because they were ineligible for the Electronic Health Record (EHR) Incentive Programs under the Health Information Technology for Economic and Clinical Health (HITECH) Act.  As an alternative, the FAH recommended that CMS permit the numerous public and private initiatives in this area, some of which are nascent, time to mature and advance our shared goals.

Long-Term Care Hospitals (LTCHs)

The FAH expressed support for CMS’s proposal to eliminate the 25% Rule, noting that the 25% Rule deters the admission of patients who are otherwise appropriate for the LTCH level of care, arbitrarily caps the number of patients an LTCH can admit from any hospital yet still receive a full payment, and thus interferes with the normal LTCH admissions process.  While expressing support for the elimination of the 25% rule, the FAH expressed its strong opposition to the application of a 0.9% permanent budget neutrality adjustment.  The FAH noted that the LTCH patient criteria and site neutral payment rate already serve as a true functional replacement for the 25% Rule, and CMS has not previously applied such an adjustment in connection with multiple statutory and regulatory moratoria on the rule.

Additionally, the FAH expressed strong disagreement with CMS's proposal to apply a budget neutrality factor to LTCH site neutral cases that qualify for high cost outlier payments.  As the FAH explained in previous years’ comments, this budget neutrality adjustment is duplicative and unwarranted because CMS has already applied budget neutrality adjustments to reduce the operating and capital portions of the IPPS standard Federal payment rate before using that rate to determine the IPPS comparable per diem amount for site neutral payment cases.

Price Transparency

The FAH expressed support for CMS’s efforts to require hospitals to make available a list of their current standard charges via the internet in a machine-readable format and to update this information at least annually, or more often as appropriate, noting that many hospitals already comply with this requirement, either voluntarily or because it is required under state law. 

While the FAH offered its support for efforts to ensure that consumers have clear, accessible, and actionable information concerning their cost-sharing obligations, the FAH also expressed concern that CMS is considering avenues for providing this information that focus exclusively on hospitals when payers—insurers, group health plans, Medicare, Medicare Advantage organizations, and others—are best suited to provide actionable coverage and cost-sharing information for all providers and suppliers involved in an episode of care.  The FAH commented that payers understand the full range of benefits under a patient’s applicable health coverage and cost-sharing obligations (including out-of-pocket spending limits, deductibles, coinsurances, and any reference-based pricing strategies used by the plan) and, because an episode of care typically involves multiple providers and suppliers, the payer is the only entity that is capable of providing a patient with an accurate and actionable estimate of their potential financial exposure for the entire episode of care.  As such, the FAH expressed that hospitals are simply not the appropriate entity to be tasked with interpreting and explaining a patient’s cost-sharing obligations under a particular plan. 

In addition, the FAH continued to recommend that CMS adopt the “surprise billing” section of the National Association of Insurance Commissioners’ (NAIC) Health Benefit Plan Network Access and Adequacy Model Act (Model Act) as a robust way to address the issue of surprise billing.  The FAH commented that this policy provides real protection for patients and strikes the right balance between the roles and responsibilities of hospitals, providers, and plans in situations in which a patient seeks care at an in-network hospital and may be treated by a provider who is not covered by the patient’s plan.

The FAH’s full comment letter can be viewed here.