AAMC Comment Letter on November
13 Medicare Outpatient PPS Interim Final Rule
January 12, 2001
Robert A. Berenson, M.D.
Acting Administrator
Health Care Financing Administration
200 Independence Avenue, SW-Room 443-G
Washington, DC 20201
Re: HCFA-1005-IFC
Dear Dr. Berenson:
The Association of American Medical Colleges (AAMC) welcomes
this opportunity to comment on the Health Care Financing Administration's
(HCFA or the Agency) interim final rule entitled "Medicare
Program; Prospective Payment System for Hospital Outpatient
Services." 65 Fed. Reg. 67798 (November 13, 2001).
The AAMC represents approximately 400 major teaching hospitals;
all 125 accredited allopathic U.S. medical schools; 86 professional
and academic societies; and the nation's medical students
and residents.
This letter addresses five issues: pass-through payments
for new drugs and devices, the inpatient-only list, interim
direct graduate medical education payments, the APC payment
rate for stereotactic radiosurgery procedures, and criteria
for considering requests to recalculate hospitals' cost-to-charge
ratios.
Pass-Through Payments for New Drugs and Devices
Teaching hospitals are harbingers for the use of cutting-edge
drugs and technologies in outpatient settings. Appropriate
payments for these services are critically important to ensure
access to the best health care for all patients, including
Medicare beneficiaries.
As with any new payment methodology, the pass-through payment
policy under the outpatient prospective payment system (PPS)
continues to evolve. For example, the recently enacted Medicare
Benefits Improvement and Protection Act of 2000 (BIPA) made
several changes to this policy, including a significant change
to require that HCFA establish pass-through payments based
on categories, rather than individual brand names and models
of devices.
The AAMC and our member hospitals are keenly interested in
participating in the development of policies regarding pass-through
payments. In addition to ensuring appropriate payment levels,
we believe such policies must be administratively straightforward
so that hospitals have a clear understanding of the process
for proper coding and billing of pass-through items.
We also remain concerned about possible pro-rata reductions
in pass-through payments if the aggregate pass-through payments
exceed the funds set aside for this purpose. We believe a
process must be developed that is based on sound data and
policy decision making that ensures that pass-through payments
are sufficient to ensure that cutting-edge institutions are
not penalized for using new and innovative technologies.
Inpatient-Only List
The AAMC supports HCFA's actions to remove 44 items from
the "inpatient only" list and place them into ambulatory
payment classification (APC) groups. We also appreciate HCFA's
decision to revise this list on a quarterly basis, effective
April 2001. Given that many of our members are at the forefront
of performing cutting-edge services in the outpatient setting,
the AAMC would be happy to assist HCFA to the extent the Agency
would like input about the ability of hospitals to perform
procedures safely and appropriately in outpatient settings.
Interim Direct Graduate Medical Education Payments
Medicare direct graduate medical education (DGME) paid to
teaching hospitals are apportioned between Parts A and B of
the Medicare program. The Part A DGME payments are associated
with Medicare inpatient payments, while the Part B payments
are associated with hospital outpatient payments. To help
maintain consistent cash flow to hospitals, Medicare makes
"interim" payments throughout the year. At the end
of the year, a payment adjustment may be made to ensure that
the total amount of interim payments equals the amount calculated
and submitted by a hospital on its Medicare cost report.
Prior to the outpatient PPS, the Part B DGME interim payments
were reflected in the interim payments hospitals received
for providing outpatient services. Since implementation of
the outpatient PPS on August 1, 2000, there has been no mechanism
to continue the Part B interim DGME payments. We recognize
that this is more of a process issue because hospitals eventually
receive these Part B DGME payments when they submit their
cost reports at the end of a year. However, the abrupt absence
of interim payments beginning August 1, 2000 has resulted
in cash flow problems for some teaching hospitals.
We urge HCFA to develop a mechanism to ensure interim Part
B DGME payments as soon as possible. In the meantime, we believe
HCFA should direct their fiscal intermediaries to increase
the Part A interim payments to reflect the Part B portion.
Moreover, we believe HCFA should make a lump sum payment to
teaching hospitals to reflect the absence of Part B interim
payments from August 1 to the time the situation is corrected.
APC Payment Rate for Stereotactic Radiosurgery Procedures
The APC payment rate for sterotactic radiosurgery, HCPCs
code G0173, is incorrect and the magnitude of the payment
inadequacy requires that HCFA make a correction as soon as
possible. A number of AAMC member hospitals use gamma knives,
the costs of which can range from between $10,000 and $15,000
per procedure. Yet, the payment rate these hospitals receive
is based on APC 302, which has an unadjusted rate of a little
over $400. This seemingly violates the "two times"
rule in the development of the APC groups, in which the median
costs of the most costly procedure within an APC must be no
more than two times the cost of the least costly procedure.
In the April 7, 2000 interim final rule, HCFA stated it would
track data for the stereotactic radiosurgery procedures to
"ensure their proper placement." (65 Fed. Reg. at
18469). We believe that claims data from the initial months
of the outpatient PPS may be useful in identifying the cost
data necessary to calculate a correct payment rate. An analysis
of this data may also support a conclusion that stereotactic
radiosurgery that involves gamma knives requires a unique
HCPCs code and APC. The AAMC also would be happy to work with
HCFA to obtain relevant cost data from our members, if such
an effort would expedite the rate calculation process.
Criteria For Considering Requests to Recalculate Hospitals'
Cost-to-Charge Ratios
HCFA relies on hospital-specific cost-to-charge ratios (CCRs)
for calculating outlier, transitional corridor payments, and
device pass-through payments under the outpatient PPS. Consequently,
a correct CCR is critical in ensuring that hospitals receive
the correct payment amounts under these provisions.
Medicare Program Memorandum A-00-63 (September 8, 2000) contains
the step-by-step process that HCFA performs to calculate the
CCR for each hospital. This program memorandum sets forth
four criteria in which a hospital may question the validity
of the CCR and request that it be recalculated. These criteria,
however, are limited to either a) those hospitals which were
assigned a default CCR and, thus, the CCR is not specific
to their hospital, and b) a settled cost report that HCFA
used to calculate the CCR has been reopened and settled again
in a manner that could affect the CCR.
We believe that HCFA should add a criterion to the current
list in the program memorandum to permit hospitals to question
the validity of their CCR if they believe that it was calculated
incorrectly. For example, we are aware that some hospitals
have tried to replicate HCFA's calculation process and have
obtained different results. The absence of such a criterion
from HCFA's current list was likely inadvertent, but because
of the significant impact it could have on hospitals' payments,
we believe the program memorandum should be modified accordingly
as soon as possible.
Conclusion
Thank you for this opportunity to present our views. We would
be happy to work with HCFA on any of the issues discussed
above or other topics that involve the academic health care
community.
If you have questions concerning these comments, please feel
free to call Robert Dickler, Senior Vice President of the
Association, or Karen Fisher, Associate Vice President, both
of whom may be reached at (202) 828-0490.
Sincerely yours,
Jordan J. Cohen, M.D.
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