Washington Highlights: August 8,
2008
CMS Releases Final Rule on Medicare Hospital Inpatient
Payments
Contents
Prior Issues
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The Centers for Medicare and Medicaid Services (CMS) July 31 published
on its website the fiscal year (FY) 2009 Medicare hospital inpatient
prospective payment system (IPPS) final
rule, which reflects several recommendations submitted by the
AAMC. The rule also includes a 3.6 percent market basket update.
Hospitals that fail to comply with the quality data submission requirements
will receive an update reduced by 2.0 percentage points, yielding
a 1.6 percent update. Included in the final rule is a provision
that will reduce capital indirect medical education (IME) payments
by 50 percent in 2009 and eliminate capital IME payments in 2010
(see related article).
Of particular significance to academic medical centers (AMC) is
CMS's decision to recognize the special needs of AMCs. In the final
rule, CMS adopted the AAMC's comments
and determined that the "stand in the shoes" proposal
related to the physician self-referral ("Stark") rule
will not apply to: (1) an arrangement that satisfies the AMC exception
in the physician self-referral rule or (2) a physician "without
the ability or right to receive the financial benefits of ownership
or investment, including, but not limited to, the distribution of
profits, dividends, proceeds of sale, or similar returns on investment."
The AAMC believes that this provision, as finalized in the rule,
will not apply to most faculty practice plans.
CMS also did not adopt the proposal to expand hospitals' EMTALA
(also known as "anti-dumping") obligations to the inpatient
setting. The AAMC strongly objected to this proposal, as did many
other commentators. After considering the comments, CMS acknowledged
that if it adopted the proposed policy, it was concerned about "the
potential for overcrowding that could result at academic medical
centers, tertiary care centers, and public safety net hospitals."
The rule also significantly scaled back CMS's previous proposal
on so-called "preventable" conditions-those for which
Medicare would not make additional payments-finalizing just 3 of
the 9 conditions proposed. The number of additional clinical quality
measures for which hospitals must report data (in order to avoid
a 2 percent payment cut) was also scaled back: only 13 of the 43
proposed measures were finalized, bringing the total number of measures
for reporting to 42.
CMS did not finalize its proposal to extend from 3 to 7 days the
timeframe for the application of the post-acute transfer policy
for home health services. Currently, hospitals that discharge patients
who then receive home health services within 3 days from discharge
are subject to the post-acute care transfer policy and are paid
a per diem rate not to exceed the full MS-DRG payment. CMS's decision
rested largely on comments by the Medicare Payment Advisory Commission
(MedPAC) that stated that MedPAC staff's analyses of the data did
not corroborate CMS's analyses, which had been the basis for the
extended timeframe.
The final rule will be published in the Federal Register
on Aug. 19, 2008, and will be implemented on Oct. 1, 2008.
Information:
Ivy Baer, Director & Regulatory Counsel
AAMC Health Care Affairs
ibaer@aamc.org
(202) 828-0490
Jennifer Faerberg, Director
AAMC Health Care Affairs
jfaerberg@aamc.org
(202) 862-6221
Diana Mayes, Specialist
AAMC Health Care Affairs
dmayes@aamc.org
(202) 828-0498
CMS to Eliminate the Capital IME Adjustment Starting
in FY 2009
The Centers for Medicare and Medicaid Services (CMS) July 31 finalized
its decision to implement a 50 percent reduction in capital indirect
medical education (IME) payments followed by the complete elimination
of the capital IME adjustment by fiscal year (FY) 2010. This policy,
included in the Medicare inpatient prospective payment system (IPPS)
final rule (see related story), will result
in a loss of $359 million to teaching hospitals in FY 2010, according
to an AAMC analysis.
CMS first announced its intention to begin eliminating capital
IME payments in its FY 2008 final rule with comment period [see
Washington Highlights,
Aug. 3, 2007]. CMS requested comments on the capital IME adjustment
during the comment period for both the FY 2008 final rule and the
FY 2009 proposed rule. The AAMC and others urged
CMS to rescind its decision to eliminate these payments. However,
CMS did not agree with these comments, and the cut is scheduled
to begin Oct. 1.
AAMC President and CEO Darrell G. Kirch, M.D., sent a May 30 letter
urging Congress to block regulatory action to eliminate capital
IME payments [see Washington
Highlights, June 6].
Both House and Senate members have signed letters urging CMS Acting
Administrator Kerry Weems to withdraw this policy [see
Washington Highlights, Aug. 1].
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
Diana Mayes, Specialist
AAMC Health Care Affairs
dmayes@aamc.org
(202) 828-0498
AAMC Urges House to Increase NHSC Authorization
AAMC President and CEO Darrell G. Kirch, M.D., Aug. 7 sent a letter
to Congress in support of a $300 million National Health Service
Corps (NHSC) authorization in the upcoming conference of the "Health
Care Safety Net Act of 2008" (S.
901, H.R.
1343). While the Senate bill incrementally increases the NHSC
authorization level from $131.5 million in FY 2008 to $185.6 million
in FY 2012, the House companion measure does not include the NHSC
reauthorization provision.
The AAMC letter addresses co-sponsors of the "National Health
Service Corps Scholarship and Loan Repayment Programs Reauthorization
Act of 2007" (H.R.
2915) and the "United States Physician Shortage Elimination
Act of 2007" (H.R.
410). Both bills include provisions that would reauthorize the
NHSC at $300 million each year through FY 2011. The letter notes,
"In the past 5 years, funding for the NHSC has been cut by
$47 million, a 27 percent reduction from the $171 million FY 2003
budget that was already insufficient to meet the nation's needs."
The NHSC reauthorization is part of a package that also reauthorizes
the Community Health Centers Program and the Rural Health Care Programs.
The Senate July 21 approved the bill by unanimous consent [see Washington
Highlights, July 25].
The House June 8 approved its companion measure. The Consolidated
Appropriations Act of 2008 provided $123.5 million for the NHSC.
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
IRS Announces Upcoming Release of Form 990 Instructions
The Internal Revenue Service (IRS) Aug. 5 announced that it will
post instructions for Form 990 on the IRS website by Aug. 15. Among
the highlights of the redesigned Form 990 instructions is a revised
definition of "key employee." The new definition includes
the organization's top 20 individuals that make more than $150,000
per year and have influence or control similar to that of an officer,
director or trustee, or manage at least 10 percent of the organization's
activities. The release of the Form 990 instructions also will include
instructions for Schedule H, which must be completed by hospitals,
and Schedule K, Supplemental Information for Tax-Exempt Bonds. The
update and selected highlights of the instructions are available
on the IRS website.
Informaton:
Ivy Baer, Director & Regulatory Counsel
AAMC Health Care Affairs
ibaer@aamc.org
(202) 828-0490
GAO Issues Report on VA Information Technology
Infrastructure
The Government Accountability Office (GAO) July 31 released a report
(GAO-08-918) concluding that while "significant progress"
has been made by the Department of Veterans Affairs (VA) in strengthening
controls over information technology (IT) equipment at VA headquarters
organizations and medical centers, continued weaknesses in IT inventory
policies and management pose the risk of improper disclosure of
veterans' personal and medical information. The report notes that
the VA currently does not maintain a list of medical equipment with
data storage capabilities for physical IT equipment inventories.
A 4-month GAO audit of three geographically disparate VA health
care systems and VA headquarters organizations revealed continued
IT inventory inaccuracies, recordkeeping errors, a lack of user-level
accountability, knowledge of proper computer hard drive data removal
and disposal, and physical security deficiencies of IT storage areas.
Five recommendations provided in the report outline actions for
continued improvement of the overall control environment. Four of
these actions initially were approved by VA, while the VA originally
objected to a fifth recommendation to develop and oversee a list
of medical equipment capable of storing patient data for future
internal physical inventories of IT equipment. Upon further clarification
that the recommendation would not require reclassification of medical
equipment with data storage capabilities as IT equipment, the VA
agreed to this recommendation as well.
Informaton:
Will Dardani, Constituent Services Specialist
AAMC Health Care Affairs
wdardani@aamc.org
(202) 828-0541
Senators Introduce Comparative Effectiveness Legislation
Senate Finance Committee Chair Max Baucus (D-Mont.) and Senate
Budget Committee Chair Kent Conrad (D-N.D.) July 31 introduced the
"Comparative Effectiveness Research Act of 2008" (S.
3408), which according to its sponsors,
would mark a first step in "making our health care system smarter
and more effective."
The bill establishes the Health Care Comparative Effectiveness
Research Institute, a private, non-profit corporation that would
identify and carry out priority, peer-reviewed research projects
evaluating the clinical effectiveness of medical treatments, services,
and other preventive or diagnostic tools and processes. The Institute
would be financed by a "Comparative Effectiveness Research
Trust Fund" (CERTF). The bill authorizes CERTF funding levels
for fiscal year (FY) 2009 ($5 million), FY 2010 ($25 million), FY
2011 ($75 million), and FYs 2012-2018 ($75 million annually). Effective
FYs 2012 - 2018, the CERTF also would receive funding from the Medicare
Part A and Part B trust funds, as well as assessments placed on
private health plans.
The measure permits the Institute to contract with federal agencies
such as the Agency for Healthcare Research and Quality (AHRQ) or
with private sector research entities to conduct the research in
accordance with pre-determined methodological standards. Governed
by a 21-member Board including the Secretary of Health and Human
Services, the Director of AHRQ, the Director of the National Institutes
of Health (NIH), and 18 other members appointed by the Comptroller
General, the Institute would be required to submit annual reports
to Congress, the President, and the public, and would be evaluated
by the Government Accountability Office (GAO).
The bill has been referred to the Finance Committee. Additional
information, including a summary
prepared by Senate staff, is available on the committee website.
Information:
Christiane Mitchell, Director, Federal Affairs
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
Tannaz Rasouli, Senior Legislative Analyst
AAMC Government Relations
trasouli@aamc.org
(202) 828-0525
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