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AAMC Responds to Ways and Means’ Discussion Draft

December 19, 2014—The AAMC Dec. 19 submitted comments  on the House Ways and Means Subcommittee on Health’s discussion draft, the Hospital Improvements for Payment (HIP) Act of 2014 [see Washington Highlights, Nov. 21]. The draft legislation would address the “two-midnight” policy, create a new “hospital prospective payment system” (HPPS) for hospital short-term stays, and enact Recovery Audit Contractors (RAC) reform. The legislation also includes numerous hospital reform policy priorities introduced by House Ways and Means Committee members during the 113th Congress.

The AAMC’s comments offer full support for several provisions of the draft, including:

  • A repeal of the two-midnights 0.2 percent payment reduction which was included in the Inpatient Prospective Payment System (IPPS) 2014 final rule;
  • An extension of the Recovery Audit Contractor (RAC) audit moratorium including further extension to inpatient “short-term” discharges through fiscal year (FY) 2019;
  • Inclusion of the Establishing Beneficiary Equity in the Hospital Readmission Program Act (H.R. 4188) [see Washington Highlights, March 14]; and
  • The creation of a permanent and national bundled payment program, similar to the Center for Medicare and Medicaid Innovation’s (CMMI) Bundled Payment for Care Improvement (BPCI) program.

While commending the committee’s efforts to address the complex short-stay hospitalization policy, the letter “cautions against the creation of an entirely new payment system for short hospital stays, which would permanently alter the DRG (diagnosis-related groups) system.”

The AAMC rather suggests the following short-stay principles:

  • Recognition that a doctor’s assessment of medical necessity is the only reasonable standard for inpatient admission, rather than a time-based cut off;
  • Continued support for a balanced DRG system that does not penalize efficiency or disrupt the balance that underlines the entire system when addressing improper hospitalizations; and
  • Care setting must be thoughtfully considered when reimbursing clinical services at inpatient hospitals and outpatient offices.

The letter also points out several areas of serious concern, including the loss of add-on payments for indirect medical education (IME) and disproportionate share (DSH) payments, as part of the proposed HPPS. The comment letter states the proposed policy “will mean that IME and DSH funding will be significantly reduced and redistributed to providers that are not committed to training residents, providing specialized services, or to treating a large proportion of low-income patients.” It continues, “these funds should be directed toward entities that are clearly fulfilling the mission and purpose of the add-on payments. The AAMC strongly opposes re-distributing funds to other, non-teaching entities that are not accredited or prepared to fulfill these roles and believes this policy could negatively impact patient care across the nation.”

Finally, the letter also comments on the committee’s interest on RAC reforms, providing cost information on hospital payments to patients, and additional data collection regarding functional status assessment information on Medicare patients in post-acute care.


Len Marquez
Director, Government Relations
Telephone: 202-862-6281

Courtney Summers
Senior Legislative Analyst
Telephone: 202-862-6042


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806