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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

AAMC Comments on FY 2016 IPPS Proposed Rule

June 19, 2015The AAMC submitted a June 16 letter on CMS’ fiscal year (FY) 2016 hospital inpatient prospective payment system (IPPS) proposed rule, commenting on proposed reductions to Medicare disproportionate share hospital (DSH) payment changes and uncompensated care (UC) payment reductions; Medicare payments for short inpatient hospital stays and the Two Midnight Rule; proposals related to the hospital quality programs; and CMS’ request for feedback regarding the potential expansion of the Bundled Payments for Care Improvement Initiative (BPCI).

The rule includes proposals to implement Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) required changes that reduce and redistribute as uncompensated care (UC) payments 75 percent of the pool of funds that hospitals would have otherwise received as Medicare DSH payments. To continue this process, CMS proposes to decrease Medicare DSH payments by $1.28 billion in FY 2016. The AAMC calls the reduction an “unsustainable cut for the hospitals serving the many remaining uninsured patients even after the implementation of the ACA, particularly given that many states have chosen not to expand Medicaid coverage.”

The AAMC expresses concerns about the projections and estimates CMS uses as a basis for drastic reductions to the UC payment pool and strongly urges CMS to make the projections and estimates transparent and verifiable. Additionally, CMS should use all of its available authority to implement these cuts in a manner that is more gradual and sustainable, because they disproportionately affect teaching hospitals and safety net hospitals that routinely provide medically necessary services to all comers in keeping with their missions.

The AAMC strongly encourages CMS to use the calendar year (CY) 2016 Outpatient Prospective Payments Systems (OPPS) rulemaking cycle to withdraw the Two Midnight rule for stays lasting fewer than two midnights. The letter highlights challenges and fundamental flaws associated with the policy that have been expressed by both the Medicare Payment Advisory Commission’s (MedPAC’s) analysis and recommendations and by the provider community’s repeated requests for relief from its onerous effects.

The letter explains, “This policy and the physician order and certification requirements finalized with it have caused substantial provider and beneficiary confusion, inadequate payment for medically necessary services, and countless operational challenges.” And further urges CMS to “withdraw the Two Midnight rule as it applies to short inpatient hospital stays or respond to stakeholder requests for a viable alternative short stay policy that ensures clinically necessary short inpatient stays are characterized as inpatient for the purposes of reimbursement and beneficiary liability.”

The AAMC additionally comments on the hospital performance and reporting programs, including proposed changes to the value-based purchasing program (VBP), hospital readmissions reduction program (HRRP), hospital acquired conditions reduction program (HACRP), and inpatient quality reporting (IQR) program. As an overarching comment, the AAMC reiterates concerns that the three performance programs disproportionately penalize teaching hospitals compared to other types of hospitals and cited limitations in the quality measures used in the programs.

The AAMC argues against finalizing the proposed expansion of the pneumonia readmissions and mortality measures, which would expand the cohort to include patients with a primary diagnosis of aspiration pneumonia and those with a primary diagnosis of sepsis or respiratory failure and secondary diagnosis of pneumonia. The letter cites the lack of National Quality Forum endorsement and insufficient risk-adjustment for hospitals that serve higher levels of patients with these conditions. Finally, the AAMC recommends against a proposal that hospitals be required to electronically submit certain measures starting in CY 2016.

In response to CMS’ request for input regarding a potential future expansion of the Bundled Payments for Care Improvement Initiative (BPCI), the letter provides substantive feedback informed by AAMC’s role as a convener facilitator for institutions participating in the BPCI pilot program.

The AAMC supports the voluntary expansion of the BPCI and does not believe that CMS has the statutory authority to mandate participation in BPCI. If BPCI expansion is implemented through rulemaking, the letter urges CMS to use a payment model that includes the index hospitalization and post-acute care to incentivize coordination among providers across the care continuum.

Additionally, CMS should utilize benchmark price and rebasing methodologies that ensure the long-term sustainability of the program by enabling participating providers to continue to pursue efficiencies and realize savings across multiple performance periods. The AAMC expresses support for continued exclusion of indirect medical education (IME) and DSH payments from the target amount.

The letter further addresses proposals related to the MS-DRG documentation and coding adjustment, outlier payments, eliminating the simplified cost allocation methodology, and the use of non-standard cost center codes.

Contact:

Scott Wetzel, M.P.P.
Lead, Quality Reporting
Telephone: 202-828-0495
Email: swetzel@aamc.org

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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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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org