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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 2017 IPPS Proposed Rule

June 24, 2016— The AAMC June 17 submitted a comment letter to the Centers for Medicare and Medicaid Services (CMS) on the fiscal year (FY) 2017 Hospital Inpatient Prospective Payment System (IPPS) proposed rule.

The AAMC’s comments focus on the changes that would affect Medicare disproportionate share hospital (DSH) uncompensated care payments, especially the movement to Worksheet S-10; changes to payment rates based on incorrect reductions from 2014-2016 that were attributed to an increase in inpatient admissions; short inpatient hospital stays; an expansion in the number of years that an urban hospital has to build a cap for a rural training track; and revisions to the hospital quality programs.

The rule includes a proposal to rescind the 0.2 percent reduction implemented in FY 2014 based on estimates that the number of inpatient admissions would increase after implementation of the Two Midnight rule [see Washington Highlights, April 22]. The AAMC strongly opposed the 0.2 percent reduction and applauds CMS’s proposal. Additionally, the AAMC supports CMS’s proposal to implement a one-time increase of 0.6 percent to offset cuts made in FYs 2014-2016.

The AAMC continues to express concerns about the projections and estimates CMS uses as a basis for reducing the uncompensated care payment (UCP) pool and urges CMS to make the projections and estimates transparent and verifiable. The AAMC supports CMS’s proposal to use three cost reporting periods to calculate Factor 3 of the UCP in FY 2017. However, the association has a number of concerns related to the transition to the Worksheet S-10 starting in 2018 to calculate the UCP and requests that CMS delay the transition until all concerns are addressed and the S-10 data are audited. The letter also urges CMS to include direct graduate medical education (DGME) costs in the cost-to-charge ratio and audit the data for accuracy before using the Worksheet S-10 as a proxy.

Additionally, the AAMC expresses concern that the proposed negative 1.5 percent adjustment, an additional 0.7 percent from initial estimates in FY 2014, does not comply with Congress’s intent under the American Taxpayers Relief Act (ATRA, P.L. 112-240) and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10). The letter states, “Congress made clear that it did not intend for the recoupment provision to result in a permanent 0.7 percentage point reduction to IPPS rates.”

The association supports CMS’s proposal to expand from three to five years the amount of time an urban hospital with a rural training track has to build its FTE cap. This proposal will give urban hospitals with rural training tracks enough time to reflect the amount of residents that will train in the program once the program is established.

Furthermore, the AAMC commented on the hospital performance and reporting programs, including proposed changes to the value-based purchasing program (VBP), hospital acquired conditions reduction program (HACRP), hospital readmissions reduction program (HRRP), and the inpatient quality reporting (IQR) program. As an overarching comment, the AAMC notes its concerns that the three performance programs do not contain an adjustment for sociodemographic factors, thereby disproportionately penalizing teaching hospitals.

The AAMC strongly recommends that CMS not finalize inclusion of the modified PSI-90 composite in the HACRP for FY 2018. The modified PSI-90 measure has not yet been finalized for the IQR program, nor has the measure been publicly reported for at least one year, criteria the association holds must be met before including any measure in a performance program. The AAMC objects to the CMS proposal to shorten the PSI-90 performance period to 15 months, as such a short period would significantly reduce the reliability of the measure. The comment letter also cites concerns with two proposed efficiency measures for the VBP program, noting lack of sociodemographic adjustment and overlap with the Medicare Spending Per Beneficiary Measure.

The letter further addresses proposals to written requirements under the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE, P.L. 114-42).

Contact:
Ayeisha A. Cox, J.D.
Hospital Policy & Regulatory Specialist
Telephone: 202-828-0482
Email: aycox@aamc.org

Scott Wetzel, M.P.P.
Senior Specialist, Health Care Affairs
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