Washington Outlook

August 6, 2010

A hard-won victory was achieved this week by the hospital community as senators head into their August recess after completing action on the second major health program extension measure this year. Final passage is expected next week by the House, which is being called back into session to vote on the bill that will provide enhanced Medicaid matching funds for states.

Hospitals, however, are faced with new challenges with the release of the final inpatient payment rule for fiscal year 2011 in which the Centers for Medicare & Medicaid announced it is proceeding with its coding and documentation adjustment as proposed. Overall, hospitals will see their inpatient payments decrease by an average of 0.4 percent. Other efforts to ensure adequate funding for hospitals become even more critical, and Premier is working with a group of bipartisan lawmakers who are championing a legislative fix to a problem created in the final rule providing Medicare and Medicaid electronic health records (EHR) incentives that disallows multi-campus hospitals from receiving separate payments for each facility.

The House and Senate are scheduled to return from their district work periods on September 13. Expect the next edition of Washington Outlook when Congress reconvenes. In the meantime, Premier Advocacy will continue to keep you updated on any noteworthy legislative or regulatory developments through Flash Updates.

Senate passes legislation providing enhanced FMAP funding; House to reconvene next week to hold vote

In a victory for Premier hospitals, the Senate voted 61-39 to approve H.R. 1586, legislation that includes a six-month extension (through June 2011), at a reduced rate, of the temporary enhanced Federal Medical Assistance Percentage (FMAP) funding provided to states under the American Recovery and Reinvestment Act (ARRA). Senators Susan Collins (R-ME) and Olympia Snowe (R-ME) joined all Democratic senators in voting for the bill. While the House recessed last week, House Speaker Nancy Pelosi (D-CA) and Majority Leader Steny Hoyer (D- MD) announced that they will reconvene next Monday and Tuesday to vote on the bill. The House is expected to pass the measure and send it to the president for his signature.

Under the legislation, which is fully offset, the supplemental funding would be extended at a scaled-back rate, from the 6.4 percent for six months included in ARRA to 3.2 percent from January to March 2011 and 1.2 percent from April through June 2011. Additional funding percentages will still be available to states with high unemployment rates during the time period of the extension.

This achievement is largely a result of Premier members and other hospitals’ tireless efforts urging senators to vote for this bill that is crucial to hospitals—particularly for those in states that have already factored an FMAP extension into their budgets and are depending on the funds.

CMS releases final FY 2011 hospital inpatient PPS rule

The Centers for Medicare & Medicaid Services (CMS) on July 30 released its fiscal year (FY) 2011 Medicare inpatient prospective payment system (IPPS) interim final rule. The rule reflects policies for FY 2011, including those mandated by the Patient Protection and Affordable Care Act (PPACA), which will reduce hospital payments on average by -0.4 percent.

CMS revised its estimated market basket update for hospitals that report quality data in FY 2011 from 2.4 percent in the proposed rule to 2.6 percent in the final rule. Applying the -0.25 percent reduction in the market basket mandated in PPACA, the payment update is 2.35 percent for FY 2011.

On top of the PPACA reduction, CMS finalized a -2.9 percent adjustment to base FY 2011 inpatient rates to recoup half of the effect of documentation and coding changes remaining as a result of the implementation of Medicare-severity diagnosis-related groups (MS-DRGs) in 2008 and 2009. CMS indicated the other half of the recoupment adjustment would occur in FY 2012. The hospital specific rates for Medicare dependent and sole community hospitals will also be reduced by 2.9 percent.

“CMS’s decision to apply a documentation and coding adjustment of 2.9 percent in FY11 is incorrect and inappropriately cuts payments to such a degree that patient care could be put at risk,” said Blair Childs, Premier senior vice president of Public Affairs in a statement released to the press. “Numerous analytical studies, including Premier’s, show that CMS’ methodology for determining this payment reduction is flawed. A significant portion of the payments CMS attributes to changes in documentation and coding are actually due to hospitals’ treatment of more complex and severely ill patients.”

CMS is accepting comments relating to the section of the interim final rule that implements changes to the “72 hour rule,” mandated by the recently passed Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010. As required by statute, the rule limits the ability of hospitals to unbundle therapy-related services within 72 hours of an admission to only those services that are unrelated to the admission. The rule also tightens the definition of "unrelated" services, which will require hospitals to bundle more services than is current practice.

As proposed, CMS is adding the following eight existing hospital-acquired condition (HAC) categories to the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program for FY 2012 payment determination:

Foreign Object Retained After Surgery
Air Embolism
Blood Incompatibility
Pressure Ulcer Stages III & IV
Falls and Trauma: (Includes: Fracture, Dislocation, Intracranial Injury, Crushing, Injury, Burn, Electric Shock)
Vascular Catheter-Associated Infection
Catheter-Associated Urinary Tract Infection (UTI)
Manifestations of Poor Glycemic Control

CMS brings the total number of measures in the RHQDAPU program to 55 for FY 2012 payment determination. This includes retiring one measure—the AHRQ Mortality for Selected Surgical Procedures Composite—and retaining the other 45 quality measures. However, hospitals will also begin reporting an additional two measures in FY 2011 for payment determination in FY 2013: 1) AMI-10 Statin at Discharge, a chart-based measure; and, 2) Central Line Associated Blood Stream Infection (NQF #0139), which hospitals must report through the Center for Disease Control and Prevention (CDC)’s National Healthcare Safety Network (NHSN).

In addition to the eight HAC measures listed above, CMS adds two other claims-based measures:

PSI-11: Post-Operative Respiratory Failure
PSI-12: Post-Operative Pulmonary Embolism (PE) or Deep Vein Thrombosis (DVT)

CMS is revisiting its proposal to require hospitals to report measure sets through registries in FY 2011 based on concerns raised by commenters.

“Members of the Premier healthcare alliance commend CMS for reversing its proposal to require hospital quality reporting through proprietary registries provided to hospitals for a fee,” said Childs. “While this is an important step, CMS should ensure for the future that all measures tied to payment are transparent and publicly available. Without this transparency, CMS risks creating de facto monopolies, requiring hospitals to spend substantial sums to access proprietary registries in order to qualify for payment.”

A CMS fact sheet and press release is available on the agency’s website.

A Premier summary and further analysis of the inpatient interim final rule are forthcoming.

Effort to fix EHR multi-campus hospital issue underway

With the Department of Health and Human Services finalizing a provision in the electronic health records (EHR) “meaningful use” rule that prevents some multi-campus hospitals from receiving individual EHR incentives, lawmakers are seeking a legislative solution to change the policy. Although the final rule contains a series of modifications to the agency’s original proposal – including those that give providers some flexibility in meeting performance metrics – the final rule failed to address the concerns of the hospital community over the multi-campus hospitals issue.

Last week, Representative Zach Space (D-OH), along with chairmen and members of the House committees on Ways and Means and Energy and Commerce introduced a bill that would clarify that EHR Medicare and Medicaid incentive payments should go to each campus of a multi-campus hospital system consisting of a main provider hospital and one or more remote location hospitals, even if they share the same Medicare provider number. The “Electronic Health Record Incentives for Multi-Campus Hospitals Act of 2010” (H.R. 6072) would give multi-campus hospitals the choice of either a base payment for each campus, but only one per-discharge amount, or additional per-discharge amounts for each campus, but only one base payment.

In a July 27 Energy and Commerce Health Subcommittee hearing, a number of Subcommittee members, while acknowledging the potential that health IT has to modernize and improve patient care, conveyed the concerns of many providers within their respective home states and Congressional districts regarding the treatment of multi-campus hospitals. During the hearing, Rep. Space noted that one hospital in his district has estimated that the hospital stands to lose upwards of $2 million in incentive payments based on the adverse way in which the final regulation was written with respect to the treatment of multi-campus hospitals.

A fact sheet summarizing H.R. 6072 is available. The bill currently has 30 cosponsors, including 28 Democrats and two Republicans. Premier mobilized its hospital and health systems to encourage their legislators to join as cosponsors of the bill. Senator Charles Schumer (D-NY) was joined yesterday by Senators John Kerry (D-MA), Tom Harkin (D-IA), Robert Menendez (D-NJ), Frank Lautenberg (D-NJ), Kristen Gillibrand (D-NY), Al Franken (D-MN), and Amy Klobuchar (D-MN) in introducing a Senate companion bill (S. 3708).

Premier releases summary of initial set of standards, implementation specifications, and certification criteria for EHR technology

Premier is pleased to share a detailed summary of the final rule that specifies the initial set of standards, implementation specifications, and certification criteria for electronic health record (EHR) technology. The Office of National Coordinator (ONC) put the final rule on public display on July 13. The certification criteria adopted in this initial set establish the capabilities and related standards that certified EHR technology will need to include in order to, at a minimum, support the achievement of the proposed meaningful use Stage 1 by eligible professionals, eligible hospitals and critical access hospitals under the Medicare and Medicaid EHR Incentive Programs (see the separate summary of the final rule on EHR meaningful use for further details).

Trustees announce Medicare solvency until 2029

The Medicare Hospital Insurance Trust Fund will be extended until 2029—12 years longer than reported last year—according to the Medicare Board of Trustee’s annual report released on August 5. The report attributes the improved outlook of the trust fund to the positive impact of the Patient Protection and Affordable Care Act (PPACA).

The Trustees note that the bulk of the projected savings from the implementation of PPACA will a result of the lower annual increases in Medicare payments to hospitals, skilled nursing facilities, home health agencies, and most other providers. However, Department of Health and Human Services Secretary Kathleen Sebelius indicated that, before next year’s Trustees report is released, a technical advisory panel would be convened to examine the assumptions on which the solvency projections are based—particularly whether the productivity gains that are assumed can actually be achieved by providers.

A fact sheet and press release on the 2010 Annual Social Security and Medicare Trustees Report is available on the CMS website.

Weekly legislative and regulatory round-up

The round-up for the week of July 31 - August 6, 2010 is available here.

The round-up for the week of July 17 - 23, 2010 is available here.