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NAUH Comments on Proposed Medicare Inpatient Rule: Part 4 of 5

In April the Centers for Medicare & Medicaid Services published its proposed rule governing how it plans to pay hospitals for Medicare-covered inpatient services in FY 2017. The rulemaking process includes an invitation to stakeholders to submit comments on what CMS has proposed.

NAUH LogoNAUH submitted extensive comments in response to the proposed rule, addressing six aspects of what CMS proposed:

  • Medicare disproportionate share (Medicare DSH) payments
  • the Medicare hospital readmissions reduction program
  • inpatient rates
  • observation status/the two-midnight rule
  • the outlier threshold
  • reporting data for the Medicare area wage index

This week the NAUH blog presents NAUH’s comments. Our schedule is as follows:

  • Monday – objections to the proposed new methodology for calculating Medicare DSH uncompensated care payments
  • Tuesday – NAUH’s own proposed alternative methodology for calculating Medicare DSH uncompensated care payments
  • Wednesday – NAUH’s concern about the size of the proposed Medicare DSH uncompensated care pool
  • Thursday – the Medicare hospital readmissions reduction program
  • Friday – inpatient rates, observation status/the two-midnight rule, and the outlier threshold

Find NAUH’s complete comment letter here.

Medicare Hospital Readmissions Reduction Program

NAUH is disappointed that this year’s draft regulation does not include a proposal to reform the hospital readmissions reduction program.

For the past five years NAUH has responded to the proposed inpatient prospective payment system regulation by asking CMS to modify the readmissions reduction program to add a risk adjustment component based on our belief that the program, as currently constituted, is unfair to private urban safety-net hospitals and is harming them because it lacks such risk adjustment. While in the beginning NAUH was among the very few expressing such a concern, the passage of time has seen many come to share our view. MedPAC and the National Quality Forum feel the same way; scholarly articles in the New England Journal of Medicine, Health Affairs, and Health Services Research have echoed this view and presented research to support it; the U.S. Department of Health and Human Services’ own Agency for Healthcare Research and Quality shares this perspective as well. In March, the journal Health Affairs reported on the issue, highlighting a MedPAC proposal to address the challenge by “…grouping hospitals into peer groups based on their share of low-income Medicare patients and then set readmissions targets for each peer group. Put another way, hospitals with similar shares of low-income patients would be compared with each other instead of all hospitals” (“The Challenges Of Rewarding Value Over Volume Without Penalizing Safety-Net Hospitals,” March 20, 2016). And just last month, a study published in another important journal, JAMA Pediatrics, reached the same conclusion (“Explaining Racial Disparities in Child Asthma Readmission Using a Causal Inference Approach,” May 16, 2016).

Two years ago CMS invited public comment and recommendations on the subject. Despite this, despite the growing consensus that the readmissions reduction program is flawed and needs to be reformed, and despite the continual harm this program is causing to many private urban safety-net hospitals, this year’s proposed regulation does not call for any changes in the program. Unlike many other aspects of Medicare policy and health care reform, which are directed by Congress, CMS has the authority to address this problem on its own. We are disappointed that it did not do so this year through the proposed FY 2017 inpatient prospective payment system regulation and urge you to act on this important matter in time for reforms to be introduced when FY 2017 begins on October 1.

NAUH LogoNAUH urges CMS to introduce socio-economic risk adjustment to the readmissions reduction program beginning in FY 2017. The current program treats private urban safety-net hospitals and other safety-net providers unfairly, a conclusion now supported by numerous quality, credible scholarly studies as well as by MedPAC. Adding socio-economic risk adjustment would correct that unfairness while maintaining the integrity of the program and preserving its valuable and important objectives.

Find NAUH’s complete comment letter here.

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