Healthcare leaders offer direction on key CMS inpatient proposals for FY 2022

• Many healthcare professionals are concerned about several of the agency’s key proposals in the Proposed Fiscal Year 2022 Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals Policy Changes and Rates.
• Some of those proposals are the Repeal of the Market-based MS-DRG Data Collection and Weight Calculation, Hospital Wage Index Proposals: Low Wage Areas, and Redefining Medicare Organ Acquisition Costs and Reimbursement.
• Practicing healthcare experts must continue to engage and collaborate with federal and state policymakers to bridge the gaps between perceptions drawn from data analysis and the world in which patient care is practiced in real-time.

While most appreciate the support CMS has provided hospitals, healthcare workers and patients during the public health emergency, many healthcare professionals are concerned about several of the agency’s key proposals in the Proposed Fiscal Year 2022 Hospital Inpatient Prospective Payment System for Acute Care Hospitals Policy Changes and Rates. Concerns expressed include some about the following proposals:

• Repeal of the Market-based MS-DRG Data Collection and Weight Calculation
• Hospital Wage Index Proposals: Low Wage Areas
• Redefining Medicare Organ Acquisition Costs and Reimbursement
• Closing Gaps in Health Equity for Graduate Medical Education (GME) Programs

Repeal of the Market-based MS-DRG Data Collection and Weight Calculation

CMS is proposing to repeal the requirement that hospitals report the median payer-specific negotiated charge, by MS-DRG, that is negotiated with its Medicare Advantage payers for cost reporting periods ending on or after January 1, 2021. CMS is also proposing to repeal the market-based MS-DRG relative weight methodology that was adopted effective for FY 2024.

HFMA members applaud CMS for proposing to repeal the requirement that all hospitals report payer-specific negotiated charges for cost reporting periods ending on or after January 1, 2021. We are cautiously optimistic that this is not a temporary reprieve, and that CMS continues to remain consumer-focused when it comes to price transparency initiatives. HFMA and its members also commend CMS’s repeal of the market-based MS-DRG relative weight methodology that was adopted effective for FY 2024 and support the use of the cost-based MS-DRG relative weight methodology to set Medicare payment rates for inpatient stays for FY 2024 and subsequent fiscal years.

Hospital Wage Index Proposals: Low Wage Areas

For FY 2020 and at least three additional years, FY 2021-2023, CMS has proposed to reduce disparities in the Medicare AWI among hospitals that have a low AWI value by increasing the AWI for hospitals in the bottom quartile, which is to be funded by a decrease in the national standardized operating rate for all hospitals.

HFMA appreciates CMS’s recognition of hospitals with low wage rates but recommends an approach CMS supported in the past when buoying frontier states to an AWI of 1.0 through new funds. HFMA opposes CMS’s proposal to buoy AWI values for some hospitals only to be funded by a reduction to the standardized operating rate for other hospitals, especially when Medicare pays less than the cost of providing care in many cases. HFMA and other healthcare industry leaders have repeatedly expressed concern that Medicare’s wage index is flawed in many respects, including its accuracy, volatility and substantial reclassifications and exceptions. To date, a consensus solution to the wage index’s numerous shortcomings has yet to be proposed.

Redefining Medicare Organ Acquisition Costs and Reimbursement

CMS proposes that transplant hospitals must accurately track, count and report Medicare usable organs and total usable organs on their Medicare hospital cost reports to ensure that costs to acquire Medicare usable organs are accurately allocated to Medicare. For cost reporting periods beginning on or after October 1, 2021, CMS is proposing at (§413.408b) to narrow the definition of Medicare usable organs to include only organs transplanted into Medicare beneficiaries, organs for which Medicare has a secondary payer liability for the organ transplant, or pancreata procured for the purpose of acquiring pancreatic islet cells acquired for transplantation for Medicare beneficiaries participating in a National Institute of Diabetes and Digestive and Kidney Diseases clinical trial.

HFMA’s members strongly oppose CMS’s proposal to remove excised organs from the excising transplant hospital’s count of Medicare organs unless the excising transplant hospital can provide auditable documentation that the organ in question was transplanted into a Medicare beneficiary.

The access to organ recipient’s current insurance information that CMS describes in their proposal does not exist and it is highly unlikely that an Organ Procurement Organization or transplant hospital would share their recipient’s demographic information with a hospital that excised the organ due to patient privacy and HIPAA laws. HFMA respectfully asks CMS to ensure that Medicare beneficiaries and other individuals who require organ transplantation have access to these services by withdrawing the agency’s proposed change to the definition of Medicare organs that will jeopardize the solvency of many transplant programs.

Closing Gaps in Health Equity for Graduate Medical Education (GME) Programs

CMS proposes to implement sections 126, 127, and 131 of the Consolidated Appropriations Act (CAA) 2021 which addresses the distribution of additional residency slots, adjustments to the FTE caps for hospitals facilitating rural training tracks and adjustments to the per resident amount and FTE count for hospitals that host a small number of residents for short duration.

Overall, HFMA supports the agency’s effort to create additional Medicare funded residency training slots to address current and anticipated physician shortages. We request that CMS extend the five-year cap-building window for impacted hospitals by the length of the PHE plus the additional time needed to reach July 1, to align with the start date of the academic year when residency programs begin.

HFMA also respectfully requests the agency to expand the definition of hospitals that qualify for residency positions under Category Four to include those within ten miles of the border of the HPSA or expand Category Four to include population HPSAs rather than being limited to geographic HPSAs, which would satisfy PHSA section 332(a)(1)(A) and 332(a)(1)(B). 

HFMA respectfully requests that CMS withdraw its proposal to use population HPSA scores to prioritize applications for additional slots. For the FFY 2023 distribution, HFMA encourages CMS to use the alternative distribution methodology that prioritizes applicants for the additional slots created by section 126 of the CAA based on the number of categories the hospital qualifies. For FFY 2024 and beyond, HFMA encourages CMS to develop an alternative scoring factor to prioritize applications for receipt of additional residency slots. We ask CMS to consider collaborating with teaching hospitals and exploring a methodology that gives priority to applications seeking to create or expand programs in specialties that have the highest projected future physician shortfalls.

HFMA respectfully recommends that instead of limiting a qualifying teaching hospital to one FTE per year and requiring it to reapply each year for additional slots for the residency program that the agency tie the number of slots allocated in response to an application to the duration of the residency program the teaching hospital is creating or expanding.

Takeaway

Practicing healthcare experts must continue to engage and collaborate with federal and state policymakers to bridge the gaps between perceptions drawn from data analysis and the world in which patient care is practiced in real-time.

I encourage all health systems, providers, healthcare professionals and policy experts to continue working closely together to support stronger policies and bolder initiatives that will strengthen the health of our communities. Healthcare has gleaned a great deal of knowledge from the COVID-19 pandemic, let those lessons and momentum guide us to stronger health.

Link to full HFMA comment letter

HFMA’s full Proposed Fiscal Year Hospital IPPS comment letter can be found here.