GIBBONS, Kathryn--PA

June 29, 2009 Charlene Frizzera Acting Administrator The Centers for Medicare & Medicaid Services Hubert H. Humphrey Building 200 Independence Avenue, S.W., Room 445-G Washington, DC 20201 RE: CMS-1406-P, Medicare Program; Proposed Changes to the Hospital Inpatient Prospective Payment System for Acute Care Hospitals and Fiscal Year 2010 Rates; and to the Long-Term Care Hospital Prospective Payment System and Rate Year 2010 Rates; Proposed Rule (Vol. 74, No. 98), May 22, 2009 Dear Ms. Frizzera: On behalf of St. Luke's Hospital & Health Network we appreciate this opportunity to comment about the Centers for Medicare & Medicaid Services’ (CMS) hospital inpatient prospective payment system (PPS) proposed rule for federal fiscal year (FFY) 2010. While we support a number of the proposed rules, we have major concerns as outlined in our comments below. MS-DRG DOCUMENTATION AND CODING ADJUSTMENT The proposed rule includes a 1.9 percent cut to both operating and capital payments during fiscal year (FY) 2010 and beyond—$23 billion during ten years— to correct the base rate for payments made during FY 2008 that CMS claims are the effect of documentation and coding changes that do not reflect real changes in case mix. In combination with other policy changes, this cut results in hospitals being paid $1 billion less during FY 2010 than during FY 2009. In its analysis of documentation and coding changes, CMS concludes that, from FY 2007 to FY 2008, there was a decline in real case mix. In contrast, the Hospital Association of Pennsylvania (“HAP”) has found through its research that there is a historical pattern of steady annual increases of 1.2 to 1.3 percent in real case mix, and we are concerned that CMS’ conclusion is incorrect. Given the severity of the 1.9 percent proposed cut, and in light of the fact that HAP’s research shows real increases in patient severity, we request that CMS significantly mitigate its proposed documentation and coding cut. This 1.9% reduction left unchanged will have a ($2,780,000) negative impact on operations for St. Luke's Hospital & Health Network. HOSPITAL MARKET BASKET As required by law, CMS proposes to rebase the market basket from FY 2002 to FY 2006, and revise certain categories and price proxies. However, the projected increase in the market basket could be extremely volatile this year. While the country recently has experienced a period of very low inflation, funds from the American Recovery and Reinvestment Act of 2009 are beginning to work their way into the economy, and the country is beginning to see signs of recovery. CMS is required to revise the weights used in the hospital market basket every four years to reflect the most current data available, but CMS is not required to modify the price proxies used in the market basket calculation. We recommend that CMS only rebase the data and weights used in the market basket calculation, and not to revise the price proxies used in the calculation. Doing so will result in a more stable estimate of the increase in the market basket and demonstrate forbearance given the economic volatility that has occurred, and may be yet to come. This proposed rule has a ($700,000) negative effect on St. Luke's Hospital & Health Network’s acute care services. WAGE INDEX The proposed rule discusses using wage data from the Bureau of Labor Statistics (BLS), so that the MedPAC approach can be implemented. There are challenges and limitations involved with using BLS data, including but limited to: • The BLS develops wage data for a particular occupation from all employers, not just short-term, acute care hospitals participating in the Medicare program. Wage rates, however, vary depending on the type of employer and the mix of employers by market. • Wages paid by companies that offer temporary employees to health care providers are included in the BLS sample. However, their wages reflect the lower rate that the employees are paid by the agency, as opposed to what hospitals pay to the agency for the contracted workers. In addition, there are employee wages included in the current CMS data that are not included in the BLS data, such as Part A physicians’ time unrelated to medical education. • BLS has a strict confidentiality policy; as such, how would hospitals be able to verify the accuracy of the data? • Every six months, BLS surveys 200,000 establishments (a panel), building the full sample of 1.2 million unique establishments during a three-year period. These data are inflated to a certain month and year using a “single national estimate” of wage growth for broad occupational divisions. This approach fails to account for any differences in wage growth between markets during the three-year period. • While CMS collects wage data for a 12-month period, the BLS survey captures only two payroll periods per year, each capturing data from one-sixth of the total number of sampled establishments. • BLS excludes shift differentials, overtime pay, and jury duty—all of which CMS includes. • Full- and part-time employees are equally weighted in BLS’ data. • Estimates using a sampling methodology like the BLS approach are subject to sampling error, and will be less reliable than using the entire universe of PPS hospitals, as CMS does. OTHER PROPOSALS ? We oppose the elimination of the indirect medical education adjustment to capital payments which reduces payments to Pennsylvania teaching hospitals by $25 million during FY 2010. The proposed 2010 rule eliminates 100% of the indirect medical education for capital, dropping reimbursement for St. Luke's Hospital by ($576,000) from that of FY 2009 levels. ? We oppose the application of a cumulative retroactive budget neutrality adjustment to the FY 2002-based Medicare-dependent hospitals. This proposal will reduce annual payments (at a minimum) by ($112,000) for our Miners Memorial Hospital. We appreciate the opportunity to submit these comments and recommendations. If you have questions, or would like to discuss these comments in more detail, please contact me at (610) 954-3093. Sincerely, Kathryn Gibbons Director of Reimbursement & Financial Planning Cc: Francine Botek, Vice President, Finance