HAP Resource Center

Comment Letter: CMS, Inpatient Prospective Payment System Proposed Rule for 2020

June 24, 2019

Ms. Seema Verma, Administrator
Centers for Medicare & Medicaid Services
U.S. Department of Health and Human Services Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Washington, DC 20201

SUBJECT: CMS-1716 -P. Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2020 Rates; Proposed Quality Reporting Requirements for Specific Providers; Medicare and Medicaid Promoting Interoperability Programs Proposed Requirements for Eligible Hospitals and Critical Access Hospitals; Proposed Rule, May 3, 2019

Dear Administrator Verma:

On behalf of The Hospital and Healthsystem Association of Pennsylvania (HAP), which represents approximately 240 member institutions, we appreciate the opportunity to comment about the Centers for Medicare & Medicaid Services’ (CMS) hospital inpatient prospective payment system proposed rule for fiscal year (FY) 2020.

HAP supports many of the payment and policy proposals contained within the proposed rule and is pleased to see CMS continue its efforts to reduce the administrative burdens often associated with its quality programs.

HAP continues to have significant reservations related to the proposals for disproportionate share hospital payment changes, area wage index modifications, and the impact this will have on hospitals in Pennsylvania.

Thank you for your consideration of HAP’s comments regarding this proposed rule. If you have any questions, contact Kate Slatt, senior director, health care finance policy, at (717) 561-5317.



Jeffrey Bechtel
Senior Vice President, Health Economics and Policy


HAP Comments—Inpatient Prospective Payment System Proposed Rule for Calendar Year 2020


As required by Section 3133 of the Affordable Care Act (ACA), beginning in fiscal year (FY) 2014, eligible hospitals receive 25 percent of the Medicare Disproportionate Share Hospital (DSH) payments they would have received had the ACA not been enacted. Section 3133 refers to these payments as “empirically justified Medicare DSH payments.” The remaining 75 percent of Medicare DSH payments, referred to as “uncompensated care payments,” are reduced by the percentage change in the number of uninsured individuals from FY 2013 and distributed to each hospital eligible for Medicare DSH based on its share of national uncompensated care costs.

During FY 2018, CMS began incorporating cost report Worksheet S-10 data on hospital charity care and bad debt into the determination of the amount of uncompensated care each hospital provides. CMS phased in the use of the S-10 data during the past two years, using data from a rolling three-year period to estimate uncompensated care payments. CMS states that a three- year average was utilized during the phase-in of S-10 to smooth over anomalies between cost reporting periods and mitigate undue fluctuations in uncompensated care payment amounts from year to year. However, for FY 2020, CMS proposes to use a single year of cost report data, and requests comments about the specific year it should use, further described below.

FY 2015 versus FY 2017 Cost Report

In the FY 2019 Inpatient Prospective Payment System (IPPS) final rule, CMS stated that it would conduct audits on Worksheet S-10 data. Subsequently, Medicare Administrative Contractors (MAC) carried out audits on FY 2015 cost reports for a group of DSH hospitals representing more than half of uncompensated care payments for FY 2020. In the FY 2020 proposed rule, CMS proposes utilizing the FY 2015 cost report data to determine the distribution of uncompensated care payments, both in light of the recent audits and also because FY 2015 data are the most recent data for which resubmission has been allowed.

CMS acknowledges that, during the audit process, concerns were raised by some hospitals regarding the cost report instructions in effect for FY 2015. As a result, CMS seeks comments on whether Worksheet S-10 data from FY 2017 cost reports should be used instead of FY 2015 cost reports to determine uncompensated care amounts.

HAP strongly opposes the use of the FY 2017 cost report data. First and foremost, this data is unaudited. It w ould be reckless of CMS to distribute payments that are so critical to hospitals based on data that has not been verified. In Pennsylvania, use of the unaudited 2017 data w ould result in a loss of $43 million in DSH payments. Nearly one-third of our hospitals reported negative margins during FY 2018 . With all the financial threats looming, this significant payment reduction is something that hospitals simply cannot absorb, and it could directly reduce access to care for many of the most vulnerable citizens across the state.

Data Concerns

HAP recognizes CMS’ efforts to improve the clarity of the Worksheet S–10 instructions, make changes in policy to allow for uninsured discounts, and afford hospitals the opportunity to update their data. However, we remain very concerned that absent a uniform and systematic audit of the data, CMS continues to make more than $8 billion dollars in uncompensated care payments to hospitals based on data that is not yet reliable or valid for purposes of payment.

While we understand CMS’ goal to fully transition to using Worksheet S–10 data, HAP strongly urges the agency to continue its w ork to accurately capture hospital uncompensated care costs used in the calculation of Medicare DSH paymentsSpecifically, HAP urges CMS to:

  1. ) Continue to improve the Worksheet S– 10 form instructions ,w hich are still w idely misunderstood by hospitals and have resulted in aberrant and incorrect data reporting
  2. ) Audit all hospitals’ S– 10 data in a uniform and consistent manner to ensure accurate data reporting. CMS should publish the audit protocols in advance and subsequently review the audit findings to ensure consistent application by MACs nationw ide

HAP strongly urges CMS to continue to work with the field in investing the resources necessary to improve the accuracy of this data. CMS should provide ongoing educational resources to hospitals in the form of conference calls, webinars, and frequently asked questions documents.

Worksheet S-10 data is now a source of uncompensated care data for all hospitals. It is a publicly available, downloadable, and relatively easy dataset to work with. It will be accessed by various stakeholders, the media, researchers, state and federal agencies and others. Hospitals and CMS must work together to ensure its accuracy as the current variation in the data is, in our view, unexplainable. CMS must make this an agency priority and dedicate the resources to undertake this work.


The area wage index adjusts payments to reflect differences in labor costs across geographic areas. For FY 2020, CMS proposes to use data from FY 2016 cost reports to determine the area wage index.

Modifications to Wage Index Values for Low-wage and High-wage Hospitals

CMS proposes to increase wage index values for low-wage hospitals. Specifically, for hospitals with a wage index value below the 25th percentile, the agency proposes to increase the hospital’s wage index by half the difference between the otherwise applicable wage index value for that hospital and the 25th percentile wage index value for all hospitals. The agency also would decrease the wage index for hospitals with values above the 75th percentile to make this policy budget neutral. Specifically, for hospitals with a wage index value above the 75th percentile, the agency proposes to reduce the hospital’s wage index by a set percentage of the difference between the otherwise applicable wage index value for that hospital and the 75th percentile wage index value for all hospitals. CMS proposes that this policy be effective for at least four years, beginning during FY 2020.

Because the methodology is based on quartiles, approximately 25 percent of hospitals will experience an increase in their wage index, 25 percent will experience a decrease, and 50 percent will experience no change due to this policy.

Cap on Decrease in Wage Index from FY 2019 to FY 2020

CMS also proposes to cap any decrease in a hospital’s final wage index in FY 2020 compared to its final wage index during FY 2019 at five percent. This provision is not specific to changes in wage index due to particular policy proposals. Instead, it would ensure that a hospital’s FY 2020 final wage index value would be no less than 95 percent of its final wage index for FY 2019. CMS proposes to make this provision budget neutral through an adjustment to the standardized amount.

The area wage index is intended to recognize differences in resource use across types and location of hospitals. Hospitals, Congress, and Medicare officials have repeatedly expressed concern that the wage index is flawed in many respects. HAP recognizes the need to address low w age index values. How ever, improving w age index values for some hospitals, while much needed, by cutting payments to other hospitals, particularly when Medicare already pays far less than the cost of care, is unacceptable. CMS has the ability to provide needed relief to low -wage areas without penalizing high-wage areas. If CMS chooses to adjust wage index values, the agency should allocate additional funds for this purpose.


Currently, the IPPS provides for a new technology add-on payment (NTAP) for high-cost cases utilizing new medical services or technology. In order to qualify for the add-on payment under the IPPS, regulations specify three criteria that must be met:

  1. The medical service or technology must be new.
  2. The medical service or technology must be costly such that the diagnosis-related group (DRG) rate would otherwise be applicable to discharges involving the medical service or technology is determined to be inadequate.
  3. The service or technology must demonstrate a substantial clinical improvement over existing services or technologies.

The current rate of payment is set at the lesser of 50 percent of the marginal cost of a case or 50 percent of the cost of the technology.

In the proposed rule, CMS acknowledges that the current rate for setting the maximum add-on percentage at 50 percent may not be adequate for certain transformative technologies. The rule proposes increasing the maximum add-on payment beginning during FY 2020 from 50 percent to 65 percent.

The rule also seeks comments related to potential revisions to the substantial clinical improvement criterion used to evaluate applications for new technology add-ons. Recent stakeholder feedback has indicated a desire for guidance and clarity specific to this criterion to provider greater predictability about which applications will meet the criterion.

There are currently 13 technologies receiving the add-on payment. CMS is proposing the removal of three technologies as they will no longer be in their newness period during FY 2020, and presents 17 new applications for the add-on. Two technologies continuing with the add-on are payment for types of chimeric antigen receptor (CAR) T-cell therapy.

HAP is pleased w ith the short-term proposal to reduce the financial burden for hospitals and health systems providing these life-saving therapies. Specific to CAR T-cell therapy, HAP supports the proposal to continue assigning CAR T-cell therapy to MS-DRG016 and continuing the NTAP during FY 2020. HAP encourages CMS to consider a permanent solution to address the extraordinary cost of this therapy but urges caution to ensure the methodology to determine the cost of the therapy is captured accurately and includes consideration of the average sales price. HAP also notes that future payment for CAR T-cell therapy must include independent medical examination (IME) and DSH as required by statute.


Under the Promoting Interoperability Program, hospitals that are not identified as meaningful Electronic Health Record (EHR) users are subject to a reduction of 2.4 percentage points in the update factor for FY 2020.

The current policy for reporting periods requires a minimum of any continuous 90-day period for 2019 and 2020. CMS is proposing to apply the same continuous 90-day reporting period during 2021.

HAP supports CMS efforts to focus on increasing meaningful health information exchange in an effort to increase the quality of care provided to patients.

HAP is supportive of the CMS proposal to continue utilizing a reporting period of any continuous 90-day period for calendar year (CY) 2021 to support the stability of the program.


Hospital Readmissions Reduction Program (HRRP)

The HRRP seeks to reduce readmissions in six clinical areas including acute myocardial infarction, heart failure, pneumonia, total hip arthroplasty/total knee arthroplasty, chronic obstructive pulmonary disease, and coronary artery bypass surgery by imposing a penalty of up to three percent of base IPPS payment for having readmissions exceeding an expected level.

CMS is proposing four policy updates:

  • New measure removal policy—The rule proposes adopting the same set of eight factors CMS uses to determine if a measure should be removed from programs like the inpatient quality reporting (IQR) the hospitals value based payment (VBP) program, and other hospital quality reporting programs.
  • Performance periods for upcoming fiscal years—Consistent with current policy, CMS proposes a three-year applicable period from July 1, 2017, through June 30, 2020 for the FY 2022.
  • One-month look back for determining a patient’s dual-eligible status—CMS proposes to modify the definition of dual-eligible to avoid undercounting the dual eligible status of beneficiaries who die within the month of a hospital discharge beginning during FY 2021.
  • Sub-regulatory process for making non-substantive changes to program—CMS proposes to mirror the existing sub-regulatory process that currently exists for making changes to HRRP measures, to make changes to other components of the HRRP.

HAP supports CMS’ efforts to continually assess the appropriateness of the measures associated w ith the HRRP and its willingness to retire measures that no longer meet the stated goals of the program. HAP, aligning with the American Hospital Association (AHA), suggests exploring the use of empirical criteria when examining “topped out” performance.

HAP also supports the use of a process for sub-regulatory changes to the program to enable CMS the flexibility it needs to administer the program but requests written clarification on the definitions and criterion CMS intends to use to determine if a policy change is “non-substantive.”

Hospital Value-Based Purchasing

The VBP program is funded by reducing participating hospitals’ base rates by two percent. The rule proposes no changes to the measures or the methodology in the program, however, it does propose utilizing the same data to calculate the National Healthcare Safety Network (NHSH) health care-associated infections (HAI) measures for the VBP program that it currently utilizes for the Hospital-Acquired Condition (HAC) Reduction Program beginning with data collection on January 1, 2020, for the FY 2022 VPB program performance period.

HAP supports the proposal to align the data sources for measurement of the NHSH HAI measure across the VBP and HAC programs.

HAC Reduction Program

The HAC program reduces payment to hospitals that are in the worst performing quartile as measured by the HAC measure set by one percent.

Like the proposal included in the HRRP, CMS is proposing to adopt the same set of eight factors CMS uses to determine if a measure should be removed from programs like IQR Program, the hospital VBP Program, and other hospital quality reporting programs.

The rule also proposes changes to the data validation process for the HAI measure. Currently, each year, CMS randomly selects 400 hospitals for validation of both the HAI measure in the HAC and chart-abstracted measures from the hospital IQR. An additional 200 hospitals are selected for “targeted” validation for the same measures.

Two proposed changes to the validation process include:

  • Allowing CMS to select “up to” 200 hospitals for the targeted validation
  • Updating the “filtering” criteria it uses to select cases from each hospital to remove positive blood or urine cultures that are obtained on the first or second day following hospital admission

As stated above, HAP supports the adoption of criteria to determine if and w hen measures should be removed from the HAC reduction program.

HAP also supports efforts to minimize hospital burden by applying appropriate filters which w ould reduce the number of cases requiring validation that were community-acquired infections rather than hospital-acquired infections HAIs.

IQR and Electronic Clinical Quality Measure (eCQM) Reporting

The IQR Program is a pay-for-reporting program. Failure of hospitals to meet the required program requirements reduces payment to hospitals equal to one quarter of the annual market basket update.

The rule proposes:

  • Removing the Claims-Based Hospital-Wide All-Cause Readmission measure and replacing it with the proposed Hybrid Hospital-Wide All-Cause Readmission (Hybrid HWR) Measure with Claims and Electronic Health Record Data measure requiring reporting beginning with the FY 2026 payment determination after two years of voluntary reporting of the Hybrid HWR measure; and establishing reporting and submission requirements for the hybrid measure
    • Adopting two new opioid-related eCQMs beginning with the calendar year (CY) 2021 reporting period/FY 2023 payment determination:
      • Safe Use of Opioids—Concurrent Prescribing eCQM
      • Hospital Harm–Opioid-Related Adverse Events eCQM

While providers have long argued that claims data only is an insufficient way to measure outcomes, the introduction of a required hybrid measure may be premature. Hospitals are at varying levels of sophistication related to connectivity. The proposed measure also requires the reporting of a significant number of data elements including 13 core clinical data elements and six “linking” variables. HAP encourages CMS to continue w ith the voluntary nature of the hybrid readmission measure while evaluating the usefulness of all of the required data elements and ensuring hospitals have the appropriate amount of time to prepare prior to mandating the measure.

Pennsylvania has been particularly affected by the opioid crisis. The state’s Governor has declared a “state of emergency” related to the epidemic. Recognizing that policymakers are urgently seeking solutions to address the opioid crisis, policies must be fully considered for the consequence of implementation, including the operational adoption and practical impact. HAP is supportive of the inclusion of opioid-related metrics in the future after they are thoroughly vetted and endorsed by the National Quality Forum (NQF). While HAP can support the introduction of Safe Use of Opioids-concurrent prescribing, HAP does not support inclusion of the proposed metric related to opioid-related adverse events until it is endorsed by NQF.

CMS also is proposing three changes for reporting eCQMs. These proposals align with the Promoting Interoperability Program’s Clinical Quality Measure proposals:

  • For the CY 2020 reporting period/FY 2022 payment determination and CY 2021 reporting period/FY 2023 payment determination, to extend the current eCQM reporting and submission requirements finalized for the CY 2019 reporting period, such that hospitals submit one, self-selected calendar quarter of discharge data for four self- selected eCQMs in the IQR Program measure set
  • For the CY 2022 reporting period/FY 2024 payment determination, to require hospitals to report one, self-selected calendar quarter of data for: (1) three self-selected eCQMs, and (2) the proposed Safe Use of Opioids—Concurrent Prescribing eCQM, for a total of four eCQMs
  • Require EHR technology be certified to all eCQMs available to report for the CY 2020 reporting period/FY 2022 payment determination and subsequent years

While HAP supports the inclusion of the new Safe Use of Opioids Measure in the measure set, we do not support requiring its reporting beginning with the CY 2022 reporting period. HAP urges CMS to continue with the voluntary nature of the measure to allow hospitals time to ensure accuracy in collaboration with the electronic health record vendors.


Topics: Medicare

Revision Date: 6/24/2019

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