Regulatory Affairs Updates
In addition to legislation, federal regulations can have a tremendous impact on the rural healthcare system. The NRHA frequently comments on proposed regulations so that rural Americans have a voice in the regulatory process. Here you will find the latest comments submitted to federal agencies by the NRHA, as well as important information from various federal agencies.
2007 Regulatory Updates
NRHA Comments on Proposed Hospice Rule -
June 29
On June 29th, NRHA submitted comments on the Fiscal Year 2008 Hospice Wage Index proposed rule. In the proposed rule, CMS proposes a new methodology of calculating payment rates for Massachusetts and Puerto Rico rural hospice providers. These two regions do not currently have a rural hospital that is needed under the CMS methodology used in the rest of the country. In the new methodology, both Massachusetts and Puerto Rico see increased payments to their rural providers. NRHA, however, voiced concern that CMS should re-consider this formula if it is needed in any other state. Rural states can have wide differences in their makeup and if other states lose the necessary data points to compute the overall formula, CMS should reexamine the issue.
NRHA's Comments on the Proposed Hospice Rule
CMS Releases Proposed Rule on Physician Fee Schedule
- July 2
Medicare payments to doctors in 2008 would be cut by almost 10 percent, as mandated by the formula driven Sustainable Growth Rate, under proposed regulation announced Monday, July 2nd by CMS. CMS had the choice of using a $1.35 billion fund to reduce the 2008 cut to about 7.9 percent, but elected not to do so under the proposal. Instead, it would use the money to extend, through 2008, a system of bonus payments started this year for doctors who report data on the quality of their care through the Physician Quality Reporting Initiative (PQRI). CMS is hoping that PQRI will promote quality and efficiency according to the proposed rule, which will be published in the Federal Register on July 12.
The NRHA will be analyzing the Proposed Rule to find its impact beyond the expected proposed cuts to physicians. We anticipate Congress will pass legislation later this year to block the 9.9 percent cut as part of the larger health package described in the Government Affairs Update. Comments are due August 31, 2007.
See the CMS website for more information
NRHA Informally Comments on the CAH Relocation Interpretative Guidelines
Last month, NRHA hear from representatives of the Centers for Medicare and Medicaid Services (CMS) that CMS will "revise" the Critical Access Hospital (CAH) relocation interpretive guidelines by mid-summer. The announcement was made during a conference call where five CAH administrators detailed to CMS how the guidelines restricted their ability to rebuild their facilities and provide quality care in their respective communities. At the time, CMS asked NRHA for informal comments to help guide the CMS staff in this endeavor. We will keep NRHA members posted on what the final rule looks like.
NRHA Comments on CAH Relocation Interpretative Guidelines
NRHA Comments on the Proposed Hospital IPPS Regulations
The NRHA submitted comments on June 12, 2007 on the CMS proposed rule on the Hospital Inpatient Prospective Payment System (IPPS). In the rule, CMS proposes to create 745 new severity-adjusted diagnosis-related groups (DRG) to replace the current 538 DRGs. Overall, payments under the inpatient prospective payment system to hospitals would increase by an average of 3.3% in fiscal 2008 for those hospitals that report quality data to the CMS, though hospitals' payments will vary depending on the patients they serve.
The NRHA commented that while CMS spent a tremendous amount of time and effort to adjust the DRG system with a severity-adjustment system, that we were concerned with the implementation of this system by the fall. This is a short time frame to allow hospitals time to figure out the new system and to report secondary diagnosis. We believe this puts rural hospitals at a disadvantage. In our comments, we supported the American Hospital Association's proposal to have a four year phase-in of the system and other supports of rural facilities.
In addition to the new severity-adjusted DRG, the NRHA also weighed in on a number of topics including urging CMS to allow Critical Access Hospitals to keep their former provider number if they become PPS hospitals so that they can apply for Medicare Dependent Hospitals or Sole Community Hospital status and that CMS should not require Rural Referral Centers to keep their status for one calendar year. Both of these would be CMS using their authority in new ways that would affect policy around rural hospitals.
NRHA's comments on the IPPS Proposed Rule
Moratorium on Medicare Advantage PFFS Marketing
Last week, CMS announced that the seven largest Medicare Private-Fee-For-Service (PFFS) insurers had agreed to a voluntary moratorium on marketing the plans. CMS cited the concerns of many beneficiaries and provider groups, including the NRHA, that there were "bad actors" marketing the plans to beneficiaries. CMS acknowledged that they were responding to a growing number of complaints regarding marketing tactics and that these seven companies, which represent over 90 percent of the enrollment in PFFS, had agreed to work on ending these problems. The moratorium will last until CMS has checked to make sure the plans are living up to their promises in this year's call for contracts.
The NRHA has been active in explaining its concerns regarding Medicare Advantage PFFS, including questionable marketing tactics, confusing benefit packages, and lack of adequate repayment rates for rural providers. NRHA Board Member Brock Slabach testified before the House Ways and Means Committee in May and the Rural Health Policy Board passed a paper dealing with the issue in February. The NRHA will continue to play an active role in the debate around PFFS plans to protect rural beneficiaries and providers.
Read NRHA's testimony before the NRHA's testimony before the House Ways and Means Committee and view other testimony
Read NRHA's official policy on Medicare Advantage
CMS Announces to NRHA-Relocation Rule for CAHs Will Be Revised
On Tuesday, May 1, 2007, representatives from the Centers for Medicare and Medicaid Services (CMS) announced to the NRHA that CMS will "revise" the Critical Access Hospital (CAH) relocation interpretive guidelines by mid-summer. The announcement was made during a conference call where five CAH administrators detailed to CMS how the guidelines restricted their ability to rebuild their facilities and provide quality care in their respective communities.
CMS Acting Deputy Director Herb Kuhn, along with other CMS representatives, admitted that current guidelines have proven problematic, and stated that it was CMS's goal to establish "good consistent policy that works for everyone." As the five hospital administrators chronicled their concerns, a CMS representative stated that the current guidelines, including sections defining "mountainous terrain" and the "75-percent rule," will be "revised" and "replaced" this summer. Deputy Director Kuhn further stated that specific examples of hospitals experiencing difficulty in interpreting the rule were "very helpful" to CMS during the redrafting process. CMS welcomed the NRHA to provide additional comments and feedback to make the process of releasing new guidelines more seamless. Towards this effort, we ask that NRHA members who are affected by these guidelines, or could be at a future date, submit a short description of their situation (less than a page) by Wednesday, May 23rd, to Tim Fry at fry@NRHArural.org. For more information, call Tim Fry at 703-519-7910.
Critical Access Hospital Fact Sheet Released
The March 2007 version of the "Critical Access Hospital Fact Sheet", which provides general information about Critical Access Hospitals, is now available in downloadable format. Print versions of the fact sheet will be available in approximately six weeks. The fact sheet is an excellent resource to help with your advocacy efforts at a state and local level in explaining what a Critical Access Hospital is. To view the fact sheet, go to CMS' website.
Hospital Value Based Purchasing Plan
Under the Deficit Reduction Act of 2005, CMS is charged with developing a plan to implement a Medicare hospital value-based purchasing (VBP) plan. Development of the plan is scheduled to occur between September 2006 and June 2007. As part of this process, CMS conducted two listening sessions, held on January 17 and April 12, 2007. Actual implementation of the plan will require new changes in law and new regulations. NRHA is closely monitoring developing of the VBP plan and submitted comments so that the plan will work for rural and low-volume hospitals. We will continue to participate in future efforts to implement the VBP plan and raise the unique challenges faced by rural hospitals.
Read CMS's Options Paper for the Apr. 12, 2007 listening session.
Read NRHA's comments on the second listening session.
Read CMS’s Issues Paper for the Jan. 17, 2007 listening session.
Read NRHA’s comments on the first listening session.
Medicaid Regulation Limiting Payments to Safety Net Providers
On January 18, 2007 the Administration issued a proposed rule that would cut Medicaid payments to public and other safety net providers by $3.8 billion over five years, according to CMS estimates. The rule would:
- Limit Medicaid payments to costs for "governmentally operated providers."
- Impose sweeping changes to permissible sources of non-federal share funding. Intergovernmental transfers (IGTs) would be limited to tax revenues, and certified public expenditures (CPEs) would only be permissible in connection with cost-based reimbursement and would be subject to stringent new documentation requirements.
- Impose a new, restrictive definition of "unit of government," which would substantially limit the types of entities authorized to provide non-federal share funding and determine which health care providers would be subject to the new cost limit.
- Require providers to receive and retain the full state and federal share of all Medicaid payments received, and CMS would have the authority to examine any associated transactions to ensure compliance with the requirement.
A copy of the proposed rule is available: [Here].
Infants Will Not Need to Prove Citizenship to Receive Medicaid Benefits
CMS announced that infants born to undocumented immigrants whose deliveries are covered by Medicaid would automatically receive coverage under the program for one year, a reversal of current policy. Under an interim final rule issued in July 2006, CMS said that infants born to undocumented immigrants would not automatically receive coverage under the program. The rule required that undocumented immigrants provide documentation to prove the citizenship of their infants before they could receive Medicaid coverage. The rule was changed in response to pressure from Senators and Representatives of both parties including Senator Grassley (R-IA), who had introduced a bill to legislatively fix this policy, and a number of state officials, hospitals and pediatricians. CMS officials said that the agency will issue a new interim final rule to revise the policy in the near future, which will also give one year of coverage to any mother who gave birth to a child while supported by Medicaid. Under the new rule, undocumented immigrants would have to provide documentation to prove the citizenship of their children after one year to maintain their Medicaid coverage.
Medicare Guide to Rural Health Services Released
CMS has released the second edition of "The Medicare Guide to Rural Health Services Information for Providers, Suppliers, and Physicians." This guide contains rural specific information about different rural health facility types, coverage and payment policies, and rural provisions under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Deficit Reduction Act of 2005. The guide is available as a pdf download from the CMS webpage
Physician Quality Reporting Initiative Webpage - FAQ
CMS has announced that the 2007 Physician Quality Reporting Initiative (PQRI) webpage has over 50 Frequently Asked Questions (FAQ's) available! You can access these FAQs by visiting the PQRI webpage at, http://www.cms.hhs.gov/PQRI and scrolling down to the "Frequently Asked Questions" link. The Tax Relief and Health Care Act of 2006 authorized the establishment of a physician quality reporting system by CMS, which establishes a financial incentive for eligible professionals to participate in a voluntary quality reporting program. Eligible professionals who successfully report a designated set of quality measures on claims for dates of service from July 1 to December 31, 2007, may earn a bonus payment, subject to a cap, of 1.5% of total allowed charges for covered Medicare physician fee schedule services.
Medicaid Regulation Implementing Changes to Prescription Drug Payments
On December 14, 2006, CMS issued a proposed regulation implementing changes to Medicaid payments for prescription drugs made in the Deficit Reduction Act of 2005. The regulation:
- Changes pharmacy reimbursement for prescription drugs to the "average manufacturer price". The new way of calculating "federal upper limits"(FULs) used to reimburse certain prescription drugs in Medicaid means retail pharmacies will typically be paid less than the cost of acquiring the drugs.
- Mandates collection of National Drug Codes (NDC) for physician administered drugs and drugs administered in hospital outpatient departments or clinics.
- Extends the Medicaid rebate to physician-administered drugs, which will result in a loss of the 340B drug discount in the circumstance where a 340B hospital provides physician-administered drugs in an outpatient setting to Medicaid patients.
- Excludes prompt pay discounts from the calculation of Average Manufacturer Price, which will raise AMP. To the extent AMP is a factor in determining 340B prices, 340B prices could subsequently go up.
- Fails to utilize the Secretary's authority to expand nominal price protection for a wider array of safety net hospitals.
Comments on the regulation are due by February 20, 2007. A copy of the proposed rule is available at: [Here]
To view older regulatory updates, visit our Regulatory Update Archive.
