June 9, 2023
The Honorable Chiquita Brooks-LaSure
Centers for Medicare & Medicaid Services
U.S. Department of Health and Human Services
Attention: CMS 1785-P
P.O. Box 8013
Baltimore, MD 21244-1850
RE: CMS 1785-P, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2024 Rates; Quality Programs and Medicare Promoting Interoperability Program Requirements for Eligible Hospitals and Critical Access Hospitals; Rural Emergency Hospital and Physician-Owned Hospital Requirements; and Provider and Supplier Disclosure of Ownership: Proposed Rule (Vol. 88, No. 83), May 1, 2023.
Dear Administrator Brooks-LaSure:
On behalf of The Hospital and Healthsystem Association of Pennsylvania (HAP), which represents approximately 235 member institutions, we appreciate the opportunity to comment about the Centers for Medicare & Medicaid Services’ (CMS) hospital inpatient prospective payment system (IPPS) proposed rule for federal fiscal year 2024.
HAP has strong concerns about the proposed payment updates. In particular, we are deeply concerned about the inadequacy of the proposed market basket update given the changing health care system dynamics and its workforce challenges. As such, we strongly urge CMS to utilize its authority to provide a market basket adjustment to account for what the agency missed in the fiscal year (FY) 2022 market basket forecast. We also are concerned about the agency’s proposed cuts to disproportionate share hospital (DSH) payments and the lack of transparency in the underlying calculations. A summary of our key recommendations follows.
IPPS Payment Update
CMS proposes a market basket update of 3.0 percent less a productivity adjustment of 0.2 percentage points, resulting in a net update of 2.8 percent. This update, especially when taken together with the FY 2022 payment update of 2.7 percent, continues to be woefully inadequate. These updates fail to account for the fact that labor composition and costs have not reverted to “normal” levels and that, as a result, the hospital field has continued to face sustained financial pressures. Workforce shortages continue to create outsized pressures on hospitals and health systems, and workforce financial pressures are particularly challenging because labor on average accounts for about half of a hospital’s budget. Therefore, HAP urges CMS to use its "special exceptions and adjustments" authority to make a retrospective adjustment to account for the difference between the market basket update that was implemented for FY 2022 and what the market basket is for FY 2022. We also urge the agency to use the same authority to eliminate the productivity cut for FY 2024 and to fully restore the shortfall resulting from the American Taxpayer Relief Act of 2012 documentation and coding adjustments.
HAP continues to be concerned about the agency’s lack of transparency with regard to how it is calculating DSH payments. Specifically, we disagree with the agency’s estimates of the number of uninsured for FY 2024. For instance, CMS maintains that the rate of the insured stayed the same as FY 2023. However, it is expected that health coverage for millions of people will end as the Medicaid continuous coverage requirements are now unwinding. As such, we expect to see a large increase in the number of the uninsured in FY 2024. We urge CMS to consider additional data by researchers and policy stakeholders to reach a more reasonable estimate of the percent of uninsured.
Thank you for your consideration of HAP’s following comments regarding this proposed rule. If you have any questions, contact Kate Slatt, vice president, innovative payment and care delivery, at (717) 561-5317.
Jeffrey W. Bechtel
Senior Vice President, Health Economics and Policy