Over the last two weeks, GNYHA submitted detailed comments on health care reform options released by the Chair and Ranking Member of the U.S. Senate Finance Committee, Senators Max Baucus (D-MT) and Charles Grassley (R-IA), respectively. The options released by the Committee leaders covered a wide range of issues, from delivery system reform to insurance coverage options for the uninsured to financing. GNYHA also shared its comments with Senators Charles Schumer (D-NY) and Kirsten Gillibrand (D-NY), Senate Finance Committee member Robert Menendez (D-NJ), and House leaders including Ways and Means Chairman Charles Rangel (D-NY) and Energy and Commerce Health Subcommittee Chairman Frank Pallone (D-NJ). GNYHA also shared it comments with a coalition of stakeholders from across the health care sector, of which GNYHA is a part. The group began meeting with President Barack Obama and key Administration officials on May 11 to identify ways to reduce the rate of health care spending growth over the next 10 years. The coalition expects to release a progress report to the President and Congress in early June.
In the cover letter accompanying GNYHA’s comments on delivery system reform, GNYHA President Kenneth E. Raske wrote, “GNYHA is pleased and honored to be part of the health reform debate. Our nation has a once-in-a-lifetime chance to truly reform our health care system and finally make universal health insurance coverage a reality. The delivery system initiatives described in the SFC paper would fundamentally change the way health care is delivered in the United States and have profound implications for providers and patients…We are generally supportive of most of the concepts, although we have serious concerns about several specific proposals.” GNYHA’s detailed comments are available at www.gnyha.org.
Hospital-Specific Recommendations: With regard to options on hospital financing and delivery system reform, GNYHA offered the following comments:
GME: The Committee outlined an option in its financing paper that called for reducing Medicare payments for teaching hospitals and perhaps combining Medicare and Medicaid graduate medical education (GME) funding. The Committee also outlined an option that called for redistributing unused residency slots to hospitals in need of more slots, particularly for primary care residencies. GNYHA expressed strong opposition to cutting GME funding, either through Medicare and Medicaid indirect medical education (IME) adjustment cuts or cuts in direct GME payments. GNYHA also expressed strong support for legislation introduced by Senators Schumer, Bill Nelson (D-FL), and Majority Leader Harry Reid (D-NV) that would redistribute unused residency slots and increase the number of Medicare-funded slots by roughly 15,000.
DSH: The Committee outlined an option in its financing paper that called for consolidating Medicare and Medicaid disproportionate share hospital (DSH) funds and reducing DSH funding. GNYHA strongly opposes this option and called for preserving Medicare and Medicaid DSH funding and ensuring that both Medicare and Medicaid DSH can be used to help cover bad debts. This is especially important if options to cover the uninsured include low-cost options with high deductibles and copays, which may be difficult for low-income families to afford and will result in uncompensated care provided by hospitals. In addition, health insurance coverage expansions are unlikely to cover undocumented immigrants, meaning that a large number of uninsured residents will still rely on hospitals for health care. Further, unless Congress solves the problem of underpayments by the Medicare and Medicaid programs, hospitals that provide care for large volumes of Medicare and Medicaid patients will continue to suffer losses that they will not be able to cover without the assistance of DSH funding.
Regional Variation: Relying on studies from the Dartmouth Institute, the Committee outlined an option to reduce reimbursement rates for providers in areas with higher than average Medicare spending, after adjusting for wage differences. Alternatively, the Committee suggested an option to reduce reimbursement rates for providers in geographic areas with higher Medicare spending compared to their peers in the same geographic area. GNYHA strongly opposed these options in its comment letter, noting that the Dartmouth Institute’s utilization trend estimates are not risk-adjusted for poverty, poor access to primary care, multiple chronic conditions, psychiatric and substance abuse comorbidities, limited English proficiency, certain racial and ethnic backgrounds, and population density—all of which contribute to legitimate higher utilization patterns, according to the Urban Institute and others.
Value-based Purchasing: The Committee outlined an option that would withhold, over time, as much as 5% of a hospital’s inpatient Medicare prospective payment system payments (minus IME and DSH), which hospitals could attempt to earn back by meeting quality thresholds. Under the option, the lowest-performing quartile of hospitals would not be able to earn back withheld funds, while hospitals between the 25th and 75th percentiles would receive back a portion of their funds on a sliding scale. The entire withhold would be returned to hospitals in the highest quartile. While supportive of value-based purchasing in concept, GNYHA strongly opposes a proposal that dooms 25% of hospitals to a 5% cut in Medicare payments regardless of actual performance or improvement. GNYHA commented that it favors an approach that would base incentive payments on actual performance, not relative performance.
Readmissions: The Committee proposed an option that would penalize hospitals with high 30-day readmission rates by reducing Medicare fee-for-service reimbursement rates. GNYHA commented that the readmission window should be no longer than 15 days; that readmission rates should exclude planned and unavoidable readmissions; that rates should be risk-adjusted to take into account socio-economic risk factors; and that hospitals targeted for readmission penalties should be those with risk-adjusted readmission rates statistically significantly higher than expected, not merely those with rates falling above a certain percentile ranking.
Bundled Medicare Payments: The Committee proposed that the proposed readmissions policy phase into a new Medicare fee-for-service payment methodology of bundled payments, whereby acute care and post-acute care payments for an episode of care would be bundled and paid to a single entity, such as a hospital. Physician services would not be included. GNYHA commented that the Committee should start by aligning incentives between physicians and hospitals by relaxing rules that prohibit gain-sharing and other approaches that inhibit the ability of hospitals and doctors to work together to enhance quality and efficiency.
GNYHA also offered comments on fairness in the Medicaid matching rate formula, coverage options, and other issues.
In addition, GNYHA commented that the government must take action to help reduce health providers’ costs of doing business, including through medical malpractice reform, reform of private payer practices, comparative effectiveness research, vendor price transparency, and other means.