Medicare Program; Treatment of Medicare Part C Days in the Calculation of a Hospital's Medicare Disproportionate Patient Percentage
| Published date | 06 August 2020 |
| Citation | 85 FR 47723 |
| Record Number | 2020-16896 |
| Section | Proposed rules |
| Court | Centers For Medicare & Medicaid Services |
Federal Register, Volume 85 Issue 152 (Thursday, August 6, 2020)
[Federal Register Volume 85, Number 152 (Thursday, August 6, 2020)]
[Proposed Rules]
[Pages 47723-47728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16896]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 412
[CMS-1739-P]
RIN 0938-AU24
Medicare Program; Treatment of Medicare Part C Days in the
Calculation of a Hospital's Medicare Disproportionate Patient
Percentage
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would establish a policy concerning the
treatment of patient days associated with persons enrolled in a
Medicare Part C (also known as ``Medicare Advantage'') plan for
purposes of calculating a hospital's disproportionate patient
percentage for cost reporting periods starting before fiscal year (FY)
2014 in response to the ruling in Azar v. Allina Health Services, 139
S. Ct. 1804 (June 3, 2019).
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on EDT on October 5,
2020.
ADDRESSES: In commenting, please refer to file code CMS-1739-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1739-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1739-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Donald Thompson (410) 786-4487.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that website to view public comments.
I. Executive Summary and Background
A. Purpose and Legal Authority
This proposed rule would create a policy governing the treatment of
days associated with beneficiaries enrolled in Medicare Part C for
discharges occurring prior to October 1, 2013, for the purposes of
determining the additional Medicare payments to subsection (d)
hospitals under section 1886(d)(5)(F) of the Social Security Act (the
Act).
B. Summary of Major Provisions
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals that serve a significantly
disproportionate number of low income patients. The Act specifies two
methods by which a hospital may qualify for the Medicare
disproportionate share hospital (DSH) payment adjustment. Under the
first method, hospitals that are located in an urban area and have 100
or more beds may receive a Medicare DSH payment adjustment if the
hospital can demonstrate that, during its cost reporting period, more
than 30 percent of its net inpatient care revenues are derived from
State and local government payments for care furnished to needy
patients with low incomes. This method is commonly referred to as the
``Pickle method.'' The second method for qualifying for the DSH payment
adjustment, which is more common, is based on a complex statutory
formula under which the DSH payment adjustment is based on the
hospital's geographic designation, the number of beds in the hospital,
and the hospital's disproportionate patient percentage (DPP). A
hospital's DPP is the sum of two fractions: The ``Medicare fraction''
and the ``Medicaid fraction.'' The Medicare fraction (also known as the
SSI fraction or SSI ratio) is computed by dividing the number of the
hospital's inpatient days that are furnished to patients who were
entitled to both Medicare Part A and Supplemental Security Income (SSI)
benefits by the hospital's total number of patient days furnished to
patients entitled to benefits under Medicare Part A. The Medicaid
fraction is computed by dividing the hospital's number of inpatient
days furnished to patients who, for such days, were eligible for
Medicaid, but were not entitled to benefits under Medicare Part A, by
the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the inpatient
prospective payment system (IPPS), the statutory references to ``days''
in section 1886(d)(5)(F) of the Act have been interpreted to apply only
to hospital acute care inpatient days. Regulations located at 42 CFR
412.106 govern the Medicare DSH payment adjustment and specify how the
DPP is calculated as well as how beds and patient days are counted in
determining the Medicare DSH payment adjustment.
C. Summary of Costs and Benefits
If we adopted our proposal to include days associated with patients
enrolled
[[Page 47724]]
in Medicare Part C in the calculation of the SSI ratio and to exclude
them from the calculation of the numerator of the Medicaid fraction,
there would not be any additional costs or benefits relative to the
Medicare DSH payments that have already been made because those
payments were made under the policy reflected in the proposal (prior to
it having been vacated). The effect of this proposed rule would be to
avoid the consequences of legal ambiguity that would otherwise continue
into the future; the resulting costs, benefits and transfer impacts are
thus highly uncertain.
In order to quantify one point in the relevant uncertainty range,
we considered excluding days associated with patients enrolled in
Medicare Part C from the calculation of the SSI ratio and (for patients
also eligible for Medicaid) including them in the calculation of the
numerator of the Medicaid fraction. We refer readers to section V.D. of
this proposed rule for a discussion of this alternative considered.
II. Provisions of the Proposed Regulations--Treatment of Patient Days
Associated With Patients Enrolled in Medicare Advantage Plans With
Discharge Dates Before October 1, 2013, in the Medicare and Medicaid
Fractions of the Disproportionate Patient Percentage (DPP)
The regulation at 42 CFR 422.2 defines Medicare Advantage (MA) plan
to mean ``health benefits coverage offered under a policy or contract
by an MA organization that includes a specific set of health benefits
offered at a uniform premium and uniform level of cost-sharing to all
Medicare beneficiaries residing in the service area of the MA plan . .
. .'' Generally, each MA plan must at least provide coverage of all
services that are covered by Medicare Part A and Part B, but also may
provide for Medicare Part D benefits and/or additional supplemental
benefits. However, certain items and services, such as hospice
benefits, continue to be covered under Medicare Part A fee-for-service
(FFS) even if a beneficiary chooses to enroll in an MA plan. Generally,
under Sec. 422.50 of the regulations, an individual is eligible to
elect an MA plan if he or she is entitled to Medicare Part A and
enrolled in Medicare Part B. Dually eligible beneficiaries (individuals
entitled to Medicare and eligible for Medicaid) also may choose to
enroll in an MA plan, and, as an additional supplemental benefit, the
MA plan may pay for Medicare cost-sharing not covered by Medicaid.
In the FY 2004 IPPS proposed rule (68 FR 27208), in response to
questions about whether the patient days associated with patients
enrolled in an MA plan (then called a Medicare + Choice (M+C) plan)
should be counted in the Medicare fraction or the Medicaid fraction of
the disproportionate patient percentage (DPP) calculation, we proposed
that once a beneficiary enrolls in an MA plan, patient days
attributable to the beneficiary would not be included in the Medicare
fraction of the DPP. Instead, those patient days would be included in
the numerator of the Medicaid fraction, if the patient also were
eligible for Medicaid. In the FY 2004 IPPS final rule (68 FR 45422), we
did not respond to public comments on this proposal, due to the volume
and nature of the public comments we received, and we indicated that we
would address those comments later in a separate document. In the FY
2005 IPPS proposed rule (69 FR 28286), we stated that we planned to
address the FY 2004 comments regarding MA days in the IPPS final rule
for FY 2005. After considering comments on this proposal, we decided
not to implement the policy as proposed. Instead, in the FY 2005 IPPS
final rule (69 FR 49099), we determined that, under Sec.
412.106(b)(2)(i) of the regulations, MA patient days should be counted
in the Medicare fraction of the DPP calculation. (We note, at the time
of the FY 2005 rulemaking, Medicare Part C was referred to as M+C;
however, to avoid confusion we use the current terminology (MA) when
referring to Medicare Part C.) We explained that, even where Medicare
beneficiaries enroll in an MA plan, they are still entitled to benefits
under Medicare Part A. Therefore, we noted that if an MA beneficiary is
also an SSI recipient, the patient days for that beneficiary would be
included in the numerator of the Medicare fraction (as well as in the
denominator) and not in the numerator of the Medicaid fraction. We note
that, despite our statement in the FY 2005 final rule that the text of
the regulation at Sec. 412.106(b)(2)(i) would be revised to state
explicitly that the days associated with MA beneficiaries are included
in the Medicare fraction, due to a clerical oversight, the regulation
at Sec. 412.106(b)(2)(i) was not amended to reflect this policy until
2007 (72 FR 47384).
In 2012, a district court vacated the final policy adopted in the
FY 2005 final rule on the basis that the final rule was not a ``logical
outgrowth'' of the proposed rule. In the FY 2014 IPPS/LTCH PPS proposed
rule, we proposed to re-adopt the policy of including MA patient days
in the Medicare fraction prospectively for FY 2014 and subsequent
fiscal years (78 FR 27578). We finalized this proposal in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50614). We made no change to the
regulation text at Sec. 412.106(b)(2)(i) because the text of the
regulation already reflected the policy we adopted in the FY 2014 IPPS/
LTCH PPS final rule. In 2014, the United States Court of Appeals for
the D.C. Circuit upheld the district court's holding that the policy
adopted in the FY 2005 IPPS final rule requiring inclusion of Part C
days in the Medicare fraction was not a logical outgrowth of the
proposed rule, but left open the possibility that we could employ the
same approach through adjudication.
In Azar v. Allina Health Services, 139 S. Ct. 1804 (June 3, 2019),
the Supreme Court considered a challenge to the agency's inclusion of
MA patient days in the Medicare fractions it published for FY 2012.
Section 1871(a)(2) of the Act requires notice-and-comment rulemaking
for any Medicare ``rule, requirement, or other statement of policy''
that ``establishes or changes a substantive legal standard governing
the scope of benefits, the payment for services, or the eligibility of
individuals, entities, or organizations to furnish or receive services
or benefits.'' The Supreme Court held that section 1871(a)(2) of the
Act required CMS to engage in notice-and-comment rulemaking before
adopting its policy regarding treatment of inpatient days for
beneficiaries enrolled in MA plans for purposes of calculating the DPP.
Section 1871(e)(1)(A) of the Act authorizes CMS to engage in
retroactive rulemaking when the Secretary determines that such
retroactive application is necessary to comply with statutory
requirements or that a failure to apply a policy retroactively would be
contrary to the public interest. For example, CMS has invoked its
authority to engage in retroactive rulemaking under section
1871(e)(1)(A) of the Act in connection with its policy related to bad
debt (see the FY 2021 IPPS/LTCH PPS proposed rule (85 FR 32867)),
predicate facts and cost report reopening (see the CY 2014 OPPS final
rule (78 FR 75165)), and the low-volume hospital adjustment (see the FY
2020 IPPS/LTCH PPS final rule (84 FR 42349)).
Section 1886(d)(5)(F) of the Act requires CMS to make DSH payments
to eligible hospitals. Calculating such payments, in turn, requires CMS
to calculate a Medicare and a Medicaid fraction for each hospital.
Under section 1886(d)(5)(F)(vi)(I) of the Act, the
[[Page 47725]]
Medicare fraction must include the patient days for beneficiaries
``entitled to benefits under part A.'' The Court of Appeals for the
D.C. Circuit has held that the Medicare statute does not speak directly
to how Part C days should be treated for purposes of DSH calculations,
that is, whether Part C patients are ``entitled to benefits under part
A'' and should therefore be included in the Medicare fraction, or
whether they are not so entitled, and should therefore be included in
the numerator of the Medicaid fraction if they are also eligible for
Medicaid. (See Ne. Hosp. Corp. v. Sebelius, 657 F.3d 1, 13 (D.C. Cir.
2011).) However, the court has also found that section
1886(d)(5)(F)(vi) of the Act requires the Secretary to account for Part
C days in the DPP calculation by including them in one of the fractions
(Medicare or Medicaid) and excluding them from the other. (See Allina
Health Servs. v. Sebelius, 746 F.3d 1102, 1108 (D.C. Cir. 2014).)
Because the FY 2005 IPPS final rule was vacated, the Secretary
``has no promulgated rule governing'' the treatment of Part C days for
fiscal years before 2014.'' (See Allina Health Servs. v. Price, 863
F.3d 937, 939 (D.C. Cir. 2017).) As a result, in order to comply with
the statutory requirement to calculate Medicare DSH payments, CMS must
determine whether beneficiaries enrolled in Part C are ``entitled to
benefits under part A'' and so must be included in the Medicare
fraction (and excluded from the numerator of the Medicaid fraction), or
are not so entitled and so must be excluded from the Medicare fraction
(and included in the numerator of the Medicaid fraction, if dually
eligible). The Secretary has therefore determined that, in order to
comply with the statutory requirement to make DSH payments, it is
necessary for CMS to engage in retroactive rulemaking to establish a
policy to govern whether individuals enrolled in MA plans under Part C
should be included in the Medicare fraction or in the numerator of the
Medicaid fraction, if dually eligible, for fiscal years before 2014.
We continue to believe, as we stated in the preamble to the FY 2014
IPPS/LTCH PPS final rule (78 FR 50614 and 50615) and have consistently
expressed since the issuance of the FY 2005 IPPS final rule, that
individuals enrolled in MA plans are ``entitled to benefits under part
A'' as the phrase is used in the DSH provisions at section
1886(d)(5)(F)(vi) of the Act. Section 226(a) of the Act provides that
an individual is automatically ``entitled'' to Medicare Part A when the
person reaches age 65 or becomes disabled, provided that the individual
is entitled to Social Security benefits under section 202 of the Act.
Beneficiaries who are enrolled in MA plans provided under Medicare Part
C continue to meet all of the statutory criteria for entitlement to
Medicare Part A benefits under section 226 of the Act. Moreover,
section 1852(a)(1)(B)(i) of the Act provides that in order to enroll in
Medicare Part C, or to change from one MA plan to another MA plan
offered under Part C, a beneficiary must be ``entitled to benefits
under Part A and enrolled under Part B.'' Thus, by definition, a
beneficiary must be entitled to Part A to be enrolled in Part C. There
is nothing in the Act that suggests that beneficiaries who enroll in a
Medicare Part C plan thereby forfeit their entitlement to Medicare Part
A benefits. To the contrary, enrollment in a plan under Medicare Part C
is simply an option that a person entitled to Part A benefits may
choose as a way to receive their Part A benefits. A beneficiary who
enrolls in Medicare Part C is entitled to receive benefits under
Medicare Part A through the MA plan in which he or she is enrolled, and
the MA organization's costs in providing such Part A benefits are paid
for by CMS with money from the Medicare Part A Trust Fund. In addition,
under certain circumstances, Medicare Part A pays directly for care
furnished to patients enrolled in Medicare Part C plans, rather than
indirectly through Medicare Part A Trust Fund payments to MA
organizations. For example, under section 1852(a)(5) of the Act, if,
during the course of the year, the scope of benefits provided under
Medicare Part A expands beyond a certain cost threshold due to
Congressional action or a national coverage determination, Medicare
Part A will pay providers directly for the cost of those services
provided to beneficiaries enrolled in Part C. Similarly, Medicare Part
A pays directly for hospice care furnished to MA patients who elect
under section 1812(d)(1) of the Act to receive such care from a
particular hospice program and, under certain circumstances, for
federally qualified health center (FQHC) services provided to MA
patients by FQHCs that contract with MA organizations under sections
1853(h)(2) and 1853(a)(4) of the Act, respectively. Thus, we continue
to believe that a patient enrolled in an MA plan remains entitled to
benefits under Medicare Part A, and should be counted in the Medicare
fraction of the DPP, and not the numerator of the Medicaid fraction.
Additionally, the Secretary has determined that it is in the public
interest for CMS to adopt a policy for the treatment of MA patient days
in the Medicare and Medicaid fractions through notice and comment
rulemaking retroactively for discharges before October 1, 2013 (the
effective date of the FY 2014 IPPS/LTCH PPS final rule). CMS must
calculate DSH payments for periods that include discharges occurring
before the effective date of the FY 2014 prospective rule for hundreds
of hospitals whose DSH payments for those periods are still open or
have not yet been finally settled, encompassing thousands of cost
reports. In order to calculate these payments, CMS must establish
Medicare fractions for each applicable cost reporting period during the
time period for which there is currently no regulation in place that
expressly addresses the treatment of Part C days. Because the Supreme
Court has held that CMS cannot resolve this issue except by notice-and-
comment rulemaking, we have concluded that the only way for CMS to
resolve this issue and properly calculate DSH payments for time periods
before FY 2014 is to establish a new regulation that would apply
retroactively to the determination of Medicare and Medicaid fractions
for this time period. Consequently, retroactive rulemaking is not only
necessary to comply with statutory requirements, but is also necessary
to avoid an outcome that would be contrary to the public interest.
Absent such a retroactive rule, the Secretary would be unable to
calculate and confirm proper DSH payments for time periods before FY
2014, which would be contrary to the public interest of providing
additional payments to hospitals that serve a significantly
disproportionate number of low-income patients, as expressed in the DSH
provisions of the Medicare statute. Moreover, to the extent the
Secretary must adopt an approach to calculate those payments, it is in
the public interest to permit interested stakeholders to comment on the
proposed approach and for the agency to have the benefit of those
comments in the development of any final rule. Therefore, for the
purposes of calculating the Medicare and Medicaid fractions for cost
reporting periods that include discharges before October 1, 2013, we
are proposing to adopt the same policy of including MA patient days in
the Medicare fraction that was prospectively adopted in the FY 2014
IPPS/LTCH PPS final rule and to apply this policy retroactively to any
cost
[[Page 47726]]
reports that remain open for cost reporting periods starting before
October 1, 2013. We do not expect this proposal to have an effect on
payments as the payments previously made reflect the proposed policy.
We are not proposing any change to the regulation text because the
current text at Sec. 412.106(b)(2)(i) reflects the policy being
proposed for fiscal years before FY 2014.
Because we are proposing to establish this policy retroactively, it
would cover cost reporting periods for which many cost reports have
already been final settled. Consistent with Sec. 405.1885(c)(2), any
final rule retroactively adopting the policy at Sec. 412.106(b)(2)(i)
for fiscal years before FY 2014 would not be a basis for reopening
these final settled cost reports.
We seek comments on our proposal to include MA patient days in the
Medicare fraction for fiscal years before FY 2014, and also on the
alternative, which is discussed in detail in section V. of this
proposed rule, of including MA patient days for dually eligible
beneficiaries in the numerator of the Medicaid fraction for those
fiscal years.
III. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping, or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Regulatory Impact Analysis
A. Statement of Need
This proposal is necessary to create a policy governing the
treatment of days associated with beneficiaries enrolled in Medicare
Part C for discharges occurring prior to October 1, 2013, for the
purposes of determining additional Medicare payments to subsection (d)
hospitals under section 1886(d)(5)(F) of the Act.
B. Overall Impact
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (5 U.S.C.
603), section 1102(b) of the Act, section 202 of the Unfunded Mandates
Reform Act of 1995 (2 U.S.C. 1532), Executive Order 13132 on Federalism
(August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and
Executive Order 13771 on Reducing Regulation and Controlling Regulatory
Costs (January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impact of
entitlements, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in Executive Order 12866.
The discussion accompanying our proposal along with this Regulatory
Impact Analysis (RIA) demonstrate that this proposed rule has been
analyzed consistent with the regulatory philosophy and principles
identified in Executive Orders 12866 and 13563, the RFA, and section
1102(b) of the Act. We note that Medicare DSH payments affect a
substantial number of small rural hospitals, as well as other classes
of hospitals, and the effect of Medicare DSH payments on some hospitals
is significant.
An RIA must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This
rulemaking is ``economically significant'' as measured by the $100
million threshold, and hence also a major rule under the Congressional
Review Act, 5 U.S.C. 804(2). Accordingly, we have prepared an RIA that
to the best of our ability presents the costs and benefits of the
rulemaking.
C. Detailed Economic Analysis
Medicare DSH payments have already been made under the policy
reflected in the proposal (prior to the policy having been vacated by
the Court of Appeals, which was affirmed by the Supreme Court's
decision). Therefore, the effect of this proposed rule would be to
avoid the consequences of legal ambiguity that would otherwise continue
into the future; the resulting costs, benefits and transfer impacts are
thus highly uncertain. In other words, given that there is currently no
regulation governing the treatment of Part C days, it is not clear what
to compare an estimate of DSH payments under our proposed policy to in
order determine the effect of our proposed policy on DSH payments.
There are multiple possible trajectories whereby agency actions could
be made consistent with the Supreme Court's ruling requiring notice-
and-comment rulemaking. Our proposed policy is one such trajectory and
DSH payments made under our proposed policy would not differ from
hospitals' historical DSH payments. This comparison between DSH
payments under our proposed policy and hospitals' historical DSH
payments quantifies one point within the relevant uncertainty range of
potential costs, benefits, and transfer impacts. However, in order to
explore another possible trajectory (and thus to quantify an additional
point within the relevant uncertainty range), we considered an approach
of excluding days associated with patients enrolled in Medicare Part C
from the calculation of the SSI ratio and including them in the
numerator of the Medicaid fraction (for those patients who are dually
eligible). We are not proposing such a policy because we continue to
believe, as we stated in the preamble to the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50614 and 50615) and have consistently expressed
since the issuance of the FY 2005 IPPS final rule, that individuals
enrolled in MA plans are ``entitled to benefits under part A'' as the
phrase is used in the DSH provisions at section 1886(d)(5)(F)(vi) of
the Act.
We created a public use data file in order to facilitate public
comment and analysis of our proposal and the alternative approach. This
file is available in the Downloads section of the Disproportionate
Share Hospital
[[Page 47727]]
web page on the CMS website: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh. The file contains an
illustrative model at the hospital level of the potential effect on the
DSH adjustment of excluding days associated with patients enrolled in
Medicare Part C from the SSI ratio and including them in the numerator
of the Medicaid fraction (for those patients who are dually eligible).
In constructing the model, we used data from hospital cost reports
for hospitals that were eligible for and received Medicare DSH payments
for their longest cost reporting period ending between January 1, 2013,
and December 31, 2013, inclusive of those dates, as reflected in the
Healthcare Cost Report Information System (HCRIS) data. (For more
information on the HCRIS data, see https://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/Cost-Reports/Hospital-2010-form.) We chose this time period to model because these
cost reports generally contain the bulk of the most recent cost report
data for hospitals prior to our readopting the policy of including MA
patient days in the Medicare fraction in the FY 2014 IPPS/LTCH PPS
final rule. We also incorporated relevant data from the MedPAR data
files and the SSI eligibility files pertaining to that time period.
These are the same source files used to construct the FY SSI Ratio
files also found in the Downloads section of the Disproportionate Share
Hospital web page on the CMS website.
In order to model the Medicare fraction for each hospital, we
estimated the SSI ratio applicable to that hospital's cost report after
excluding days associated with patients enrolled in Medicare Part C.
In order to model the Medicaid fraction for each hospital, we used
the days associated with patients enrolled in Medicare Part C who were
also eligible for SSI, based on the applicable SSI eligibility data, as
a proxy for the Medicaid days associated with patients enrolled in
Medicare Part C. We used this proxy, because we do not have readily
available specific data on Medicaid eligibility for beneficiares who
are eligible for SSI benefits. However, we believe this proxy is
reasonable because the majority of states provide Medicaid eligibility
to people eligible for SSI benefits. The Part C SSI days for each
hospital were then added to the numerator of the otherwise applicable
Medicaid fraction for that hospital as reflected in the hospital's cost
report data.
We then used these alternative Medicare and Medicaid fractions to
model the percent change in the Medicare DSH adjustment for the
hospital.
The modelled percent change in the Medicare DSH adjustment was
applied to an annualized Medicare DSH payment from the hospital's cost
report to estimate the 12-month change in Medicare DSH payments to that
hospital.
Based on this model, most hospitals' Medicare DSH payments would
increase relative to their historical Medicare DSH payments; however,
some hospitals' Medicare DSH payments would decrease or not change. In
aggregate, the modelled Medicare DSH payments would increase by 6
percent relative to the historical Medicare DSH payments, which for the
hospitals represented in the model was approximately a net $0.6 billion
annualized increase for this time period.
We note that these estimates are for illustrative purposes and
involve modelling assumptions (for example, use of a proxy for the
Medicaid days associated with patients enrolled in Medicare Part C, as
described previously), which may differ from actual calculations that
would be done during cost report review and settlement processes by
contractors if such a policy were adopted. These expenditures (or, as
regards payments already made for past years, the avoidance of
potentially necessary reimbursements from providers to the Trust Fund)
would be classified as transfers to Medicare providers.
We are seeking comments on this illustrative model and the
assumptions used in this analysis.
D. Alternative Considered
We considered as an alternative to our proposal excluding days
associated with patients enrolled in Medicare Part C from the
calculation of the SSI ratio and including them in the calculation of
the Medicaid fraction. However, we are not proposing such a policy
because we continue to believe, as we stated in the preamble to the FY
2014 IPPS/LTCH PPS final rule (78 FR 50614 and 50615) and have
consistently expressed since the issuance of the FY 2005 IPPS final
rule, that individuals enrolled in MA plans are ``entitled to benefits
under part A'' as the phrase is used in the DSH provisions at section
1886(d)(5)(F)(vi) of the Act.
Similar to the discussion in section V.C. of this proposed rule
regarding DSH payments under our proposed policy, because it is not
clear what DSH payments prior to FY 2014 would be given that there is
currently no regulation governing the treatment of Part C days, it is
not clear what to compare an estimate of DSH payments under the
alternative to in order to determine the change in DSH payments. Taking
the quantitative impact estimate that appears earlier that DSH payments
made under the alternative policy would represent an increase of $0.6
billion over hospitals' historical DSH payments for the relevant time
period--that is, projecting a transfer of the same $0.6 billion
magnitude -- yields an estimate of the alternative's impact relative to
hospitals' historical DSH payments. As in the analysis of the policy as
proposed, the alternative's impact estimate represents a boundary on an
especially wide uncertainty range.
E. Accounting Statement
As required by OMB Circular A-4, in the following Table 1, we have
prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this proposed rule as
they relate to hospitals receiving Medicare DSH payments. This table
provides our best estimate of the change in Medicare DSH payments to
hospitals as a result of our proposal. All expenditures are classified
as transfers to Medicare providers.
Table 1--Accounting Statement: Classification of Estimated Medicare DSH
Expenditures Prior to FY 2014
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $0 to-$0.6 billion.
From Whom to Whom......................... Federal Government to
Hospitals Receiving
Medicare DSH Payments.
------------------------------------------------------------------------
F. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of less than $7.5 million to $38.5 million in any 1 year.
Individuals and states are not included in the definition of a small
entity. We are not preparing an analysis for the RFA because we have
determined, and the Secretary certifies, that if we adopted our
proposal there would not be any additional costs or
[[Page 47728]]
benefits relative to Medicare DSH payments that have already been made.
Therefore, this proposed rule will not have a significant economic
impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area and has fewer
than 100 beds. We are not preparing an analysis for section 1102(b) of
the Act because we have determined, and the Secretary certifies, that
if we adopted our proposal there would not be any additional costs or
benefits for small rural hospitals relative to Medicare DSH payments
that have already been made to these hospitals. Therefore, this
proposed rule would not have a significant impact on the operations of
a substantial number of small rural hospitals.
G. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2020, that
threshold is approximately $156 million. This proposed rule will have
no consequential effect on state, local, or tribal governments or on
the private sector.
H. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on state
or local governments, the requirements of Executive Order 13132 are not
applicable.
I. Regulatory Reform Analysis Under Executive Order 13771
Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017, and requires that the
costs associated with significant new regulations ``shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least two prior regulations.'' OMB's Guidance
Implementing Executive Order 13771, Titled ``Reducing Regulation and
Controlling Regulatory Costs'', issued on April 5, 2017, available at
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-21-OMB.pdf, explains that ``E.O. 13771 deregulatory actions
are not limited to those defined as significant under E.O. 12866 or
OMB's Final Bulletin on Good Guidance Practices.'' It has been
determined that this proposed rule imposes no more than de minimis
costs, and therefore is not considered a regulatory action under
Executive Order 13771.
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
Dated: March 24, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 09, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-16896 Filed 8-4-20; 4:15 pm]
BILLING CODE 4120-01-P
