Long-term acute-care hospitals and their growing base of friends in Congress put new pressure on the CMS last week to revise a proposal that even the Medicare Payment Advisory Commission has come out against.
Among comments on the CMS' proposed 2005 inpatient payment rule, there was no dearth of recommendations about how to address the increasing number of long-term acute-care, or LTAC, facilities, which receive higher Medicare payments for treating extremely complex cases.
In response to rapid growth in Medicare spending on LTACs-$1.9 billion in 2001, up from $398 million in 1993-the CMS proposed in May that new restrictions be placed on the facilities. Under the CMS' suggested policy, which was open to comments until July 12 and will be completed on Oct. 1, LTACs that operate within other hospitals would have to be separately owned and draw no more than 25% of their admissions from the host hospital (May 17, p. 8).
In comment letters to the CMS, the hospital lobby and members of Congress argued that the 25% threshold would be exceedingly difficult for most LTACs to meet. The proposed regulations, many letters argued, would also keep hospitals from sending post-acute patients to the best place for their care.
If the regulation were adopted as proposed, "Several of our hospitals, frankly, would have to close," said Rod Laughlin, president of Regency Hospital Co., which operates 11 LTACs, all of which are separately owned hospitals within hospitals. "The unintended consequences of the 25% rule far outweigh any good it might do in controlling minuscule inappropriate behavior," said Laughlin, who is also president of the American Long-Term Hospital Association. Some 10,000 jobs would be lost in the LTAC sector if the CMS' regulations become final, he said.
Laughlin and others-including the Medicare Payment Advisory Commission-favor patient- and facility-level criteria that would help determine which cases are best suited for the type of care provided by an LTAC. Such criteria, the argument goes, would ensure that care is provided in the optimal setting and that hospitals do not unnecessarily move patients into LTACs just to receive higher payments.
"Alternative certification criteria would be far less arbitrary than the (25%) rule," the Federation of American Hospitals, which represents investor-owned facilities, said in its 67-page comment letter. "Nowhere in the proposed rule ... is there any discussion or indication as to why a 25% limit on referrals from colocated hospitals makes sense."
The CMS received some 30,000 comment letters on its proposed 2005 payment regulations, according to an agency spokeswoman. Approximately 1,000 of those comments were unique and the rest consisted of duplicate remarks sent through letter-writing campaigns.
It was unclear how many of the comments focused on LTACs. Citing a restriction against discussing regulations under consideration, CMS officials declined last week to answer questions about the proposed regulations or how the agency might respond to critics' comments.
Among those comments are several from members of the House and Senate. In one letter to CMS Administrator Mark McClellan that echoed others from Capitol Hill, six lawmakers representing both parties argued that although they are concerned about LTACs abusing the Medicare system, medically based criteria for patient admissions is a better solution than the 25% rule.
"The 25% `patient quota' rule substitutes an arbitrary rule for the medical decisions that should be made by physicians," said a comment letter signed by Georgia's House delegation.
LTACs care for the most complex patients who cannot be properly treated in any other type of facility, Laughlin said.
In its comment letter, MedPAC said the CMS' proposed rule for LTACs is risky and "may be inequitable" because the 25% rule does not ensure patients receive care in the best post-acute setting, does not apply to free-standing facilities and may be circumvented by the construction of free-standing LTACs instead of hospitals within hospitals.
"The MedPAC letter is dynamite for folks who want to blow up the CMS' LTAC proposal," said Alec Vachon, president of Hamilton PPB, a Washington lobbying firm.
Several hospital officials argued that the CMS should study the LTAC matter more thoroughly before making radical regulatory changes.
"The goal is to try to identify what LTACs do and what types of patients we should be taking so we don't overlap with other providers in the industry," said Margaret Crane, chief executive officer of 75-bed Barlow Respiratory Hospital in Los Angeles. Because Barlow is a free-standing facility, it would not be affected by the proposed 25% rule, but the hospital's plan to expand in coming months by building hospitals within hospitals would be jeopardized, Crane said.
Some health policy analysts said facilities such as Barlow shouldn't sweat too much. "I would not be surprised to see CMS withdraw their aggressive proposed change to the LTAC criteria," said Larry Goldberg, a director in the Washington office of Deloitte & Touche.
Outside of LTACs, most of the industry's comments on the proposed PPS rule centered on changes to the wage index used to calculate the portion of Medicare payments based on hospital labor costs. The American Hospital Association told the CMS that a hospital whose wage index declines 5% or more as a result of newly proposed wage regions should have its loss limited to 5%.