CMS rule quirk irks health execs

Plenty of multicampus hospitals have a beef with the latest CMS rule on the federal electronic health-record system subsidy program, but theirs is a problem only an act of Congress can solve.

The consensus among industry leaders for the aggrieved hospitals is that CMS rulemakers had a solid legal peg on which to hang their disappointing interpretation—that multicampus hospitals using one Medicare provider number are ineligible for the same level of federal EHR subsidy payments as similar organizations in which each hospital has its own Medicare provider number.

“In a sense, the administration, in printing the final rule, has spoken,” said Chip Kahn, president and CEO of the Federation of American Hospitals. “Their view and that of the general counsel at HHS is reflected in that.” Kahn said each of the 22 for-profit hospital corporations that make up the federation has at least a few hospitals affected by the quirk in the federal EHR subsidy program. Several members have many.

The interpretation came in a final rule issued July 13 that establishes meaningful-use criteria and procedural guidelines for EHR subsidies under the American Recovery and Reinvestment Act of 2009. Under that rule, hospitals that use one Medicare provider number for all campuses qualify for only a single $2 million “base payment.” Meanwhile, systems that use multiple provider numbers could qualify for multiple base payments. A second portion of the Medicare EHR subsidy payment is based on patient volume, with $200 paid per discharge, beginning at 1,150 discharges and capped at 23,000.

Randy Thomas, vice president of product strategy and planning for the Premier healthcare alliance, said as many as 50 of its hospital customers are affected by the exclusionary policy. The maximum amount a system can receive under the federal IT subsidy scheme is about $11 million per hospital, according to Thomas. Conceivably, she said, a five-hospital system could receive as much as $55 million if all five hospitals have their own Medicare provider numbers, while a five-campus hospital with one number would get only $11 million.

Don May, vice president for policy at the American Hospital Association, said it's difficult to quantify the financial impact the rule has on hospitals across the country.

First, the AHA doesn't keep statistics on the number of hospitals operating under a single provider number, he said. Second, the additional, volume-based component to the subsidy formula and individual hospitals' estimations needed as to their potential to meet the meaningful-use criteria, would necessitate a hospital-by-hospital assessment to come up with hard numbers on the financial effect of the rule, May said.

Based on anecdotal evidence, though, “It's absolutely a huge issue,” May said. “We're hearing about it from hospitals across the country that are affected by it.”

On July 20, Premier sent a four-page letter of complaint to the Health Subcommittee of the House Ways and Means Committee, which held a hearing on meaningful use and the government's efforts to promote health information technology adoption.

It called on Congress to redefine hospitals eligible for the subsidy program as either those with a Medicare provider number, or hospitals with an emergency department.

Stephen Hoven, vice president of public affairs for the St. Louis-based SSM Health Care system, also submitted a formal letter of complaint to the House committee.

“This is a crucial issue for SSM Health Care hospitals,” Hoven wrote. “For example, SSM Cardinal Glennon Children's Medical Center and St. Mary's Health Center in the St. Louis area operate under a common provider number. Also, St. Anthony Hospital and Bone & Joint Hospital in Oklahoma City operate under a common provider number. SSM Health Care is actively involved in a multiyear, $350 million-plus project to use electronic health records at all of our hospitals in Illinois, Missouri, Oklahoma and Wisconsin. Not receiving the base payments for each of our hospitals will impose a severe financial handicap on our hospitals.”

Hoven cited a “long-standing precedent” that exists to justify changing the EHR payment methodology. The Medicare wage index adjustment treats hospitals as distinct entities for payment purposes, even though they are treated as a single “subsection (d) hospital” by Medicare, Hoven wrote.

“The Medicare wage index methodology allows for these facilities to be treated differently in limited circumstances to account appropriately for facility-specific costs,” Hoven wrote. “These same circumstances exist with respect to an EHR deployed at multiple inpatient facilities comprising a single subsection (d) hospital because each inpatient facility will incur specific EHR-related costs. CMS ignores the existence of those facility-specific EHR-related costs by calculating EHR incentives as if the hospital were comprised of only a single inpatient facility.”

May said the AHA is working on a legislative solution.

“We've done a lot of talking about this and we're looking to see if there are any legislative opportunities out there,” May said.

But the Federation of American Hospitals' Kahn said that in the current environment on Capitol Hill, effected hospitals will be hard-pressed to achieve a legislative fix to their problem.

“We've been talking to the Hill,” Kahn said. “It's an uphill battle because if you do this on the Hill it will be perceived as costing new money, but it is a high priority for us.”