There is a need for good of a small sample leaves much in question. The Health Care Financing Administration has indicated that it does not propose to trend the costs from '77, '78 and '79 used in establishing the composite rate. This procedure represents a significant departure from other methods used by the Health Care Financing Administration in establishing ceilings and rates. The Hospital Association of New York State believes that it is inappropriate not to trend costs to the rate period under a prospective methodology. The Health Care Financing Administration has acknowledged that the allocation process does shift some costs to the renal dialysis centers. When the Medicare cost allocation process mandates that costs be allocated to the renal dialysis center, the Health Care Financing Administration cannot then select what it wants to pay for out of the mandated cost allocation statistics. Overhead costs may not be the only items that are affected by the excess allocation to areas other than inpatient. Use of the Bureau of Labor Statistics data in construction of the wage index does not necessarily represent the personnel necessary to staff and support renal dialysis units. It is contended that the proportion of professional personnel necessary to staff renal analysis units is greater than the proportion in the wage index base. The proposed prospective composite reimbursement methodology now transfers the cost of providing routine laboratory tests and the cost of providing aides for home dialysis patients to the facility. Such costs were not included in the base used to establish the rates. The exclusion of such costs in the base then puts another economic squeeze on the providers. The transfer of routine laboratory tests may also mean that fewer routine tests will be provided. This may have an adverse effect on the quality of care rendered to the patient. There is no review mechanism to determine the effects on quality of patient care. The Health Care Financing Administration has acknowledged that the number of exceptions estimated to be granted under the proposed reimbursement methodology would be less than currently granted. Exceptions are needed for patient mix, case mix, intensity, age of patients served, and other issues which facilities believe are justifiable reasons for costs being in excess of the composite rate established by the Health Care Financing Administration. Exceptions should be granted on their merit, not subjected to the cost of some supposedly similar group standards established by some unspecified means. The exceptions methodology in effect precludes exceptions. Effected facilities will be unable to obtain data from other facilities to verify that they are indeed atypical. One of the effects of the proposed prospective reimbursement methodology in New York State will be the dismantling of the national model program to assist home dialysis patients. Under the proposed regulations, the national model program would have to be duplicated by each individual facility providing renal dialysis services. Such an approach dismantles the group purchasing arrangement and adds unnecessary costs to the renal dialysis program. The composite rate will not reduce record keeping in this instance. Use of a composite rate is not consistent with other approaches used by the Health Care Financing Administration. Movement seems to be more toward disaggregation of costs, such as a separate alternate level of care reimbursement approach. A composite rate does not pay for the cost of rendering services to Medicare patients. The composite rate represents a cost shifting to other payors of service. The Hospital Association of New York State believes that insufficient research has been applied in the development of the proposed prospective reimbursement methodology. The data base should be extended. The spread in the range of rates should be examined to determine the reasons why such spreads exist. Different variables for groupings of cost and statistics should be examined. Standards should be tested before being implemented. The effect on patient care should be examined before regulations are implemented which may provide lower quality patient care or deny a patient access to renal dialysis treatment. THE IOWA HOSPITAL ASSOCIATION Suite R 600 Fifth Ave. Des Moines, Iowa 50309 Phone (515) 288-1955 DONALD W. DUNN, President April 22, 1982 COMMITTEE ON Subject: Health Care Financing Administration Proposed Rule on End The Iowa Hospital Association is pleased to have the opportunity to provide you information and comment regarding the HCFA proposal to implement a prospective reimbursement system for dialysis services on an outpatient basis. The proposed rules which were published on February 12, 1982, we believe will have an unfavorable impact upon the people served by the program, remaining citizens of the state of Iowa, and the providers of services. We can state this unequivocally because health care providers in Iowa have worked together in developing an already efficient network that provides a home dialysis rate in excess of 30 percent of total dialysis procedures at the present time. This has been done on a voluntary basis, utilizing two facilities to provide home dialysis training and other satellite facilities to provide outpatient maintenance dialysis. The network now provides for 100 percent referral for the less costly home dialysis service, and as consequence the proposed financial incen tives will not improve on the present performance level of home dialysis. Implications It is estimated that the eight IHA member providers of ESRD services will be shortchanged $2.3 million if the proposed February 12 rules are adopted. It is significant to note that the $2.3 million represents 2.3 percent of the estimated savings to the Medicare program if the regulations were adopted, but the Iowa dialysis patient population represents only one percent of the total number of dialysis patients in the United States. Therefore, the citizens of the state of Iowa would be bearing a highly disproportionate burden of the cost savings the HCFA is trying to achieve. It is further unjust that this is being levied against the responsible parties who have with the 34 percent home dialysis rate created one of the nation's successful home dialysis programs, and already have achieved the 30 to 40 percent rate HCFA considers optimal. 95-703 0-82--25 Furthermore, because there is not a bank of home dialysis patients from which the not-for-profit, hospital-based facilities can draw there is very little relief for the hospitals in the combined prospective payment rate. These facts are being stated to inform those concerned that there is very little room for hospitals to make decisions. The not-for-profit providers have always been audited by the Medicare intermediary and com sequently the costs claimed have been been verified. To say that there is $2.3 million of fat in the Iowa satellite network would be irrespon sible and would indicate that there has been no effort extended to ascertain the circumstances. In addition to being audited by Medicare intermediaries these providers are run by governing boards who are volunteers in public service and serve without profiting from the operation of the hospital. The HCFA will be making the governing board subject to tremendous payment shortfalls These boards are already faced with reduced Medicaid payments across the board, increasingly stringent Medicare routine cost limitations, and financial pressures to maintain quality service through appropriately compensated personnel. Additional shortfalls cannot be shifted to charge based payers. We can say, therefore, while the impact of the proposed rules will vary from hospital to hospital some of the satellite facilities in the network will be hard pressed to defend retention of their current unit in light of the escalating losses. Accessibility to patients is the real concern of the hospitals and the network. Presently, End Stage Renal Disease Network 8 has set a goal to provide dialysis services that are reasonably accessible to patients in terms of travel distance. The network felt that sixty miles one way air distance was a maximum distance patients should be required to travel for dialysis. If any facility should drop from the satellite network it will greatly increase the travel time. Since transportation cost is presently a patient responsibility his outof-pocket costs will substantially increase. Travel time can also be a valid safety factor during times of inclement weather in Iowa such as this past winter. Also, if a patient is currently employed increased time away from the job to secure treatment will endanger the patient's employment status. Some patients, in fact, may be uprooted from their communities, where they have social and moral support, to move to a metropolitan community totally foreign to their previous environment. The trauma of relocation will certainly impact upon the tenuous balance the ESRD patient must contend with from a psychological and physical standpoint. Therefore, the remaining centers should expect to receive patients with more complex problems and higher admission rates as inpatients because of the reduced accessibility over that which was previously enjoyed. Another ripple effect of possible closings of satellite facilities is that the space previously allocated to the centers will be incorporated back into acute and ancillary areas of the hospitals. Therefore, while HCFA may have reduced some of the outlay for the overhead they are presently requiring to be allocated to the renal centers this allocation will revert back to the hospital and manifest itself in the acute costs that must be reimbursed. The total savings, therefore, will not be the amount first expected. A net result will be that patients will have reduced accessibility and care; while the targeted savings will not be achieved. Payment Rate In reviewing the proposed reimbursement rate it was found that the most common rate is $119. This is for rural Iowa. The lowest cost in an Iowa facility is $144. Many larger rural facilities have even greater costs and much larger shortfalls. Moreover, the difference between Iowa metropolitan and rural rates is not that great because the highest metropolitan rate is only $128. The highest metropolitan cost projected amount is in excess of $262. The gross inequity between the cost and the proposed payment is indicative that proper studies have not been conducted and there is a heavy reliance upon data collected many years ago. Apparently, there has been no attempt to update early data for inflation that has taken place due to the increasing costs of supplies, equipment, salaries and wages. These increased costs would be evident if the HCFA would process the requests for exception to the rates for the years 1979 and 1980 that have been filed by Iowa providers. Compounding the problem of the data lag is the element of the wage index. The wage index we believe does not accurately reflect the cost of routine care let alone the costs of the more specialized requirements of the person staffing the renal dialysis center. Iowa hospitals employ the health care professional, generally an R.N., specialized in the ESRD patient, to staff the unit. These professionals are better able to assess and assist patient in meeting their health care needs, rather than the technician that merely operates the equipment. The prospective rate simply does not reflect or adequately address the differences in labor rates paid for dialysis center staff. Within the rate computation we believe that a five percent adjustment in the hospital rate is grossly inadequate to provide equity over the freestanding dialysis rate. The costs allocated down to the hospital-based facility are those costs incurred because of Medicare Conditions of Participation, reimbursement principles, and the multifaceted health delivery approach of the hospital; costs the free standing center is not subject to. Also we believe that if the hospital patients were presently being serviced by free-standing centers, hospital admission rates would be greater because the free-standing centers would not be able to serve the patient that the hospital outpatient center serves through the extensive hospital total health care provision. Exception Process The HCFA has stated that there will be very few exceptions given. This is understandable because the regulations do not define with objective standards what institutions would qualify for exceptions. For example, with a typical patient mix, the burden of demonstrating that a typical mix exists is placed upon the institution that does not have access to |