to CMS Medicare Feedback

April 16, 2007

Robin Phillips
Medicare Feedback Group
Centers for Medicare & Medicaid Services
Mail Stop C4-13-07
7500 Security Blvd.
Baltimore, MD 21244-1850

RE: Medicare Hospital Value-Based Purchasing Options Pape

Dear Ms. Phillips:

I am writing on behalf of the Texas Hospital Association and its 502 institutional members in regard to the Medicare Hospital Value-Based Purchasing Options Paper. THA is pleased to have the opportunity to provide written comments on the questions posed in the options paper and to convey our organization’s deep interest in providing as much help as possible in advancing a reimbursement system that encourages the provision of high-quality care.

We applaud CMS for providing hospitals the opportunity to learn about value-based purchasing through the public listening sessions. We encourage additional sessions for stakeholder involvement as the plan matures.

As CMS moves forward with its efforts to make payments sensitive to performance, we urge that it:

proceed incrementally and thoughtfully to avoid unintended consequences when implementing such a complex program;
build predictability and transparency into the design of the program; and
work with the Hospital Quality Alliance, including the American Hospital Association, to develop an implementation plan that provides the infrastructure to collect, verify and display the data while minimizing the administrative burden.

We are encouraged that the plan for implementing VBP would reward hospitals that improve their quality performance as well as those that achieve high levels of performance. This approach would enable all hospitals to engage in the VBP Program, even if they begin with a low absolute level of performance.

Basis of Incentive Payments
CMS asked for comments on which components of the DRG payment should be included as the basis of the incentive. THA encourages CMS to base the incentive on the base DRG payment only, with geographic and DRG relative weight adjustments. This approach would link the incentive payment directly to the clinical services provided during a patient stay. Basing the incentive on all components of the inpatient prospective payment system would needlessly complicate an already complex reimbursement system.

Small Numbers on Individual Performance Measures
CMS asked for input on the small number issue. Under the current RHQDAPU Program, many hospitals report a small number of cases in the measure denominator for one or more of the measures proposed for use in VBP. This issue is of special concern for Texas, which has more than 180 rural hospitals. Requiring a minimum number of cases and a minimum of reported measures would exclude a number of Texas hospitals from full participation in the incentive payment system. Exclusion from participation would create a financial disincentive for small hospitals with already limited resources to invest in infrastructure needed to make improvements.

The problem of small numbers may be lessened as measures are introduced that assess hospital care more broadly. There is no obvious easy solution, and THA encourages additional research in this area. An interim solution could be to roll up data over multiple time periods for qualifying hospitals, along with a neutral explanation on the public reporting site.

Transitioning from RHQDAPU to VBP
We encourage CMS to proceed cautiously and thoughtfully in the implementation of VBP and recommend that CMS phase in the program over several years as outlined in the options paper. In addition to VBP, dramatic changes are planned for the DRG system. A phased-in approach would allow time for necessary adjustments on the part of CMS and hospitals as it is determined how the changes redistributing payments among the DRGs and hospitals will impact reimbursement under the VBP plan.

Compress the Data Submission Period
While THA supports efforts to decrease the time lag between discharge and public reporting, we believe that compressing the time period for submission of data to 60 days following the close of the reporting period is an unrealistic expectation. Many hospitals are struggling with the current 135 day timeframe and have indicated that 60 days is insufficient for completion of the medical record, physician sign-off, submission of the claim and abstraction of the data. THA recommends that CMS retain the current schedule for data submission.

Creating a Single Hospital Quality Data Repository and Data Infrastructure
THA supports the concept of creating a single hospital quality data repository, data infrastructure, and validation methodology in collaboration with The Joint Commission and other stakeholders. This should be done with appropriate confidentiality and security safeguards. We believe this would decrease the administrative burden of reporting.

In conclusion, we suggest that CMS carefully consider how to design the VBP program in a way that builds predictability into the system for hospitals regarding the measures on which they will be reporting, the timeframe and infrastructure used for data submission, and the structure of the performance measurement process and the financial incentives.

THA appreciates the opportunity to make comments on the Medicare Hospital Value-Based Purchasing Options Paper.