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Centers for Medicare & Medicaid Services
Submitted electronically,

Re: CMS-1461-P

Dear CMS Colleagues:

The Center for Medicare Advocacy (Center) is pleased to provide the Centers for Medicare & Medicaid Services (CMS) with comments on the Notice of Proposed Rule Making (NPRM) CMS-1461-P published in the Federal Register on December 8, 2014 (79 Fed. Reg.  72759). The Center, founded in 1986, is a national, non-partisan education and advocacy organization that works to ensure fair access to Medicare and to quality health care.  At the Center, we educate older people and people with disabilities to help secure fair access to necessary health care services.  We draw upon our direct experience with thousands of individuals to educate policy-makers about how their decisions affect the lives of real people.  Additionally, we provide legal representation to ensure that people receive the health care benefits to which they are legally entitled, and to the high quality health care they need. 

We are commenting on only several of the issues addressed in the proposed rules that we believe most directly affect Medicare beneficiaries.  We are troubled by CMS’s presentation of these issues.  The proposed rules would allow ACOs to get considerably more beneficiary-identifiable claims data, reduce the already limited possibility that beneficiaries will choose to opt out of giving ACOs access to this information, and allow hospitals to steer beneficiaries to post-acute providers with whom they have financial relationships (while ignoring post-acute providers that might be able to provide more effective care).  In combination, these changes would benefit ACOs and their provider members, but would not improve care for beneficiaries.  CMS’s repeated claim that care coordination would be improved by these changes rings hollow with us.  These provider-driven changes would enable ACOs to cherry-pick beneficiaries and steer beneficiaries to their business partners, whether or not they would be likely to provide the best post-acute care to patients.  Our specific comments follow.

  1. Claims data sharing and beneficiary opt-out

Under current rules, once an ACO formally requests beneficiary-identifiable claims data, it must give the beneficiary written notice of the right to opt out.  The written notice can be provided either when the beneficiary visits the provider or earlier, by mail.  79 Fed. Reg. 72787. 

Proposed revisions would allow beneficiaries to call 1-800-Medicare to decline claims data sharing, require providers to post a notice with updated template information about claims sharing, and require providers to have copies of written forms available for beneficiaries who request them.  79 Fed. Reg. 72789.  CMS contends that the changes would reduce burden for beneficiaries, by eliminating the need to mail back opt-out forms; minimize beneficiary confusion; and be more comfortable for beneficiaries than dealing directly with the provider, 79 Fed. Reg., 72789-790.

Center Comment:  We support expanding the options available to beneficiaries to opt-out of claims data sharing, for the many reasons identified by CMS.  However, we also support retaining the requirement of beneficiary notice at the time the ACO formally requests beneficiary-identifiable claims data.  Timely notification is appropriate and necessary to enable beneficiaries to make meaningful opt-out decisions at the time when the issue is most relevant to them.

  1. Payment requirements and other program requirements that may need to be waived in order to carry out the shared savings program
  2. Three-day rule for skilled nursing facilities (SNFs)

CMS suggests that waivers of the three-day rule may be appropriate.  We agree with CMS’s description of the changes in medical practice since Medicare was enacted 50 years ago that make the three-day rule obsolete.  While the Center supports elimination of the three-day inpatient rule as a general matter, we believe two additional requirements are needed to ensure that Medicare beneficiaries are placed in appropriate SNFs that are most likely to provide them with appropriate care. 

First, we suggest that only those SNFs that have at least a three-star rating in health survey results be permitted to participate in an ACO.  The CMS proposed requirement of a three-star rating, which may refer to the overall or composite rating, is ambiguous and insufficient. 

Under the rating system reported on Nursing Home Compare, SNFs are separately rated on health surveys (unannounced annual and complaint surveys conducted by state survey agencies) and on the self-reported staffing and quality measures.  In addition, Nursing Home Compare reports a composite measure, which begins with the health survey results and allows adjustments based on the two self-reported measures.  There has been an enormous amount of gaming by nursing homes, resulting in large increases in the numbers of facilities with low health surveys receiving higher composite scores.  See Katie Thomas, “Medicare Star Ratings Allow Nursing Homes to Game the System,” The New York Times (Aug. 24, 2014),  Poor quality facilities, as determined by health surveys, can nevertheless get a three-star (or higher) composite rank by gaming their staffing and quality measure information.  The New York Times reported that nearly two-thirds of 50 facilities on CMS’s watch list (i.e., the Special Focus Facility list) achieve four and five stars in staffing and quality measures.

In response to The New York Times’s investigative report, CMS announced plans to make significant changes to the Star rating system – implementing focused survey inspections nationwide; requiring payroll-based staffing reporting; adding quality measures (now, antipsychotic drug rates, later, hospital readmission rates); requiring timely and complete inspection data; and improving the scoring methodology to emphasize data that are verified, rather than self-reported.  White House, “Administration Announces New Executive Actions to Improve Quality of Care for Medicare Beneficiaries” (White House Statement, Oct. 6, 2014),; CMS, “CMS Announces Two Medicare Quality Improvement Initiatives” (Press Release, Oct. 6, 2014),  

CMS needs to ensure that only facilities with at least three stars in the health survey, not three stars in the composite Star Rating score, are eligible to participate in ACOs.

Second, we recommend that only SNFs that meet the staffing ratio used in Nursing Home Compare for four and five stars for the staffing measure be permitted to participate in an ACO.

Although nurse staffing is a critical prerequisite for high quality care in a nursing home, self-reported nurse staffing data are inflated and unreliable.  In addition to the gaming described by The New York Times, the Center for Public Integrity reported in November 2014 that it analyzed more than 10,000 nursing homes, comparing staffing levels reported on Nursing Home Compare with staffing data calculated from facilities’ Medicare cost reports.  It found "More than 80 percent of [more than 10,000] facilities reported higher registered nurse staffing levels" on Nursing Home Compare than the investigative report calculated from Medicare cost reports.   Moreover, the investigative report found, "In more than 25 percent of nursing homes nationwide, the listed amount on Compare was at least double the level in the cost reports."  With funding from the Improving Medicare Post-Acute Transformation (IMPACT) Act of 2014, the White House and CMS announced that CMS will implement the requirement of the Affordable Care Act that nursing facilities report staffing based on electronically-submitted payroll data.  These changes have not yet been implemented.

At present, CMS’s scoring methodology for nurse staffing under the Five-Star Rating System sets specific hours per resident day for each star rating, separately for registered nurse staffing and for all nursing staff.  CMS, Design for Nursing Home Compare Five Star Quality Rating System, Technical Users Guide, page 10, Table V (2012),

We recommend that only SNFs achieving four or five stars on each of the staffing measures (registered nurses and total nursing staff) be eligible to participate in an ACO.

CMS Request for comment

CMS specifically requests public comment on “what specific activities should be monitored to ensure that items and services are properly delivered to eligible patients, that patients are not being discharged prematurely to SNFs, and that patients are able to exercise freedom of choice and are not being steered inappropriately.”  79 Fed. Reg., 72819.

Center Comment: In addition to limiting the eligibility of participation in ACOs to SNFs that have high quality ratings in survey and staffing measures, we also suggest that CMS closely evaluate back-and-forth movements between hospitals and SNFs as indicators of premature hospital discharges to SNFs.  Specifically CMS should monitor SNFs’ rehospitalization rates and SNFs’ sending residents to hospital emergency rooms or to acute care hospitals where they are placed in outpatient status (observation status or long outpatient status). 

CMS also needs to monitor participating SNFs to ensure that the care they are providing is high quality.  The Inspector General’s report on adverse events in nursing facilities found high rates of adverse events, rehospitalizations, and even deaths within, on average, 15.5 days of admission to a SNF.  OIG, Adverse Events in Skilled Nursing Facilities: National Incidence Among Medicare Beneficiaries, OEI-06-11-00370 (Feb. 2014),
This report identifies a number of poor outcomes in SNFs that CMS should closely monitor – including medication errors, falls, and infections – to ensure that only SNFs that actually provide high quality care to residents are eligible for participation.

Finally, the Center is concerned that the only costs considered in the ACO system are Medicare costs.  Yet we know that Medicare costs can be saved if costs are shifted to other payers, particularly Medicaid.  Experience with prior cost-saving measures should make CMS proceed with caution and analyze the data carefully.

When the prospective payment system for acute care hospitals was implemented more than 30 years ago, one explicit purpose was reducing hospital costs.  A considerable amount of research found, as expected, that hospital lengths of stay were reduced following the introduction of PPS.  There is certainly a benefit to that result, in and of itself, both for public payment systems and for beneficiaries.  But some less predictable and less beneficial results also occurred. 

Research on the treatment of beneficiaries with hip fractures found enormous changes in care settings and costs following the implementation of PPS.  One study found that before PPS, patients received rehabilitation in the hospital and generally went home, either directly from the hospital or following a short stay in a SNF.  After PPS, hospital lengths of stay declined from 22 days to 13 days and the percentage of residents discharged to SNFs increased from 38% to 60%.  The expectation was that patients could get the same rehabilitation services in SNFs that they had received in acute care hospitals, but at lower cost.  This is not what happened.

After PPS, the researchers found that, for various reasons, “rehabilitation therapy within the nursing homes was less effective than inpatient therapy before PPS.”  The outcomes for patients with hip fracture were worse following PPS.  Instead of getting therapy and returning home, patients were more likely to be in the nursing home a full year after their hip fracture; a 200% increase in the rate of nursing home residence was reported by the study after PPS was implemented.  John F. Fitzgerald, M.D., et al, “The Care of Elderly Patients with Hip Fracture,” New England Journal of Medicine 319(21):1392-1397 (Nov. 24, 1988).  The researchers called this finding “alarming” and their most important finding.  Services were not the same in the different settings.

Not only were care outcomes worse for beneficiaries with hip fractures following PPS, but expected cost savings also did not materialize as costs moved elsewhere.  After PPS, people with hip fractures spent less time in the hospital, but these patients then became Medicare patients in SNFs and then, frequently, as the researchers found, long-term residents of nursing homes.  Medicare payments to SNFs increased in the years following implementation of PPS for hospitals.  And patients who would have gone home from the hospital now found themselves living in nursing facilities on a long-term basis, generally, as Medicaid beneficiaries.  Savings in Medicare acute care hospital costs were accompanied by increases in Medicare and Medicaid post-acute costs.   Costs shifted from one setting to another, with worse care outcomes for beneficiaries.  Lessons learned from this experience are that lower-cost settings do not necessarily provide comparable services and that new health care costs may emerge in other settings.

More recent research comparing IRFs and SNFs have had similar findings.  An analysis of post-acute care for patients receiving hip fracture repair found that 16% of the SNF patients, but none of the IRF patients, were discharged to a nursing facility.  Mallinson T, Deutsch A, Bateman J, Tseng HY, Manheim L, Almagor O, Heinemann AW, "Comparison of discharge functional status after rehabilitation in skilled nursing, home health, and medical rehabilitation settings for patients after hip fracture repair," Arch Phys Med Rehabil, 2014 Feb; 95(2): 209-17,  As we know, long-stay residents of nursing facilities are likely to be or become Medicaid beneficiaries. 

If hospitals refer patients to SNFs, instead of IRFs, for post-acute rehabilitation and if these patients become long-stay residents whose care is paid for by Medicaid, the ACOs will have failed.  CMS must monitor this possible outcome closely and carefully.  CMS needs to make sure that post-acute costs are not simply shifted to the Medicaid program.

  1. Homebound requirement

As suggested by some ACOs and others, CMS asks whether the homebound requirement for home health care should be waived.  79 Fed. Reg., 72822-823.

Center Comment: While the Center supports waiver of the homebound requirement, we want CMS to limit home health agencies to high quality providers.  We incorporate here our concerns, described above, about star ratings, which are just in the process of being developed for home health agencies, and our concerns, discussed below, about financial relationships between hospitals and post-acute providers, including home health agencies.

  1. Waivers for referrals to post-acute care settings

At the request of ACOs and MedPAC, CMS proposes to allow hospitals to refer patients to “high-quality SNF and HHA providers with whom they have established relationships, rather than presenting all options equally.”   79 Fed. Reg., 72824.  CMS describes “high quality post-acute providers” as including providers with which hospitals “have relationships (either financial and/or clinical) for the purpose of improving continuity of care across sites of care.”  79 Fed. Reg., 72825.

Center Comment:  CMS should not allow ACOs’ financial relationships to be an independent basis of referrals.  ACOs’ financial relationships are unrelated to both continuity of care and quality of care for patients.  We strongly oppose allowing hospitals to be permitted to refer patients solely to providers with which they have financial relationships.  There is no necessary correlation between an ACO’s financial relationship with a post-acute provider and that provider’s quality of care.

We are particularly concerned that CMS’s statement of the referral issue totally ignores an entire category of post-acute providers that typically have better health outcomes than SNFs for patients needing post-acute care – inpatient rehabilitation facilities (IRFs).   Our concern is that hospitals will avoid recommending IRFs, even when they are available in the geographic area and are the most medically appropriate post-acute setting for the patient, solely because their charges to the Medicare program are higher than SNFs’ charges.  ACOs’ financial interests will supersede patients’ best interests in high quality post-acute care. 

We recommend that only SNFs described above (with high health survey and nurse staffing scores on Nursing Home Compare and low rates of sending residents to the hospital) should be included on any “preferred post-acute provider” list.  The financial relationship between the hospital and SNF should not be the basis of referral.

CMS asks “What additional beneficiary protections and safeguards should be considered and put in place to prevent abuse of such a waiver [of referrals to preferred post-acute providers]?”  79 Fed. Reg., 72826.

Center Comment: Hospitals should be required to identify post-acute providers in all categories that exist in the community as part of the referral process – that is, as available, the full range of IRFs, SNFs, home health agencies, and long-term acute care hospitals.  Hospitals should also be required to explain, orally and in writing, the type of care and services that each setting provides and associated cost-sharing obligations for beneficiaries in each setting.  Patients should be informed of the extent of therapy and physician oversight in IRFs, as compared to SNFs.  With respect to cost-sharing, patients who have already met the inpatient hospital deductible should be told that they will not have any additional cost-sharing obligations in an IRF.  If they go to a SNF, on the other hand, they will have substantial cost-sharing obligations ($157 per day in 2015, beginning on day 21).

If hospitals are permitted to target referrals to providers with which they have financial arrangements, they should be obligated to disclose, orally and in writing, the financial relationship as part of the referral process.

As discussed above, CMS must also monitor the Medicaid payments made for patients who are referred to SNFs to determine the full costs to the government of hospital referral patterns.

  1. Other options

Among other options for improving the transition to two-sided performance-based risk arrangements, CMS discusses beneficiary attestation – beneficiary identification of the provider that they consider responsible for coordinating their care.  79 Fed. Reg., 72828-829.  CMS is testing beneficiary attestation in the Pioneer ACO program. 

CMS describes a number of concerns with beneficiary attestation: provider coercion, ACO targeting “potentially lucrative beneficiaries,” avoiding “those less likely to produce savings,” ACOs providing gifts or services to beneficiaries.  79 Fed. Reg., 72829.

We question what purpose beneficiary attestation serves.  As described by CMS, beneficiary attestation opens the door to marketing abuses by ACOs and does not improve continuity of care or quality of care for beneficiaries.  Why is it under consideration? 

Thank you for the opportunity to comment.

Toby S. Edelman
Senior Policy Attorney
Center for Medicare Advocacy
1025 Connecticut Avenue, NW, Suite 709
Washington, DC  20036
202 293-5760, extension 104
tedelman@medicareadvocacy.orgFeb. 6, 2015

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