AHA : Advocacy : Prevent Backdoor Cuts: Oppose Cuts in the FY 2008 IPPS Proposed Rule

Prevent Backdoor Cuts:

Oppose Cuts in the FY 2008 IPPS Final Rule

The Centers for Medicare & Medicaid Services’ (CMS) final inpatient prospective payment system (IPPS) rule for fiscal year (FY) 2008 includes more than $22 billion in cuts over five years to hospital payments for providing care to the elderly under Medicare. The new rule, released by CMS August 1, is an unnecessary and demoralizing blow against hospitals' ability to care for patients, and clearly flies in the face of Congressional intent.

Under the IPPS, each patient's case is categorized into a diagnosis-related group (DRG) that has a set payment rate. The final rule refines the DRG system by creating 745 new Medicare-Severity DRGs (MS-DRGs) to replace the current 538 DRGs, and revises the complication or comorbidity list. A key misstep in the rule is the "behavioral offset," which will cut payments by more than $20 billion over five years. The offset includes a cut of 1.2 percent in FY 2008, 1.8 percent in 2009 and 1.8 percent in 2010to eliminate what the agency claims will be the effect of greater use of coding for complications and co-morbidities as hospitals move to the new system. While the rule implements a full market-basket update (0.9 percent) for both urban and rural hospital capital payments in FY 2008, it eliminates the capital payment add-on for large urban hospitals, a 3 percent cut. In addition, CMS will phase out the indirect medical education adjustment to capital payments by 2010.

The overwhelming majority of Congress urged CMS not to proceed with its unprecedented behavioral offset. This summer, 269 representatives and 63 senators signed on to a letter explicitly stating their opposition to this cut. In addition, last month the House voted 412-12 to add an amendment to the FY 2008 Labor-HHS-Education appropriations bill that would restrict CMS from spending funds on prospective implementation of the offset. Yet CMS completely disregarded Congressional intent and finalized this massive cut.

Please contact your legislators and let them know that we need legislation to prevent this irresponsible and inappropriate cut, building on the House appropriations amendment. Currently, there is no companion to the House amendment in the Senate. Legislative action is our only opportunity to prevent this devastating cut from becoming reality. We will work to identify the appropriate legislative vehicle, but for now, please let your House and Senate members know that they must work with us to legislatively stop this unwarranted cut to services for Medicare beneficiaries.

Cutting payments for services for America's seniors will put in jeopardy hospitals' ability to care, not only for Medicare patients, but also for anyone who comes through the doors. We must work together as a field and with Congress to send a clear message - cuts to hospital services threaten care for the elderly and disabled covered by Medicare. This page highlights our advocacy efforts.

Congressional Letters Opposing Proposed FY 2008 IPPS Rule

House letter urging block of behavioral offset implementation (Altmire-Welch), (Open as of September 20, 2007)

House letter opposing proposed FY 2008 IPPS Rule (J. Lewis-Weller), List of signees (Closed as of June 13, 2007)

Senate letter opposing proposed FY 2008 IPPS Rule (Salazar-Roberts), List of signees (Closed as of June 6, 2007)

Other Letters Opposing Proposed Cuts

Letter to HHS from Matthew T. Crosson, President, The Long Island Association, July 30, 2007

Letter to HHS from Ralph J. Schulz, President/CEO Nashville Area Chamber of Commerce, July 26, 2007

Letter to HHS from Joseph B. Blake, President/CEO Denver Metro Chamber of Commerce, July 26, 2007

Letter to CMS from Webb Scott Brown, President, Montana Chamber of Commerce, July 26, 2007

Letter to HHS from Daniel L. Juneau, President, Louisiana Association of Business and Industry, July 23, 2007

Letter to CMS from Russell Holman, MD, President, Society of Hospital Medicine, July 17, 2007

Letter to HHS from Russell Holman, MD, President, Society of Hospital Medicine, July 17, 2007

Letter to HHS from Floyd Warner, President, Pennsylvania Chamber of Business and Industry, July 12, 2007

Letter to HHS from Glenn Hamer, President, Arizona Chamber of Business and Industry, July 11, 2007

Letter to the White House from Nevada Governor, Jim Gibbons, July 10, 2007

Letter to HHS from Thomas J. Donohue, President, U.S. Chamber of Commerce, June 28, 2007

The Coalition to Protect America’s Health Care, an organization of hospitals; national, state and metro hospital associations; and businesses that fund advertising designed to raise hospital and health care issues to a high level of visibility, has developed an ad thanking members of Congress for signing letters to CMS protesting “backdoor cuts” imposed by the proposed inpatient PPS regulation. The ad will run in publications that are widely read on Capitol Hill. For more on the congressional letters opposing the proposed cuts, see “Prevent Backdoor Cuts” under “Highlights” below.