CAH OIG Report and Recommendations

1. CAH OIG Report and Recommendations Friday, September 27, 2013 Elizabeth G. Cobb MPH Kentucky Hospital Association

2. Office Of Inspector General • Report released by OIG under Federal Health and Human Services • August 15, 2013 • Report and Recommendations requested by a Congressional Committee • Significant impact on majority of the nation’s CAHs

3. OIG Report

4. OIG Report – Objectives • To determine the extent to which CAHs would meet the location requirement if required to re-enroll in Medicare • To Calculate potential savings to Medicare and beneficiaries if CMS decertified CAHs that would not meet the location requirements if required to re-enroll.

5. CAH Certification Requirements CAHs must meet two location-related requirements • CAHs must be located at least a certain distance from other hospitals (including CAHs, acute, psych, rehab, LTACH and Childrens) • CAHs must be located in a rural area

6. Distance Requirement • Those wishing to obtain certification must: • Be located more than a 35-mile from a hospital or CAH • By being located more than 15 mile from a hospital or CAH in areas of mountainous terrain or areas where only secondary roads available.

7. Necessary Provider CAHs • CAHs could be designated without meeting distance criteria by being designated as a “Necessary Proider” • Criteria included being rural, health profession shortages, etc. • NP Provision expired January 1, 2006 under the Medicare Prescription Drug, Improvement and Modernization Act • Existing CAHs allowed to retain their NP designation indefinitely

8. Increased Scrutiny • 2011, President published “Plan for Economic Growth and Deficit Reduction” • Reduce CAH reimbursement to 100% of cost • Eliminate CAH designation for CAHs less than 10 miles from another CAH • President’s budget proposals have made similar recommendations

9. OIG Methodology • Used mapping software • Considered types of roads • Survey of States’ Department of Transportation • OIG stated they used older datasets and mapping and may have “underestimated the number of CAHs that would not meet the distance criteria”

10. Findings • 849 of the 1,329 CAHs (64%) would NOT meet the distance requirement • 1.2 million beneficiaries received services at these CAHs in 2011 • 306 CAHs were 15 miles or less from another hospital

11. OIG Recommendations CMS Should: • Seek legislative authority to remove NP CAHs’ permanent exemption from the distance requirement • Seek LA to revise the CAH CoPs to include alternative location-related criteria • Periodically reassess CAHs’ compliance with location requirements • Ensur that it applies its uniform definition of Mountainous Terrain to all CAHs

12. Kentucky • 15/29 Kentucky CAHs made the OIG list • All 15 CAHs were 15 miles or less from another hospital or CAH

13. Problems with OIG Report • CAHs have a substantial economic impact on local communities. Wages and taxes far outweigh the savings that would be made to Medicare program • Most Kentucky CAHs would not survive under traditional hospital payment system • Physician and provider recruitment is often spearheaded by local CAH. If CAH closes, would lose primary care services as well • There are 39 Kentucky counties with NO hospital or CAH. It does not make sense to measure distance between hospitals and not patient travel distance.

14. CAH Portion of Medicare Budget

15. What Comes Next • Educating the media and public! • The report alone does not implement, it would require legislation • CAH Value report • Talking points and letters of support

16. Questions or Comments?