How not to conduct a rulemaking

A well done article in Modern Healthcare raises more questions about CMS' analysis and motivations than it answers with regard to the agency's proposal to change facility fees for outpatient services. 

Quick summary:

CMS has proposed tighter controls over facility fees as part of a plan to redirect billions of dollars Medicare spends annually on outpatient care. Its proposal, though preliminary, is already drawing fire.

I make no judgment about the appropriateness of the rule change, but I have to raise questions about the manner in which the proposal was made.  Specifically, there seems to be an aversion to transparency on the part of the agency as to the reasons for the change and the likely impacts.  Here are more excerpts from the article:

The CMS didn't estimate the financial impact of the coding change and declined a written request for any data indicating upcoding by hospitals. The agency also declined to provide any comment on the rationale for the draft rule.

In proposing the facility fees change, the CMS appears to be searching for a simple way to prevent hospitals from picking service codes at a higher level than they really deserve, an illegal practice known as upcoding. Hospitals deny they engage in upcoding.

Hospitals argue that they shouldn't be taken to task for any confusion over how to bill these charges properly. During the past decade, the industry repeatedly urged the CMS to set standards for billing emergency department facility fees. But in 2007, CMS officials wrote that the effort “was proving more challenging than we initially thought.” The proposed new rule states that national guidelines are “not feasible,” hence the decision to give up on them and adopt a flat-rate payment.

Jugna Shah, a hospital outpatient billing expert who is president of Washington-based Nimitt Consulting, said CMS officials in recent years haven't given any hint that they believe some hospitals game Medicare. “It caught me off guard,” she said of the proposed rule. The CMS could be searching for a “quick fix” to the controversy over alleged upcoding, she added.

Along the same lines, the American College of Emergency Physicians advised its members that the CMS “might be reacting to the media attention and speculation” about upcoding, noting the “harsh reprimand” from Holder and Sebelius.

If the CMS wants to be more persuasive that the direction of its proposal is sound, the agency should be more forthright about the thought process behind the proposed change. Otherwise, this just looks like a knee-jerk reaction at the behest of the Attorney General and the Secretary of Human Services.