Premier healthcare alliance, which encompasses 2,300 not-for profit hospitals and health systems and more than 63,000 other healthcare organizations, addressed healthcare reform in a letter to Congressional leadership Jan. 12. Premier told Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi that the organization supports healthcare reform. It also offered several recommendations regarding aspects of the two healthcare reform bills now before Congress.

Below is the open letter, republished in its entirety.

Dear Speaker Pelosi and Majority Leader Reid:
 
On behalf of the Premier healthcare alliance, serving more than 2,300 leading not_for_profit hospitals and health systems and more than 63,000 other healthcare sites, we strongly support your efforts to reform the healthcare system and to enact meaningful reforms to expand coverage, improve the quality of healthcare and reduce costs.
 
The Premier healthcare alliance sees reform as essential to the sustainability of our healthcare system.  We believe your efforts will empower hospitals to make further strides in quality improvement and cost containment by transforming the way healthcare is delivered.  As the conference continues its work of merging the two healthcare reform bills, we have some recommendations to share that will ensure the goals of reform are fully accomplished.
 
Readmissions
We are very concerned about the readmissions policy as currently drafted.  A technical correction is urgently needed to the readmissions policy contained in both the House and Senate bills to obtain the correct payment penalties for hospitals with higher than expected readmission rates.  Since the excess readmissions ratio is the percentage of readmissions to expected readmissions, it must be applied to payments for readmissions and not to payments for all admissions, as the current language incorrectly indicates.  We strongly urge you to correct the language to conform to Congress' intent on this policy.
 
Accountable care organizations
Premier strongly supports the Senate's provision that creates permanent voluntary accountable care organizations (ACOs) to manage population health.  We also support provisions allowing hospitals to initiate eligible ACOs and those allowing CMS to test a variety of innovative payment mechanisms to provide accountable, integrated care, as both the House and Senate provisions would do.  These approaches will expand the diversity of ACOs and more quickly inform us on the best ways to improve quality while curbing the growth of healthcare spending.
 
Medicare hospital value-based purchasing
Premier strongly supports the Senate's budget-neutral implementation of a Medicare hospital value-based purchasing program that links payment to quality outcomes.  In addition, we support the enhanced investment in quality measure development and other provisions to help hospitals provide better care for patients such as the creation of quality improvement technical assistance and implementation grants.
 
Hospital-acquired conditions
Premier opposes the 1 percent penalty for hospital-acquired conditions (HACs) included in the Senate bill.  The punitive approach to quality and patient safety improvement included in the Senate reform bill leads to conflicting incentives.  Specifically, the Senate HAC policy reduces by 1 percent total Medicare payments to hospitals in the top quartile of national HAC rates.  It also incorporates six infections into the value-based purchasing section of the bill.  These new policies would be in addition to the current regulatory policy that prevents hospitals from being paid for the higher diagnosis-related group (DRG) if one of a current list of 10 conditions is acquired during a patient's stay.  In other words, if the Senate bill were to be enacted, federal policies could penalize hospitals three times for the same infection.  At a minimum, the final health reform bill should be amended to ensure that conditions already included in the current inpatient prospective payment system HAC policy and hospital value-based purchasing policy be excluded so that reductions are not duplicated.
 
Center for Medicare and Medicaid Innovation
We also strongly support the Senate's commitment to test new payment and service delivery models by including provisions to create a bundled payment pilot project and to establish a Center for Medicare and Medicaid Innovation.
 
340B Drug Pricing Program
Premier supports provisions that allow hospitals that participate in the 340B Drug Pricing Program to purchase drugs and other products through their group purchasing organizations (GPOs) in the inpatient setting.  We believe, however, that language should be strengthened to ensure hospitals can continue to work with their GPOs. We also support the bill's provision that creates new exceptions allowing 340B entities to work with GPOs in the outpatient setting in specific situations, such as when there is a drug shortage.  This will ensure that these hospitals not only have access to these drugs but also have access to the best pricing available.
 
Medical device tax
Premier supports the Senate structure of the $20 billion medical device tax, which would be levied based on market share, rather than the House version, which applies at point of sale.  We are concerned that the structure of the tax in the House bill would make it easier for manufacturers to pass the cost on to hospitals.  We believe that Democratic leadership intends this $20 billion contribution to the healthcare reform effort to be absorbed by medical device manufacturers, who are most likely to benefit from healthcare reform, rather than by other sectors of the healthcare community that are already contributing in other ways to the important endeavor of expanding coverage and improving healthcare quality.  Adopting the Senate structure, rather than the House structure, will ensure that this occurs to the largest extent possible.
 
In addition to adopting the Senate tax structure, we urge you to defer to the House language for the implementation date, which would levy the tax beginning in 2013, rather than 2011, as the Senate bill would do.  A later imposition of the tax would provide the opportunity for all parties in the healthcare supply chain to ensure that the new tax is not added to their purchase price during their negotiating process with medical device manufacturers.

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