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DFRR comment letter final 10 10 07

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October 10, 2007 Sent Via FAX: 202-395-6974 OMB Human Resources and Housing Branch Attention: Carolyn Lovett OMB Desk Officer New Executive Office Building Room 10235 Washington, DC 20503 RE: Disclosure of Financial Relationships Report (“DFRR”): Form Number: CMS-10236 (OMB#: 0938—New), Vol. 72, No. 178 Fed. Reg., September 14, 2007 Dear Ms. Lovett: On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, and our 37,000 individual members, the American Hospital Association (AHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’ (CMS) proposal to establish a mandatory Disclosure of Financial Relationships (DFRR) reporting system for hospital relationships with physicians. We urge the Office of Management and Budget to deny CMS authorization to proceed with this information collection as proposed. CMS offers no justification for this broad-based, intrusive and extremely burdensome demand on community hospitals. In addition, the DFRR is outside the scope of the current regulation on reporting requirements. If CMS wishes to broaden the scope of those reporting requirements, it must do so by amending the regulation. DRA DOES NOT JUSTIFY THE PROPOSED DFRR CMS’ stated rationale for the DFRR largely relies on the Deficit Reduction Act of 2005 (DRA), which directed CMS to “develop a strategic and implementing plan” to address issues ...

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October 10, 2007

Sent Via FAX: 202-395-6974

OMB Human Resources and

Housing Branch

Attention: Carolyn Lovett

OMB Desk Officer

New Executive Office Building

Room 10235

Washington, DC 20503

RE: Disclosure of Financial Relationships Report (“DFRR”): Form Number: CMS-10236

(OMB#: 0938—New), Vol. 72, No. 178 Fed. Reg., September 14, 2007

Dear Ms. Lovett:

On behalf of our nearly 5,000 member hospitals, health systems and other health care

organizations, and our 37,000 individual members, the American Hospital Association (AHA)

appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’

(CMS) proposal to establish a mandatory Disclosure of Financial Relationships (DFRR)

reporting system for hospital relationships with physicians.

We urge the Office of Management and Budget to deny CMS authorization to proceed with

this information collection as proposed.

CMS offers no justification for this broad-based,

intrusive and extremely burdensome demand on community hospitals. In addition, the DFRR is

outside the scope of the current regulation on reporting requirements. If CMS wishes to broaden

the scope of those reporting requirements, it must do so by amending the regulation.

DRA D

OES

USTIFY THE

ROPOSED

DFRR

CMS’ stated rationale for the DFRR largely relies on the

Deficit Reduction Act of 2005

(DRA),

which directed CMS to “develop a strategic and implementing plan” to address issues of concern

to Congress regarding “physician investment in specialty hospitals.”

The DFRR, however, is a mandatory reporting instrument, initially directed at 500 hospitals,

requiring disclosure of information and the submission of related documents on physician

Ms. Carolyn Lovett

October 10, 2007

Page 2 of 4

investments in hospitals and compensation arrangements between hospitals and physicians

unrelated to whether those physicians have an investment interest. Of the original 500 hospitals,

only about 150 are specialty hospitals in which physicians have an investment interest. The vast

majority of the hospitals are community hospitals whose relationships with physicians are

structured through contracts to perform particular functions. The DRA did

not

direct CMS to

study compensation arrangements between community hospitals and physicians.

If CMS believes a mandatory survey instrument is needed to address physician investment

issues, the AHA would support a revised proposal specific to the investment interests of

physicians in “specialty hospitals,” the issue of concern to Congress in the DRA. The fact that

CMS stated in the plan it submitted to Congress its intent to develop a disclosure process for all

hospitals does not satisfy the requirements of the

Paperwork Reduction Act

(PRA), nor exempt

CMS from complying with its existing rule on hospital reporting.

CMS’ S

UBMISSION

OES

EET THE

PRA R

EQUIREMENTS

CMS has not demonstrated a problem or concern that would merit this intrusive, costly and very

burdensome demand on community hospitals. At most, it offers a general statement that it will

use the information to examine the compliance of each hospital with the physician self-referral

law, and to assist in developing a disclosure process for all hospitals.

The DFRR is highly inappropriate as a pilot test for a disclosure process. The grossly

underestimated burden (hours and costs) provided by CMS indicates a lack of adequate testing of

the survey instrument with potential respondents. The inclusion of 500 hospitals in what is

essentially a pilot test only magnifies the problem. Instead of beginning with the minimum

number of hospitals needed to achieve its goals, and to do so in the most cost-effective manner,

the DFRR begins with the maximum burden and no articulation of objectives against which the

manner and method can be evaluated. There also has been no exploration of a less costly and

burdensome approach. A field test of the instrument with a small number of hospitals of varying

size and complexity should be required to both develop a more realistic assessment of survey

burden and to assess whether the data collected would achieve goals that should be clearly set

forth. This is especially important for the new segments related to compensation that were not

part of the earlier survey used to develop CMS’ DRA-required report to Congress.

CMS has grossly understated the burden for responding to the compensation questions.

Responding to the DFRR will be a predominately manual, not electronic, effort. CMS requests

information on nine different categories of compensation arrangements. For those categories

most commonly engaged in (e.g., recruitment arrangement), it asks for copies of every contract

in effect during a calendar year. Depending on the size of the hospital, documents will be

required for hundreds or thousands of contracts. And the number of contracts only begins to

describe how many pieces of paper will need to be copied. CMS estimates that the average

burden for hospitals will be six hours. In most instances, that will not cover the time devoted just

to copying the documents that need to be submitted.

Ms. Carolyn Lovett

October 10, 2007

Page 3 of 4

Copying the documents will be the last step and the least of what it will take for a hospital to

comply. They must identify all the relevant contracts, where they are located, and assemble

them in a central location. Only then can the kind of review and analysis be completed that will

be necessary to answer the specific questions asked and enable a CEO to make the certification

that is required. Anecdotally, the burden estimates for hospitals include:

•

At least 200 hours just to identify and assemble all the relevant contracts.

•

Three to four weeks to fully respond, assuming no vacations or holidays for involved

staff.

•

Two to three months to respond with one FTE’s time.

•

The number of contracts affected: 400; 500-600; 800-1,000.

•

Smaller hospitals will have fewer contracts, with fewer staff to complete the work, and

have a greater need for outside attorneys or auditor support.

•

Hospitals with a fiscal year that is not a calendar year are required to include

arrangements from two fiscal years, doubling their workload.

Some questions require information on arrangements for which a simple review of the agreement

will not be sufficient. For example, knowing which specific exception an arrangement relied on

when more than one may be applicable will not necessarily be noted in the contract. Only an

attorney’s review will allow a hospital to determine that information.

CMS seems to believe that electronic record systems have been created specific to the terms of

the DFRR. This is simply not the case. The threat of a $10,000-per-day penalty for late

responses suggests that hospitals had a pre-existing duty to anticipate this type of demand. That

also is not the case.

URRENT

EPORTING

ULES

UPPORT THE

DFRR

In explaining its request for a three-year authorization, CMS effectively recognizes that its

current reporting regulations do not support the DFRR. The agency includes the need for

rulemaking if it decides to apply the DFRR to the hospital field. The need for rulemaking

applies equally to the current use of the DFRR, as it would to application of the DFRR to the

whole field.

Under the current rule, routine mandatory reporting is not required. In fact, it was included in

the proposed rule on reporting. And, after hearing from the field that it would be unduly

burdensome, CMS made a conscious decision not to use that approach. It also made clear that it

was not developing any forms or record-keeping requirements specific to reporting. The DFRR,

therefore, would circumvent CMS’ own rulemaking decision.

There is nothing in the regulations to support imposition of the broad-based, all-encompassing

demand of the DFRR. While CMS reserved the right to make requests on an individual basis,

that is not what it is doing with the DFRR. This is a wholesale mandatory request. An

individual request would have to be justified on grounds specific to the circumstances of the

entity from which the information was requested. The DFRR is not a reasonable exercise of

Ms. Carolyn Lovett

October 10, 2007

Page 4 of 4

agency discretion and is outside the scope of the current rule, whether judged as a mandatory

reporting system or an individual request.

The effect of the DFRR is more like a subpoena for records in an investigation (authority that

CMS does not have), only with none of the safeguards that would apply to a subpoena. There

are no standards against which to judge CMS’ request and no process to challenge relevance and

undue burden. CMS is trying to do by survey what it is not authorized to do by regulation, and

without meeting any of the conditions that would undoubtedly be included in a reporting

obligation established through a notice and comment rulemaking.

The AHA urges the Office of Management and Budget to deny CMS authorization to proceed

with the DFRR as proposed.

If you have any questions, please feel free to contact me or Maureen Mudron, Washington

counsel, at (202)626-2301 or

mmudron@aha.org

Sincerely,

// s //

Rick Pollack

Executive Vice President

cc:

Susan Dudley, Administrator

Office of Information and Regulatory Affairs, OMB

Kerry Weems, Acting Administrator

Centers for Medicare & Medicaid Services

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