EDINBURG, TEXAS – DHR Health rebutted critics that wanted the Centers for Medicare & Medicaid Services to reject the health system’s application to expand services.

The critics are the Federation of American Hospitals and the American Hospital Association. These two entities penned a joint letter to CMS. The other critic is South Texas Health System, which also wrote to CMS.

In a 22-page letter sent to CMS, DHR said the critics failed to provide any facts upon which CMS could base a denial of DHR Health’s request to expand service for a high Medicaid facility. 

The letter was penned by Dr. Manish Singh, CEO of DHR Health.

Dr. Manish Singh, MD.

DHR Health is a physician-owned hospital based in Edinburg that plans to build a general hospital in Brownsville. In order to operate the Brownsville hospital, DHR Health had to seek an exception to a federal prohibition against expansion of the facility capacity of a physician-owned hospital.

DHR Health is slated to officially open a 59-bed general hospital in Brownsville, Texas, in the coming weeks. 

According to information sent to the Texas Health & Human Services Commission, DHR says the hospital will have 39 medical/surgical inpatient beds at single occupancy and 59 at double occupancy, along with “clinical laboratory services, diagnostic x-ray services, treatment facility, including surgery, a 24/7 basic emergency department, intensive care unit with three beds, and seven nursing stains with around-the-clock nursing care.”

As it considered DHR’s application, CMS invited public comment. Some of the correspondence CMS received was in favor of DHR’s expansion. Some was against. Here, below, is the letter DHR sent rebutting its critics.

Letter

April 22, 2022

The Honorable Chiquita Brooks-Lasure Administrator

Centers for Medicare & Medicaid Services

U.S. Department of Health and Human Services Hubert H. Humphrey Building

200 Independence Ave. SW Washington, DC 20201

RE:  Rebuttal to Community Input to Medicare Program; Announcement of Request for an Exception to the Prohibition on Expansion of Facility Capacity Under the Hospital Ownership and Rural Provider Exceptions to the Physician Self-Referral Prohibition (CMS-1774-PN)

Dear Administrator Brooks-LaSure:

On July 21, 2021, Doctors Hospital at Renaissance, Ltd. (DHR Health) submitted a request to the Centers for Medicare & Medicaid Services (CMS) for a “high Medicaid facility” (“HMF”) exception (“HMF Exception”) to the limitation on facility expansion set forth in the whole hospital exception (“Whole Hospital Exception”) of the federal physician self-referral law. DHR Health’s request was amended and restated on October 14, 2021. As required by applicable law, DHR Health’s request provides a detailed explanation, with supporting documentation, demonstrating that DHR Health satisfies all of the criteria necessary to qualify as a “high Medicaid facility.”

In the February 9, 2022 edition of the Federal Register, CMS provided the public with notice of DHR Health’s request. In response, CMS received a total of 14 comments. The vast majority of commenters-including (i) elected officials representing the area, (ii) representatives of the local community, including the HOPE Family Health Center clinic (HOPE), and (iii) groups such as the Texas Medical Association (TMA)and the Physician-led Healthcare for America (PHA)­ supported DHR Health’s request to provide better access to care in an underserved community.

Only two of the comments opposed the request. The first, dated March 11, 2022, was submitted jointly by the Federation of American Hospitals (FAH) and the American Hospital Association (AHA) (“Associations”). The second, also dated March 11, 2022, was submitted by a law firm (Bradley) on behalf of South Texas Health System (“STHS”). As discussed below, these comments fail to provide any facts upon which CMS could base a denial of DHR Health’s request. To the contrary, the Association and STHS comments essentially concede that DHR Health satisfies all of the specific and detailed statutory and regulatory criteria necessary to qualify as a “high Medicaid facility” and obtain an HMF Exception. Instead, the comments argue that although “the three high Medicaid facility criteria are met,” CMS has the “discretion” to deny DHR’s request and, for various “public policy” reasons, should do so.

CMS, however, has made it clear that this is not the case. That is, the agency has made it clear that if a hospital satisfies the criteria necessary to qualify as “high Medicaid facility,” the hospital’s request for a “high Medicaid facility” exception must and will be approved. Put differently, CMS has confirmed that it cannot – in the middle of its review of a request for a “high Medicaid facility” exception – simply make up and then apply new criteria that are nowhere to be found in the self­ referral law or its implementing regulations.

The facts set forth in DHR Health’s request establish that DHR Health qualifies as a “high Medicaid facility” and, therefore, CMS should approve the request in accordance with the applicable federal statute and regulations.

I.  About DHR Health


For over 20 years, DHR Health has provided access to high-quality care in Hidalgo County. With over 70 specialties and sub-specialties, our health system offers the most comprehensive and advanced health care services in the region. These services help to eliminate health disparities and the need for our residents to travel hundreds of miles to get the care they need and deserve.

The care DHR Health provides is sorely needed and has transformed our region’s health care landscape. The Rio Grande Valley is located along the U.S.-Mexico border on the bottom tip of Texas and encompasses Cameron, Hidalgo, Starr, and Willacy counties. Large parts of the Rio Grande Valley are designated medically underserved and health professional shortage areas. One-third of the Rio Grande Valley’s population lives below the federal poverty level, and close to 30 percent of the region’s residents do not have health insurance. Additionally, approximately 32 percent of Rio Grande Valley residents (almost double the state average) are enrolled in Medicaid.

As a locally and physician owned and operated community health system and safety-net hospital, DHR Health is proud to provides access to health care services for all. A recent snapshot of discharge data shows that 44 percent of DHR Health’s patient population is covered by Medicaid. Last year, 73 percent of the babies born at DHR Health were covered by Medicaid, and since opening its doors in 2007, the Women’s Hospital at Renaissance has birthed over 110,000 babies (the equivalent of an elementary school a month, each and every month, for almost 15 years). ln 2021 alone, DHR Health incurred over $90 million in uncompensated and charity care costs.

In addition to providing over 70 specialties and sub-specialties, DHR Health offers:

•       the region’s only transplant program;

•       the region’s first and only Level I Trauma facility;

•       the only dedicated women’s hospital south of San Antonio, and which has earned a Level IV maternity designation (the highest level in Texas);

•       a Level Ill nee-natal intensive care unit that ranks top five in the world in terms of outcomes according to the Vermont-Oxford network:

•       the largest teaching hospital in the region, with 12 graduate medical education (GME) programs including six residencies and six fellowships training over 130 residents and fellows;

•       a Joint Commission certified comprehensive stroke center;

•       the DHR Health Institute for Research and Development, which is dedicated to correcting the low representation of Hispanics in national clinical trials, and currently has 217 separate studies;

•       an affiliation with Starr County Memorial Hospital, a rural public hospital in one of the poorest counties in the nation, pursuant to which DHR Health provides hospitalist coverage and emergency department, surgical and OBGYN services, all in an effort to ensure the residents of Starr County have access to lifesaving care closer to home; and

•       a partnership with Driscoll Children’s Hospital to establish the region’s first truly freestanding and dedicated non-profit children’s hospital, thereby ensuring that the children of the Rio Grande Valley have access to the highest level of pediatric care available.

DHR Health’s commitment to its community is further demonstrated by our response to the COVID-19 pandemic. From the outset of the pandemic, DHR Health acted early and committed the resources of our entire health system to protect and care for our community. DHR Health­ while losing millions of dollars in revenue due to COVID-invested over $80 million in COVID preparedness. By way of example only, DHR Health:

•       built four dedicated, free-standing COVID units, each with over 300 beds, and provided hospital care for over 3,700 COVID patients;

•       served as a Texas COVID Vaccine HUB, which has administered approximately 300,000 doses to date;

•       established the RGV Collaborative-which includes 11 hospitals, 92 physicians, and four county health departments-to coordinate the collection and distribution of convalescent plasma and monoclonal antibody infusion therapies across the region; and

•       hosted Texas COVID-19 Infusion Centers during COVID-19 surges.

II.    DHR Health Meets High Medicaid Facility Criteria


The Associations and STHS do not seriously dispute that DHR Health satisfies the three criteria necessary to qualify as a “high Medicaid facility.” 42 C.F.R. § 411.362(c){3) implements Section 1877(i){3)(F) of the Social Security Act (the “Act”) and states that “[a]high Medicaid facility is a hospital that satisfies all of the following criteria” (emphasis added):

(3)       Criteria for high Medicaid facility. A high Medicaid facility is a hospital that satisfies all of the following criteria:

(i)         Sole hospital. Is not the sole hospital in the county in which the hospital is located.

(ii)               Medicaid inpatient admissions. With respect to each of the 3 most recent 12- month periods for which data are available as of the date the hospital submits its request, has an annual percent of total inpatient admissions under Medicaid that is estimated to be greater than such percent with respect to such admissions for any other hospital located in the county in which the hospital is located. For purposes of this paragraph, the most recent 12-month period for which data are available means the most recent 12-month period for which the data source used contains all data from the requesting hospital and every hospital located in the same county as the requesting hospital.

(A)             Until such time that the Healthcare Cost Report Information System (HCRIS} contains sufficiently complete inpatient Medicaid discharge data, a hospital may use filed Medicare hospital cost report data or data from an external data source (as defined in paragraph (a) of this section) to estimate its annual percentage of total inpatient admissions under Medicaid and the annual percentages of total inpatient admissions under Medicaid for every other hospital located in the county in which the hospital is located.

(B)             On or after such date that the Secretary determines that HCR/5 contains sufficiently complete inpatient Medicaid discharge data, a hospital may use only filed Medicare hospital cost report data to estimate its annual percentage of total inpatient admissions under Medicaid and the annual percentages of total inpatient admissions under Medicaid for every other hospital located in the county in which the hospital is located.

(iii)           Nondiscrimination.Does not discriminate against beneficiaries of Federal health care programs and does not permit physicians practicing at the hospital to discriminate against such beneficiaries.

The regulation is clear that a hospital meeting these criteria “is” a “high Medicaid facility.” Indeed, in their comments, the Associations contend that the Secretary must deny requests that fail to comply with these statutory and regulatory criteria. It follows, then, that requests that comply with these same criteria must be approved. Nor does the fact that Congress has provided for community input suggest otherwise.

As CMS has made clear, the purpose of the public comment period under 42 C.F.R. § 411.362(c)(S) is to provide community stakeholders11 an opportunity to raise questions as to whether the hospital requesting an exception meets applicable criteria, not to establish new criteria under which CMS may approve or deny a request. As CMS stated in the Calendar Year (CY) 2021 OPPS/ASC final rule with comment period, community input “allows for confirmation of (or disagreement with) the data provided by a high Medicaid facility seeking an exception to the prohibition on expansion of facility capacity[.]” In sum, the comment period is a datavalidation exercise for approving requests that meet “high Medicaid facility11 criteria and denying those that do not. It is not a forum for offering additional criteria that must be satisfied in order to qualify as a “high Medicaid facility” (or “applicable hospital).

a.  Sole Hospital Criterion

With respect to the first criterion-that the requesting hospital “is not the sole hospital in the county in which the hospital is located” (“Sole HospitaI Criterion”) – neither the Associations nor STHS dispute that DHR Health is (i} located in Hidalgo County and (ii) not the sole hospital in Hidalgo County. As such-and for all of the reasons set forth in DHR Health’s request-the Sole Hospital Criterion is satisfied.

b.  Inpatient Admissions Criterion

In a nutshell, the second criterion requires “[w]ith respect to each of the 3 most recent 12-month periods for which data are available as of the date the [requesting] hospital submits its request,” the requesting hospital must have “an annual percent of total inpatient admissions under Medicaid that is estimated to be greater than such percent with respect to such admissions for any other hospital located in the county in which the hospital is located” (“Inpatient Admissions Criterion”). Once again, neither the Associations nor STHS dispute that DHR Health satisfies the Inpatient Admissions Criterion and, as such-and for all of the reasons set forth in DHR Health’s request-the Inpatient Admissions Criterion is satisfied.

To be sure, and as discussed further below, the Associations do propose that CMS create and apply several newMedicaid-related metrics (i.e., metrics not currently set forth in either the self­ referral law or its implementing regulations). The Associations do not, however, dispute that DHR Health does, in fact, satisfy the Inpatient Admissions Criterion itself. This also is the case with respect to STHS, which simply notes that in one of the three years at issue {2019), one other hospital in Hidalgo County came close to having a higher percentage of Medicaid admissions than DHR Health.

Medicaid inpatient days are not the same as Medicaid inpatient admissions.

Medicaid days as a percentage of total patient days, a metric discussed in the Associations’ comments, are not among the “high Medicaid facility” criteria established at 42 C.F.R. § 411.362(c)(3}(ii). As noted above, the Inpatient Admissions Criterion states, in pertinent part, as follows:

With respect to each of the 3 most recent 12-month periods for which data are available as of the date the hospital submits its request, has an annual percent of total inpatient admissions under Medicaid that is estimated to be greater than such percent with respect to such admissionsfor any other hospital located in the county in which the hospital is located. For purposes of this paragraph, the most recent 12-month period for which data are available means the most recent 12-month period for which the data source used contains all data from the requesting hospital and every hospital located in the same county as the requesting hospital.

Contrary to the Associations’ assertion that CMS may use Medicaid days data instead of Medicaid admission data, the above regulation implements statutory criteria established by Congress and codified in Section 1877(i)(3)(F) of the Act. Further, regulations at 42 C.F.R. § 411.362(c)(3){ii)(A) and (B) state that Medicaid discharge data under the Healthcare Cost Report Information System (HCRIS}-which is precisely the source DHR Health used in its request-is a valid means to estimate a hospital’s annual percentage of total inpatient Medicaid admissions. In fact, even STHS admits that DHR Health satisfies the Inpatient Admissions Criterion.

One final observation. In addition to being contrary to the plain terms of the self-referral law and its implementing regulations, Medicaid days are not a good “proxy” for Medicaid admissions.In their comments, for example, the Associations reference a Texas OSH qualification file indicating that, in 2021, DHR Health’s Medicaid inpatient days16 as a percentage of total days (46.87%) were lower than Knapp Medical Center (55.12%).17 Just two years earlier, however, Knapp Medical Center’s Medicaid discharges accounted for approximately 5.4 percent of all hospital discharges, while DHR Health’s Medicaid discharges accounted for approximately 37.4 percent of all hospitaI discharges.

In sum, and as demonstrated in its request, DHR Health has the highest annual percent of total inpatient Medicaid admissions relative to any other hospital located in Hidalgo County based on HCRIS Medicaid discharge data for the years 2017-2019, which were the three most recent 12-month periods for which data was available as of the date of DHR Health’s request. Therefore, CMS should find that DHR Health satisfies the Inpatient Admissions Criterion for the purposes of DHR Health’s request.

c. Nondiscrimination Criterion

The third criterion requires that the requesting hospital “not discriminate against beneficiaries of Federal health care programs” and “not permit physicians practicing at the hospital to discriminate against such beneficiaries” (“Nondiscrimination Criterion”). Once again, neither the Associations nor STHS dispute that DHR Health satisfies the Nondiscrimination Criterion and, as such – and for all of the reasons set forth in its request – DHR Health believes the Nondiscrimination Criterion is satisfied.

d.  Application Procedural Requirements

Finally, no commenters questioned whether DHR Health’s request contained the information required by, or met the procedural requirements described in, 42 C.F.R. § 411.362(c)(4). Further, no commenters suggested that DHR Health failed to (i) disclose its request for a “high Medicaid facility” exception on its website or (ii) provide notice to relevant hospitals in Hidalgo County of DHR Health’s exception request as required by 42 C.F.R. § 411.362(c)(5). For these reasons, CMS should find that DHR Health complied with all procedural requirements under 42 C.F.R. § 411.362(c)(4) and (5) for the purposes of DHR Health’s request.

III. CMS Discretion


Although the Associations and STHS essentially concede that DHR Health qualifies as a “high Medicaid facility” – i.e., that DHR Health “technically” satisfies the three HMF criteria detailed in the self-referral law and its implementing regulations- they argue that notwithstanding this fact, CMS has the “discretion” to deny DHR Health’s request. CMS, however, has concluded otherwise.

In 2015, DHR Health sought an exception to the Expansion Limitation as an “applicable hospital” (“AH”) (and not, as here, a “high Medicaid facility”). DHR Health’s request for an AH exception (“AH Exception”) (i) provided a detailed explanation, with supporting documentation, demonstrating that DHR Health satisfied each of the five AH criteria. In May 2015, CMS published a notice in the Federal Register inviting the public to comment on DHR Health’s request. By letter dated June 8, 2015, Tenet Health (an FAH member) submitted a comment letter opposing DHR Health’s request. The letter stated that even “assuming” DHR Health satisfied the AH criteria, CMS had the “discretion” to deny DHR Health’s request. The letter then offered several reasons-unrelated to the AH criteria themselves – why CMS should do so.

After considering the comments of Tenet and others, CMS approved DHR Health’s request in September 2015. In the process, the agency squarely rejected Tenet’s “discretion” argument. Specifically, after concluding that DHR Health did, in fact, satisfy all five AH criteria-Le., the criteria that are actually set forth in the self-referral law and its implementing regulations-CMS turned to Tenet’s “discretion” argument and stated, unequivocally, that “[CMS] cannot consider any concerns unrelated to the statutory and regulatory eligibility criteria when determining whether to grant an exception to a requesting hospital.” For example, the agency continued, “if a hospital qualifies as either an applicable hospital or high Medicaid facility,” CMS “does not have the discretion to grant less than the requested increase in facility capacity.”

CMS’ conclusion is consistent with black letter constitutional and administrative law.

As noted above, DHR Health’s current request is for an HMF Exception. As required by law, the request provides a detailed explanation, with supporting documentation, demonstrating that DHR Health satisfies each of the three HMF criteria. Like Tenet, the Associations and STHS essentially concede that DHR Health satisfies each of these criteria. Also like Tenet, however, these commenters argue that notwithstanding this fact, CMS has the “discretion” to deny DHR Health’s request and, exercising this discretion, should do so. Why? Once again, for “policy reasons,” this time relating to “community needs” and “beneficiary interests.” More specifically, and reduced to their essentials, the Associations and STHS argue that DHR Health’s request should be denied for the following reasons:

•       Excess Capacity. DHR Health has not already used its full complement of baseline and (“applicable hospital”) expansion beds and, as such, should not be granted additional (“high Medicaid facility”) expansion beds.

•       Distinct Communities. Edinburg is 55 miles away from Brownsville and, as such, if DHR Health’s request is approved and the hospital allocates some of its expansion beds to Brownsville, DHR Health will be providing hospital services to patients from “distinct communit[ies].”

•       Patient Transfer.If DHR Health establishes a location in Brownsville, and a patient receiving services there requires a transfer, the patient may be transferred to Edinburg as opposed to another hospital in Cameron County, thereby raising “safety concerns.”

•       Other Metrics.While DHR Health met the Inpatient Admissions Criterion during the relevant three-year period (2017-2019), during a different three-year period (2019- 2021):

o      a hospital in Cameron County (in which DHR Health had no hospital locations between 2017 and 2021) had a higher percentage of Medicaid inpatient admissions;

o      two hospitals in Hidalgo County had a higher percentage of “Medicaid days” as compared to “total days” (a metric nowhere to be found in the HMF Exception); and

o      two hospitals in Hidalgo County and one hospital in Cameron County (again, in which DHR Health had no locations between 2017 and 2021} had higher “uncompensated care cost as a percentage of operating expenses” (again, a metric nowhere to be found in the HMF Exception).

In essence, then, the Associations and STHS today (like Tenet in 2015) contend that CMS has the discretion to create and apply new HMF criteria, contrary to the Social Security Act and the Administrative Procedures Act {APA). CMS should reject this argument for precisely the reasons it rejected the same argument in 2015-i.e., “[CMS] cannot consider any concerns unrelated to the statutory and regulatory eligibility criteria when determining whether to grant an exception to a requesting hospital.”

Curiously, the comments of the Associations and STHS nowhere mention CMS’ rejection, in 2015, of the precise argument they raise here. Nor do they reference any relevant changes in the law or regulations, or any CMS change of position, since 2015. Indeed, all of the statutes and rule makings cited by the commenters in connection with their “discretion” argument predate CMS’ 2015 statement that the agency “cannot consider any concerns unrelated to the statutory and regulatory eligibility criteria when determining whether to grant an exception to a requesting hospital” and, as such, these statutes and regulations can be presumed to have been taken into account by the agency when it articulated its position in 2015.

The commenters also ignore CMS’ statement in its 2020 rule making that the purpose of community input is not to propose additional HMF criteria-which already are detailed in the applicable statute and regulations – but to allow for “confirmation of (or disagreement with) the data provided by a “high Medicaid facility” seeking an exception to the prohibition on expansion of facility capacity.”

IV. No External Data Used in Request, Written Comments, or Rebuttal


42 C.F.R. § 411.362(c)(S)(i) specifies that CMS will deem a hospital’s exception request complete at the end of the 30-day rebuttal period if only filed Medicare hospital cost report data is used in the request, written comments, or rebuttal statement. However, 42 C.F.R. § 411.362{c)(S)(ii)(B) specifies if “external data,” as defined in 42 § C.F.R. 411.362(a}, is used in the request, written comments, or rebuttal statement, the request will be deemed complete no later than 180 days after the end of the 30-day rebuttal period.

For the reasons set forth below, CMS should determine that only Medicare hospital cost report data was used in the request, written comments, and rebuttal. Consequently, CMS should deem DHR Health’s request complete at the end of the 30-day rebuttal period.

a.  Medicaid Days as a Percentage of Total Inpatient Days

The data the Associations reference regarding Medicaid days as a percentage of total days in the Texas Medicaid DSH qualification file does not constitute an external data source within the meaning of 42 § C.F.R. 411.362{a) for two reasons:

•       First, as discussed in detail in Section ll(b) above, inpatient Medicaid days is not the relevant standard for a “high Medicaid facility”; again, the statute and regulations specifically reference Medicaid admissions.

•       Second, the Medicaid data does not comply with the requirements of Section 411.362(a) because Medicaid days are not an accurate measureof Medicaid admissions.

Section 411.362(a) specifies four prongs that must be met for a data source to qualify as an external data source. Specifically, the data source:

(1)    is generated, maintained, or under the control of a State Medicaid Agency;

(2)    is reliable and transparent;

(3)    maintains data that, for purposes of the process described in paragraph (c) of this section, are readily available and accessible to the requesting hospital, comparison hospitals, and CMS; and

(4) maintains or generates data that for purposes of the process described in paragraph (c) of this section, are accurate, complete, and objectively verifiable (emphasis added).

Paragraph (c) sets forth the three HMF criteria, including the Inpatient Admissions Criterion, that must be satisfied in order for a hospital to qualify as a “high Medicaid facility” and for the HMF Exception.

While the first three prongs above are satisfied, the measure of Medicaid days as a percentage of total inpatient hospital daysin the Texas Medicaid Disproportionate Share Hospital (DSH) qualification file does not satisfy the fourth prong because it does not maintain or generate accurate or complete data for the purpose of verifying the percentage of Medicaid admissionswithin the meaning of 42 C.F.R. § 411.362(c)(3)(ii):

•       Accuracy. Again, for all ofthe reasons set forth above, the data in the Texas Medicaid DSH qualification file relating to Medicaid inpatient daysas a percentage of total inpatient days does not “accurately” measure of Medicaid admissions, which is the relevant metric.

•       Completeness. In addition, and for largely the same reasons, the data in the Texas Medicaid DSH qualification file relating to Medicaid inpatient daysas a percentage of total inpatient days is not a “complete” measure of Medicaid admissionsbecause this data alone fails to provide sufficient information necessary to determine the percent of Medicaid admissions.The Associations rely solely upon these numbers in arguing that DHR Health is not the highest Medicaid provider in Hidalgo County. This data alone fails to effectively measure the annual percent of total inpatient admissions under Medicaid.

In sum, the data points used by the Associations from the Texas Medicaid DSH qualification file are not applicable to the requirements for a “high Medicaid facility” because Medicaid days are not the same as, or a proxy for, Medicaid admissions. As such, the Texas Medicaid DSH qualification file is not {and could not be) an “accurate, complete, and objectively verifiable” data source for the purpose of verifying the percent of hospital inpatient admissions under Medicaid.

For this reason, CMS should deem DHR Health’s exception request complete at the end of the 30-day rebuttal period pursuant to 42 C.F.R. § 411.362(c)(S)(i)(B).

b.  Cameron County Medicaid Admission Data

The data the Associations reference regarding Medicaid admissions in Cameron County does not constitute an external data source within the meaning of 42 § C.F.R. 411.362(a) because, as is discussed further below, data for a county in which the applicant hospital is not located is not relevant for the purposes of a “high Medicaid facility” expansion exception application.

Once again, for this reason, CMS should deem DHR Health’s exception request complete at the end ofthe 30-day rebuttal period pursuant to 42 C.F.R. § 411.362(c)(S)(i)(B).

IV.      Additional Arguments


a. Public Policy is Served by Allowing High Medicaid Facilities to Expand

In addition to satisfying the statutory and regulatory “high Medicaid facility” criteria, DHR Health’s request serves important public policy interests. STHS’ argument that granting DHR Health’s request would open the door to the degradation of the federal statutory framework grossly distorts Congress’ intent and fails to consider, or even recognize, the purpose behind the HMF Exception.

High Medicaid facilities provide a critical safety net for our nation’s most vulnerable patient populations and serve substantial numbers of these patients relative to others. Congress and CMS have recognized that the HMF Exception allows these providers to continue to carry on this good work for the benefit of Federal healthcare program beneficiaries. Indeed, Title VI of the Patient Protection and Affordable Care Act of 201D3 carved out expansion exceptions specifically for hospitals, like DHR Health, in medically underserved areas.

When CMS proposed removing certain regulatory restrictions imposed on high Medicaid facilities that were not required by statute in the CY 2021 Hospital Outpatient Prospective Payment System (OPPS) rule, the overwhelming response was positive. Over 130 letters of support were submitted, including letters from 30 bipartisan members of Congress, 38 national and state organizations, and over 100 health care professionals. By contrast, only 20 comments opposing the proposed rule were submitted, and many of these were stock letters.

While the Associations argue that the CY 2021 OPPS rule “opens the door” to widespread HMF Exception requests, there is nothing in that rule that alters the statutory or regulatory criteria to qualify as a “high Medicaid facility.” Furthermore, to date, only five hospitals nationwide have qualified for the HMF Exception, indicating that CMS’s rule is, in fact, narrowly tailored and (contrary to the Associations’ rhetoric) applies to a only a small subset of hospitals.

b.  Post-Request Developments

In addition to asking CMS to create (out of whole cloth) and then apply (in the midst of an HMF Exception application proceeding) a host of new HMF criteria (none of which are to be found in the applicable statute or regulations), the Associations and STHS are asking CMS to apply these new criteria notto DHR Health as it existed on July 21, 2021 (when it submitted its initial request), or October 14, 2021 (when it submitted its amended and restated request), or even as of March 11, 2022 (the date of the two comment letters at issue). Instead, the Associations and STHS are asking CMS to apply these new criteria to a hypothetical set of future facts.

Indeed, all of the arguments presented by the Associations and STHS are inextricably tied to the assumption that after CMS approves DHR Health’s request, DHR Health intends to allocate some number of its “high Medicaid facility” expansion bed compliment to a new DHR Health location in the City of Brownsville. Critically, however, neither the physician self-referral law nor its implementing regulations require a hospital seeking an expansion exception to describe where or how it will allocate its existing baseline or expansion bed compliment should the hospital’s request be approved by CMS. Necessarily, then, CMS’ decision regarding whether to approve a request for an HMF or AH Exception cannot take into account what might, or might not, happen in the future.40

Further, Congress imposed location-specific expansion limitations only on “applicable hospitals” under Section 1877(i)(3) of the Act. In the Calendar Year (CY) 2021 Hospital Outpatient Prospective Payment System (OPPS) Final Rule, CMS affirmed that “Congress did not mandate” that “high Medicaid facilities” allocate expansion beds only to their main campus:

Because the statute does not apply to high Medicaid facilities those requirements related to… the location of permitted expanded facility capacity, using the Secretary’s authority under sections 1871 and 1877(i)(3)(A)(i) of the Act, we proposed to remove certain regulatory requirements for high Medicaid facilities that are not included in the statute.

Finally, the Associations allege that DHR Health is unlikely to operate as a “high Medicaid facility” in its proposed Brownsville campus. This allegation is irrelevant. DHR Health’s exception request was made with respect to its location in Edinburg, TX, which is located in Hidalgo County. The City of Brownsville and Cameron County, and the prospect of DHR Health operating a location in Brownsville in the future, are irrelevant to CMS’s consideration of the current exception request.

In sum, the Associations’ arguments are tied to future speculative events, not established facts at the time of the request. As discussed above, the request for an HMF Exception is reviewed as of the date the request is filed, and not some future date.

c. Alleged Scheme to Circumvent Law

In its comments, STHS suggests that DHR Health is engaging in a “scheme” to circumvent the law. How? By “simultaneously” seeking an HMF Exception (from CMS) “on the basis of Hidalgo County’s data,” and a waiver (from the Texas Health and Human Services Commission, or “HHSC”) to open a “new hospital” in Cameron County (i.e., in Brownsville). STHS has it exactly backwards: DHR Health is seeking a waiver from HHSC in an effort to comply with the law, not to “thwart” it (and to preempt frivolous arguments that suggest otherwise).

For Medicare purposes-and therefore for purposes of the physician self-referral law – DHR Health is a single hospital, has a single Medicare participation agreement, has a single CMS certification number, and files a single Medicare cost report. This will not change if CMS approves OHR Health’s request and DHR Health decides to relocate some number of its baseline bed compliment or allocate some number of its “high Medicaid facility” bed compliment to a new DHR Health location in Brownsville.

Under the relevant Medicare authorities-including the so-called “provider-based” rules set forth in 42 C.F.R. § 413.65 (“Provider-Based Rules”) – a single hospital may furnish hospital services both on its “main campus” and at one or more “remote locations.” In some cases, the Provider-Based Rules require that a remote location be not more than 35 miles from the hospital’s main campus. In other cases, however – including here – the Provider-Based Rules do not impose any specific limits on the distance between a hospital’s main campus and remote locations.

This is true, moreover, even if the state in which the hospital is located requires that the hospital’s main campus and remote locations be separately licensed. In other words, while a state may require that the main campus and remote location of an entity be separately licensed, that entity will remain a single hospital for Medicare purposes as long as the various requirements of the Provider-Based Rules and all other relevant Medicare authorities are satisfied.  Here, then, provided DHR Health complies with the Provider-Based Rules and all other relevant Medicare authorities, CMS will consider OHR Health’s main campus (in Edinburg) and remote location (in Brownsville) to be component parts of a single hospital for Medicare purposes, and this is true irrespective of whether Texas requires each of those locations to be separately licensed for state law purposes.

Texas does, in fact, require locations that furnish hospital services and are more than 30 miles apart to be separately licensed.  DHR Health has asked Texas to waive this requirement. For all of the reasons set forth above, this waiver clearly is not required in order for DHR Health locations in Edinburg and Brownsville to be treated as a single hospital for Medicare purposes. Rather, DHR Health has requested this waiver precisely to avoid what it is being forced to do here: defend itself against allegations that have no basis in fact and are being applied to a legal landscape that doesn’t exist – and additionally, to provide extra time to carry out negotiations with health plans regarding enrollment of the facility.

Put otherwise, it would be ideal, of course, if DHR Health did not have to defend itself against frivolous arguments, but it does. So if HHSC grants DHR Health’s requested waiver, one more frivolous argument will be eliminated. But even if HHSC does not grant DHR Health’s requested waiver, and DHR Health ends up having two Texas hospital licenses, one covering its main campus in Edinburg and the over covering its remote location in Brownsville, these two locations will remain component parts of a single hospital for Medicare purposes, including of course the rules relating to the Whole Hospital Exception and the allocation of baseline and expansion bed compliments.

d.  DHR Health Brownsville

Finally, should DHR Health establish a remote location in Brownsville, that development will positively impact the health and safety of hospital patients and the general public. The relevant statistics are daunting:

•       As noted above, according to the Texas Health and Human Services Commission, approximately 30 percent of Cameron County residents are enrolled in Medicaid.

•       Brownsville is located in a designated Medically Underserved Area (MUA) and is designated as a “high needs” Health Professional Shortage Area (HMSA).

•       The Rio Grande Valley has a 42 percent greater physician shortage than the Texas average. Indeed, based on an analysis commissioned by the University Of Texas Rio Grande Valley School Of Medicine, it is estimated the Rio Grande Valley has a shortage of over 1,700 physicians (including both primary care and specialists) through 2022.

DHR Health Brownsville will offer underserved patients with enhanced access to physicians with highly specialized practices including, but not limited to, urology, cardiology, general surgery, endocrinology, gynecological oncology, endocrine surgery, neurology and colorectal surgery. DHR Health has recruited specialists in these areas to practice in the Brownsville area and will expand service offerings and outpatient clinics with the opening of DHR Health Brownsville.

The establishment of DHR Health Brownsville will reduce the need for residents to seek care elsewhere; and this is critically important. The high poverty rate and lack of transportation options makes traveling long distances to access health care services difficult for much of the population in the Rio Grande Valley – including Brownsville in particular, where the median household income is $38,588. For example, in a one-year period, 4,400 Brownsville residents were admitted to hospitals outside of Brownsville, accounting for 20 percent of hospital admissions; and 18,200 Brownsville residents were treated in outpatient clinics outside Brownsville, accounting for 35% of all such visits. In 2021 alone, DHR Health received over 300 requests from hospitals in Brownsville seeking to transfer patients to DHR Health in Edinburg.

In sum, the Rio Grande Valley, and Brownsville in particular, has a need for additional hospital capacity which DHR Health Brownsville will help fill. The population of Brownsville is growing rapidly, becoming sicker and more impoverished, and faces significant obstacles to access care. There is a need for more health care facilities not less. The region suffers from an epidemic of diabetes (30 percent, with another 32 percent pre-diabetic), as well as high rates of obesity (over 50 percent) and related health issues, including cardiovascular, liver, peripheral artery and chronic renal disease, and retinopathy, and behavioral issues. Furthermore, there is a high poverty rate (over 30 percent) and one of the highest uninsured rates in the country (almost 30 percent). The high rates of poverty and chronic diseases result in a population that needs access to preventative medical care and disease management yet cannot afford health insurance or out­ of-pocket costs.

Not surprisingly, the Associations misconstrue statements by DHR Health regarding patient transfers. Should DHR Health Brownsville be established, any transfers will be based solely on patient choice and the best setting of care for the patient. As documented above, DHR Health’s campus in Edinburg offers the most comprehensive and advanced health care services of any health system in the Rio Grande Valley, including, but not limited to the region’s first and only Level I trauma facility, a comprehensive stroke center, the region’s only transplant program, a Level IV maternity designated hospital with a Level Ill NICU, and over 70 specialties and sub­ specialties. There may be instances when patients in Brownsville need this higher level of care and will opt to be transferred to DHR Health in Edinburg, Texas.

***

In closing, this rebuttal statement demonstrates that commentators have failed to provide any evidence from which CMS could base a denial of DHR Health’s request for a HMF Exception.

DHR Health appreciates your time and consideration, and we look forward to hearing back from you soon. If you have any questions regarding our application or rebuttal, or would like any additional information, please do not hesitate to contact me through our Vice President, Counsel for Government Affairs, Mr. Roberto Haddad at 956-662-9008 or by email at [email protected]­ rgv.com.

Sincerely,

Manish Singh MD FACS FASMBS 

Chief Executive Officer

DHR Health


Editor’s Note: The above news story is one in a series of stories about DHR Health’s expansion into Brownsville. Thus far, ten stories have been published. Click here to read the first. Click here to read the second. Click here to read the third. Click here to read the fourth. Click here to read the fifth. Click here to read the sixth. Click here to read the seventh. Click here to read the eighth. Click here to read the ninth.


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