Patricia DePompei, RN, MSN
President
UH Rainbow Babies & Children’s Hospital
11100 Euclid Avenue
Horvitz Tower Floor 1, 1606
Cleveland, OH 44106
216.844.1410 Phone
September 12, 2019
The Honorable Seema Verma
Administrator
Centers for Medicare & Medicaid Services
U.S. Department of Health and Human Services
200 Independence Ave, SW
Washington, DC 20201
Re:

Comment to August 9, 2019 Proposed Rule (CMS 1717-P), “Medicare Program:
Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency
of Hospital Standard Charges; Proposed Revisions of Organ Procurement
Organizations Conditions of Coverage; Proposed Prior Authorization Process and
Requirements for Certain Covered Outpatient Department Services; Potential Changes
to the Laboratory Date of Service Policy; Proposed Changes to Grandfathered
Children’s Hospitals-Within-Hospitals”

Dear Administrator Verma:
In the calendar year (CY) 2020 Outpatient Prospective Payment System (OPPS) proposed rule,
the Centers for Medicare and Medicaid Services (CMS) proposed to allow grandfathered
children’s hospitals-within-hospitals (HwH) to increase their number of beds without losing
grandfathered status. University Hospitals Rainbow Babies & Children’s Hospitals (“Rainbow”),
located in Cleveland, Ohio is a grandfathered HwH. Rainbow strongly supports the proposed
change and commends CMS for taking action that will considerably increase access to
pediatric care in our community.
Background:
An HwH is a hospital that occupies space in the same building as another hospital, or in one or
more entire buildings located on the same campus as buildings used by another hospital. Effective
October 1, 1995, CMS established specific separateness and control requirements that an HwH

 would have to be meet in order to be considered a separately certified hospital. A grandfathered
HwH in existence on or before September 30, 1995 does not have to meet those requirements as
long as it continues to operate under the same terms and conditions as of that date, including the
number of beds.
Rainbow and University Hospitals Cleveland Medical Center (“UHCMC”), together with their
predecessors, have been affiliated since 1926. The current facilities of these hospitals have been
located on the same campus since 1971, and the two hospitals combined under a single board of
directors in 1974. Both of these events occurred long before the 1983 implementation of the IPPS.
As the arrangements between Rainbow and UHCMC were in place before September 30, 1995,
Rainbow is a grandfathered HwH that is precluded from increasing its number of beds to retain its
grandfathered status.
Rainbow effectively operates as a separate hospital, in a separate building, focused only on the
care of children. It employs more than 1,500 pediatric care specialists, operates the only Level I
Pediatric Trauma Center in the northern half of Ohio, and has long been ranked as one of the best
children’s hospitals in the nation. The decision made nearly 50 years ago to locate Rainbow and
UHCMC on the same campus made a great deal of sense from the perspective of clinical care—
the basis for our continued foundation of care. This shared campus is immediately adjacent to the
Case Western Reserve University School of Medicine, which trains both adult and pediatric
physicians. Rainbow engages in the education of pediatric specialists, while UHCMC engages in
the education of adult specialists.
Why are Medicare’s Rules Problematic?
Rainbow is unable to meet the HwH requirements due to its shared governance structure, and so
has operated under grandfathered status since 1995 when CMS first established the HwH rules. As
a result, Rainbow has been unable to expand the number of beds it offers to its pediatric patients
in response to changes in the healthcare marketplace for more than 20 years. Rainbow has been
unable to:




Add new inpatient units specifically designed and devoted to cutting-edge medical
developments such as cancer immunotherapy;
Expand the size of its medical education residencies to increase the number of physicians
trained to treat diseases and injuries of childhood; and
Increase its size commensurate with the increased consolidation in the Northeast Ohio
region driven by value-based care delivery reforms such as accountable care and
population health.

CMS’ HwH Policy Concern does not Apply to Children’s Hospitals
In the proposed rule, CMS indicates that its original concerns for establishing the HwH rules was
that “the unregulated linking of an IPPS hospital and a hospital excluded from the IPPS could lead
to two Medicare payments for what was essentially one episode of patient care.” Rainbow did not
co-locate itself with UHCMC for this reason. Rainbow and UHCMC’s configuration was
established long before there was an IPPS much less the HwH rules.

 CMS itself acknowledges in the rule that children’s hospitals receive a low-level of Medicare
reimbursement and that its regulatory change “would allow these hospitals to address changing
community needs for services without any increased incentive for inappropriate patient shifting to
maximize Medicare payments.” Less than 1% of Rainbow’s reimbursement derives from the
Medicare program and there are no patients who are admitted as UHCMC inpatients and then
discharged and admitted as Rainbow inpatients, or vice versa.
CMS did not specifically raise concerns about the potential impact on Medicaid payments.
Nevertheless, we note that in the enclosed letter (Appendix A), the Director of the Ohio Medicaid
Department states “the change sought by Rainbow would have no adverse impact on Ohio
Medicaid, given the way our hospital reimbursement regulations are structured and administered.”
Relative Advantage is Not Present
The proposed change to remove the restriction on children’s hospitals with grandfathered HwH
status from increasing its number of Medicare-certified beds does not confer any special advantage
to Rainbow relative to other children’s hospitals. To the contrary, based on our review, we believe
that Rainbow is the only children’s hospital in the nation unable to expand its Medicare-certified
beds. This is a situation where a Medicare regulation, and nothing else, has itself created a
disadvantage to a single hospital, for reasons unrelated to children’s hospitals. The proposed
change permits Rainbow to expand and respond appropriately to increased community demands
in the same manner as other children’s hospitals.
Thank you again for consideration of our comments. We look forward to working with the agency
as it finalizes the CY 2020 HOPPS Proposed Rule (CMS-1717-P). The update for grandfathered
children’s hospitals-within-hospitals will greatly aid Rainbow and its dedicated clinicians to
continue servicing patients in and around the surrounding community.
Sincerely,

Patti DePompei
President

 Appendix A

Oh Department of
10 Medicaid

Mike DeWine, Governor Maureen M. Corcoran, Director
Jon Husted, Lt. Governor

August 28, 2019

The Honorable Seema Verma, MPH
Administrator

Centers for Medicare Medicaid Services
200 Independence Avenue, SW

Room 445-6

Washington, DC 20201

Re: Comment to August 9, 2019 Proposed Rule (CMS 1717-P), ?Medicare Program:
Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory
Surgical Center Payment Systems and Quality Reporting Programs; Price Transparency
of Hospital Standard Charges; Proposed Revisions of Organ Procurement Organizations
Conditions of Coverage; Proposed Prior Authorization Process and Requirements for
Certain Covered Outpatient Department Services; Potential Changes to the Laboratory
Date of Service Policy; Proposed Changes to Grandfathered Children?s Hospitals-Within-
Hospitals?

Dear Administrator Verma:

In January, Ijoined Governor DeWine?s team as Ohio?s Medicaid Director. His vision for children
was the most important factor in my decision to join his administration. Throughout my career,
I have had the good fortune to work with a broad group of phenomenal professionals,
organizations, families and consumers who focus on improving the lives and health of children.
This group has consistently included the children?s hospital community. Ohio is home to some
of the best children?s hospitals in the world, including University Hospitals Rainbow Babies 81
Children?s Hospital in Cleveland, Ohio.

I am writing to you regarding a federally imposed limit implemented in the 1997 federal
regulation, 42 CFR Rainbow is the only Ohio children?s hospital that is impacted by
this CMS-imposed bed limit. On behalf of Ohio and our Medicaid Agency, I applaud CMS for the
proposed change to amend change 42 CFR 412.22, the Hospital within Hospital 
regulation, which removes the restriction on grandfathered children?s Hst? ability to expand
their number of Medicare-certified beds.

I understand that a series of modifications have been discussed with the Centers for Medicare
and Medicaid Services (CMS) aimed at permitting Rainbow to expand its bed size 
modifications that are in response to modernize its hospitals and to meet the increased
demand for services. Rainbow serves many children and their families in the Cleveland area,

50 W. Town Street, Suite 400
Columbus. Ohio 43215
medicaid.ohio.gov

An Equal Opportunity Employer and Service Provider

The Honorable Seema Verma, MPH
Administrator

Page 2

August 28, 2019

and is a significant provider for children who are covered by Ohio Medicaid. Their leadership
and capacity are important to our program. The change sought by Rainbow would have no
adverse impact on Ohio Medicaid, given the way our hospital reimbursement regulations are
structured and administered.

We commend the agency for simplifying the regulatory oversight on children?s hospitals and
believe strongly that the change goes to great by assuring all children?s hospitals can
expand their beds to address their community?s needs. As a result, I urge you and the
leadership of CMS to finalize this proposed change to the regulation as this critical update
will assure Rainbow can better plan for patient needs and the demand for high quality care.
Ohio is pleased the agency adjusted the regulation so that it is confined to children?s hospitals,
since Rainbow is Ohio?s only free-standing children?s hospital subjected to the federal
regulatory constraint. Finally, we do not believe this confers any advantage to children?s
hospitals like Rainbow.

Thank you for consideration of this request. If you have any questions or need additional
information, please feel free to contact me. My administrative assistant, Sherri Trott, can be
reached at 614.752.3786.

Sincerely,

QM w?w

Maureen M. Corcoran
Director