Board weighs whether to incorporate hospitals’ corrected financial filings when defining high‑cost outliers

Board discussion: at the meeting staff briefed the Department of Health Care Access and Information advisory board on recent resubmissions of hospital annual financial disclosure reports and the operational implications for the board’s high‑cost hospital methodology.

CJ Howard, assistant deputy director of the health care spending targets branch, explained that hospitals may resubmit prior‑year data via HCAI’s Sierra system and that resubmissions are not automatically merged into the previously published complete dataset. HCAI is validating some resubmissions, and staff said validation timelines vary from weeks to months depending on the nature and number of years resubmitted. Howard told board members that accepting validated resubmissions could reshuffle which hospitals fall above the methodology’s 80th‑percentile cutoffs used for target adjustments.

Board concerns and options: members pressed staff on whether resubmissions include formal justifications for why prior certified filings are being changed, and discussed risks of creating a perpetual cycle of resubmissions that could incentivize strategic corrections. Several board members suggested a limited, announced window for accepting corrections to older filings (for example, years filed before the board began using the dataset operationally), after which the board would use the certified files available at its cut‑off date to establish targets. Others emphasized fairness and urged staff to propose clear deadlines so all hospitals have the same opportunity to submit validated corrections.

Stakeholder comments: hospitals and trade groups urged the board to consider HCAI‑validated resubmissions. Angus Cochrane (Washington Health) said his system’s corrected filings were already accepted by HCAI and that, according to their modeling, corrected data would remove the system from the outlier list; he asked the board to adopt a methodology that considers validated resubmissions. The California Hospital Association and other hospital commenters cited types of errors found in refilings (misallocated payer revenue, incorrect discharge counts, off‑hospital license revenues) and urged OCA to account for validated corrections, while consumer advocates warned against an open‑ended process that could undermine accountability.

Staff next steps: staff said they would return with options that balance fairness and operational feasibility — for example, a one‑time window to accept resubmissions for years before a specified date, a rule to consider only HCAI‑validated resubmissions received by a communicated cut‑off, or handling corrections through the enforcement process on an ad hoc basis. HCAI staff emphasized that the AFDR/AFTR validation is primarily a desk audit for completeness and that, historically, resubmission requests were rare.

No vote was taken; the board asked staff to draft potential approaches for consideration at a future meeting.