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From Health Law Daily, April 30, 2015

Proposed FY 2016 IPPS and LTCH payment updates focus on quality of care

By Harold M. Bishop, J.D.

CMS has issued a Proposed rule to update fiscal year (FY) 2016 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital Prospective Payment System (LTCH PPS). The Proposed rule contains policies that continue the Obama Administration’s commitment to shifting Medicare payments from quantity of care to quality of care. The Proposed rule also sets forth FY 2016 policy with regard to disproportionate share hospital (DSH) payments, reduction in hospital admissions, value-based purchasing, reduction in hospital-acquired conditions, PPS-exempt cancer hospital quality reporting, and hospital and LTCH quality reporting. The proposals would affect discharges occurring on or after October 1, 2015 (Proposed rule, 80 FR 24324, April 30, 2015).

IPPS payment rates. CMS proposes a 1.1 percent increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users. This reflects the projected hospital market basket update of 2.7 percent adjusted by -0.6 percentage point for multi-factor productivity and an additional adjustment of -0.2 percentage point in accordance with section 3401 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The rate is further decreased by a proposed 0.8 percent for a documentation and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012 (ATRA) (P.L. 112-240).

If a hospital does not participate in the Hospital IQR Program, it will be subject to a one-fourth reduction of the market basket update. In addition, the update for any hospital that is not a meaningful EHR user will be reduced by one-half of the market basket update in FY 2016.

Other payment adjustments will include continued penalties for readmissions, a continued -1.0 percent penalty for hospitals in the worst performing quartile under the Hospital-Acquired Condition (HAC) Reduction Program, and continued bonuses and penalties for hospital valued-based purchasing.

LTCH PPS changes. The Proposed rule would implement section 206 of the Pathway for Sustainable Growth Rate Reform Act of 2013, attached as an amendment to the Bipartisan Budget Act of 2013 (P.L. 113-67), which directed CMS to establish two different types of LTCH PPS payment rates depending on whether or not the patient meets certain clinical criteria: (1) standard LTCH PPS payment rates; and (2) lower site-neutral LTCH PPS payment rates that are generally based on the IPPS rates. The payment reduction for site-neutral cases would be phased in for the first two years by requiring payment based on a 50/50 combination of the standard LTCH PPS rate and the site-neutral LTCH PPS rate.

Based on the proposed payment rates for FY 2016, CMS projects that LTCH PPS payments would decrease by 4.6 percent, or approximately $250 million. However, cases that qualify for the higher standard LTCH PPS payment rate would see a payment rate increase of 1.9 percent, which is based on a market basket update of 2.7 percent adjusted by the multi-factor productivity adjustment of -0.6 percentage point and an additional adjustment of -0.2 percentage point in accordance with the ACA.

DSH payment adjustment. Starting in FY 2014, under section 1886(r) of the Social Security Act, which was added by section 3133 of the ACA, DSHs will receive only 25 percent of the amount they previously would have received. The remaining 75 percent will be paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured.

In FY 2016, CMS is proposing to distribute $6.4 billion in uncompensated care payments, a decrease of $1.3 billion from the estimated FY 2015 amount. This decrease is primarily attributable to a decline in the number of uninsured individuals since the passage of the ACA. The estimate of the uncompensated care payments to be distributed in FY 2016 will be updated in the Final rule based on more recent data.

Reduction of hospital readmissions. CMS is proposing changes in policies to the Hospital Readmissions Reduction Program, which is established under section 1886(q) of the Social Security Act, as added by section 3025 of the ACA. The program requires a reduction to a hospital’s base operating diagnosis-related group (DRG) payment to account for excess readmissions of selected applicable conditions. In the Proposed rule, CMS would refine the pneumonia readmissions measure, which would expand the measure cohort for the FY 2017 payment determination and subsequent years. In addition, it would adopt an extraordinary circumstance exception policy that would align with existing extraordinary circumstance exception policies for other IPPS quality reporting and payment programs and would allow hospitals that experience an extraordinary circumstance (such as a hurricane or flood) to request a waiver for use of data from the affected time period.

Value-based purchasing. Congress authorized the Hospital Value-Based Purchasing (VBP) Program in Section 3001(a) of the ACA. For FY 2016, CMS is proposing to add a care coordination measure to the FY 2018 Hospital VBP Program year and a 30-day mortality measure for chronic obstructive pulmonary disease to the FY 2021 program year. CMS also proposes to remove two measures, effective with the FY 2018 program year, and signals future policy changes that will affect certain National Healthcare Safety Network measures beginning with the FY 2019 program year.

Reduction of hospital-acquired conditions. Section 1886(p) of the Social Security Act, added by section 3008(a) of the ACA, establishes the HAC Reduction Program to incentivize hospitals to reduce the incidence of HACs by requiring CMS to make an adjustment to payments to applicable hospitals effective for discharges beginning on October 1, 2014.

In this proposed rule, CMS would make three changes to the program’s policies: (1) an expansion to the population covered by the central line-associated bloodstream infection (CLABSI) and catheter-associated urinary tract infection (CAUTI) measures to include patients in select non-intensive care unit sites within a hospital; (2) an adjustment to the relative contribution of each domain to the Total HAC Score which is used to determine if a hospital will receive the payment adjustment; and (3) a policy that would align with existing extraordinary circumstance exception policies for other IPPS quality reporting and payment programs and would allow hospitals to request a waiver for use of data from the affected time period.

Hospital inpatient quality reporting. CMS proposes to add a total of eight new measures for the FY 2018 payment determination for the Hospital IQR Program. These include five clinical episode-based payment measures, one patient safety measure, and two coordination-of-care measures. CMS also proposes to remove nine measures, two of which are suspended, for the FY 2018 payment determination and subsequent years, as well as refine two previously adopted measures to expand measure cohorts.

CMS would also make two changes in relation to electronic clinical quality measures (eCQMs). CMS would require hospitals to submit 16 eCQMs covering three National Quality Strategy (NQS) domains beginning in calendar year 2016 for the FY 2018 payment determination, with each hospital choosing which measures to submit, from the 28 inpatient CQMs.

LTCH quality reporting. CMS is proposing one new functional status quality measure, as well as two previously finalized quality measures to the LTCH Hospital Quality Reporting Program. The previously finalized quality measures are: (1) the percent of residents or patients with pressure ulcers that are new or worsened (short stay) (NQF #0678); and (2) an application of percent of residents experiencing one or more falls with major injury (long stay) (NQF #0674). CMS is also proposing the previously finalized all-cause unplanned readmission measure for 30 days post-discharge from LTCHs (NQF #2512), in order to establish the newly National Quality Forum (NQF) endorsed status of this measure. Finally, CMS is proposing to begin to publically report quality data by fall 2016, on a CMS website.

PPS-exempt cancer hospital quality reporting. Section 3005 of the ACA added sections 1866(a)(1)(W) and (k) to the Social Security Act. Section 1866(k) establishes a quality reporting program for Prospective Payment System (PPS)-Exempt Cancer Hospitals (PCHQR). Section 1866(k)(1) states that, for FY 2014 and each subsequent FY, a PCH must submit patient safety measure data to CMS.

Under the Proposed rule, CMS would collect three new patient safety measures: (1) a Clostridium difficile (C. difficile) infection outcome measure; (2) a Hospital-Onset Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia outcome measure; and (3) a measure of Influenza vaccination coverage among health care personnel. CMS would also remove six Surgical Care Improvement Project (SCIP) measures because it will not be operationally feasible to continue collecting data on these measures.

Comments will be accepted until June 16, 2015. CMS expects to issue its Final rule by August 1, 2015.

MainStory: TopStory ReimbursementNews IPPSNews CMSNews DSHNews EHRNews HealthReformNews LTCHNews PartANews QualityNews

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