FACT
SHEET
FOR IMMEDIATE RELEASE
April 17, 2015
Contact: CMS Media Relations
(202) 690-6145 | CMS
Media Inquiries
Fiscal
Year 2016 proposed Inpatient and Long-term Care Hospital policy and payment
changes
(CMS-1632-P)
On April 17, 2015 the Centers for
Medicare & Medicaid Services (CMS) 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 (LTCH)
Prospective Payment System (PPS). The proposed rule, which would apply to
approximately 3,400 acute care hospitals and approximately 435 LTCHs, would
affect discharges occurring on or after October 1, 2015.
The IPPS pays hospitals for
services provided to Medicare beneficiaries using a national base payment rate,
adjusted for a number of factors that affect hospitals’ costs, including the
patient’s condition and market conditions to the hospital’s geographic area.
The proposed rule proposes policies
that continue a commitment to increasingly shift Medicare payments from volume
to value. The Administration has set measurable goals and a timeline to move
the Medicare program, and the health care system at large, toward paying
providers based on the quality, rather than the quantity of care they give patients.
The proposed rule includes policies that advance that vision and support
building a health care system that delivers better care, spends health care
dollars more wisely and results in healthier people.
This fact sheet discusses major
provisions of the proposed rule.
Background
CMS pays acute care hospitals (with
a few exceptions specified in the law) for inpatient stays under the IPPS and
long-term care hospitals under the LTCH PPS. Under these two payment systems,
CMS generally sets payment rates prospectively for inpatient stays based on the
patient’s diagnosis and severity of illness. A hospital receives a single
payment for the case based on the payment classification – MS-DRGs under the
IPPS and MS-LTC-DRGs under the LTCH PPS – assigned at discharge.
By law, CMS is required to update
payment rates for IPPS hospitals annually, and to account for changes in the
costs of goods and services used by these hospitals in treating Medicare
patients, as well as for other factors. This is known as the hospital “market
basket.” LTCHs are paid according to a separate market basket based on
LTCH-specific goods and services.
Changes and Updates in FY
2016 Policies
Proposed Changes to
Payment Rates under IPPS
The proposed 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 is 1.1 percent.
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 the
Affordable Care Act; like last year, 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.
Hospitals that do not successfully
participate in the Hospital IQR Program and do not submit the required quality
data will be subject to a one-fourth reduction of the market basket update.
Also, the law requires that 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.
CMS projects that the rate
increase, together with other proposed changes to IPPS payment policies, will
increase IPPS operating payments by approximately 0.3 percent. CMS projects
that total Medicare spending on inpatient hospital services will increase by
about $120 million in FY 2016.
Other payment adjustments will
include continued penalties for readmissions, a continued -1% penalty for
hospitals in the worst performing quartile under the Hospital Acquired
Condition Reduction Program, and continued bonuses and penalties for
hospital-valued based purchasing. The Medicare Access and CHIP Reauthorization
Act of 2015 also contains provisions that would impact certain payment
adjustments and policies discussed in this proposed rule, including extensions
of additional payments for Medicare-dependent hospitals and low-volume
hospitals that were due to expire. Those extensions are not reflected in this
proposed rule.
Potential Expansion of
Bundled Payments for Care Improvement Initiative
In 2011, CMS launched the Bundled
Payments for Care Improvement (BPCI) initiative. The BPCI initiative links
payments for multiple services during an episode of care into a bundled
payment. BPCI episodes initiate either with an inpatient stay or with post-acute
services following a qualifying inpatient stay. CMS is continuing to implement
the initiative, which is testing four models of care with hundreds of providers
across the country.
In the rule, CMS is seeking comment
on policy and operational issues surrounding the potential future expansion of
this initiative.
Documentation and Coding
Adjustment
Section 631 of the American
Taxpayer Relief Act of 2012 requires CMS to recover $11 billion by 2017 to
fully recoup documentation and coding overpayments related to the transition to
the MS-DRGs that began in FY 2008. For FY 2016, CMS is proposing to continue
the approach begun in FY 2014 by making another -0.8 percent adjustment to
continue the recoupment process.
Long-Term Care Hospital
Prospective Payment System Changes
Nationwide, most chronically ill
patients are treated in acute care hospitals, but some are admitted to LTCHs.
The Pathway for SGR Reform Act of 2013 directed CMS to make significant changes
to the payments system for LTCHs. The law directs CMS to establish two
different types of LTCH PPS payment rates depending on whether or not the
patient meets certain clinical criteria: standard LTCH PPS payment rates, and
new, lower site neutral LTCH PPS payment rates that are generally based on the
IPPS rates. The law transitions the payment reduction for site neutral cases
for the first two years of the revised LTCH PPS by requiring payment based on a
50/50 blend of the standard LTCH PPS rate and the site neutral LTCH PPS rate.
In the proposed rule, CMS is proposing specifics of the implementation of this
statutory requirement.
CMS projects that LTCH PPS payments
would decrease by 4.6 percent, or approximately $250 million, based on the
proposed payment rates for FY 2016. This estimated decrease is primarily
attributable to the statutory decrease in the payment rates for site neutral
LTCH PPS cases that do not meet the clinical criteria to qualify for the higher
standard LTCH PPS payment rates. Cases that do qualify for the higher standard
LTCH PPS payment rate will see an increase in that payment rate of 1.9 percent
(based on a market basket update of 2.7 percent adjusted by a multi-factor
productivity adjustment of -0.6 percentage point and an additional adjustment
of -0.2 percentage point in accordance with the Affordable Care Act).
Medicare
Disproportionate Share Hospital (DSH) Payments
Beginning in FY 2014, the
Affordable Care Act changed the Medicare DSH payment methodology. Hospitals now
receive 25 percent of the amount they previously would have received under the
statutory DSH formula. The remainder, equal to an estimate of 75 percent of
what otherwise would have been paid as Medicare DSH, is aggregated nationally,
adjusted for decreases in the rate of uninsured individuals and other factors,
and then distributed to hospitals based on their relative share of the total
amount of uncompensated care. In this rule, CMS is proposing to distribute $6.4
billion in uncompensated care payments in FY 2016, a decrease of $1.3 billion
from the estimated FY 2015 amount. This decrease is primarily attributable to
continued declines in the number of uninsured individuals since the passage of
the Affordable Care Act. 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.
Electronic Health Record
Incentive Programs and Quality Reporting
This proposed rule also includes
the requirements for eligible hospitals and Critical Access Hospitals (CAHs)
participating in electronic reporting of clinical quality measures (CQMs) for
the Electronic Health Record (EHR) Incentive Programs and the Inpatient Quality
Reporting (IQR) program. CMS is proposing modifications to some of the CQM
reporting and submission requirements to align the CQM reporting period for
electronic reporting for both programs, to specify the options for the Editions
of certified EHR technology providers may use, and to establish requirements
for the version of electronic specifications (eCQMs) a provider must use for
electronic submission of quality reporting data. No changes are proposed for
the CQM reporting and submissions requirements for Medicaid eligible
hospitals/CAHs. No new CQMs are proposed.
Hospital Inpatient
Quality Reporting (IQR) Program
In the proposed rule, CMS is
proposing to update the measures used in the Hospital Inpatient Quality
Reporting (IQR) Program. CMS proposes to add a total of eight new measures for
the FY 2018 payment determination and subsequent years (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.
In addition, CMS proposes two
changes in relation to electronic clinical quality measures (eCQMs). CMS
proposes to clarify requirements for the submission of the STK-01 measure for
CY 2015/FY 2017 payment determination. Also, CMS proposes to require hospitals
to submit sixteen 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 available
inpatient electronic Clinical Quality Measures. This will align the Hospital
IQR Program with the Medicare Electronic Health Record Incentive Program for
eligible hospitals and critical access hospitals. CMS proposes to require two
quarters (Q3 and Q4) of reporting in CY 2016.
Hospital Value-Based
Purchasing (VBP) Program
Established by the Affordable Care
Act, the Hospital VBP Program adjusts payments to hospitals for inpatient
services based on their performance on an announced set of measures. In the
proposed rule, CMS proposes to continue updates to the Hospital VBP Program and
to expand the number of measures. Specifically, the rule proposes to add a care
coordination measure to the FY 2018 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 Health Safety
Network measures beginning with the FY 2019 program year.
Hospital Acquired
Conditions (HAC) Reduction Program
In the FY 2016 IPPS/LTCH PPS
Proposed Rule, CMS is proposing: (1) an expanded population for two measures
that are already included in the program, (2) an adjustment to the relative
contribution of each domain to the Total HAC Score, and (3) an extraordinary
circumstances exception (ECE) policy.
Hospital Readmissions
Reduction Program
In the FY 2016 IPPS/LTCH PPS
Proposed Rule, CMS is proposing: the implementation of a refinement of the
pneumonia (PN) readmission measure to expand the measure cohort and the formal
adoption of an extraordinary circumstance exception (ECE) policy. CMS is also
continuing to conduct research on the issue of risk adjustment for
socioeconomic status in our quality programs, and are working with the Office
of the Assistant Secretary of Planning and Evaluation, who expects to issue a
report to Congress on this issue by October 2016.
Long Term Care Hospital
Quality Reporting Program (LTCH QRP)
Beginning in FY 2014, the
applicable annual update for any LTCH that did not submit the required data to
CMS was reduced by two percentage points. The IMPACT Act of 2014 requires the
specification of quality measures for the LTCH QRP, including such areas as
skin integrity, functional status, such as mobility and self-care, as well as
incidence of major falls.
In order to satisfy the
cross-setting requirements of the IMPACT Act, CMS is proposing one new
functional status quality measure, as well as two previously finalized quality
measures (Percent of Residents or Patients with Pressure Ulcers That Are New or
Worsened (Short Stay) (NQF #0678), and an Application of Percent of Residents
Experiencing One or More Falls with Major Injury (Long Stay) (NQF #0674)), in
order to establish their use as cross-setting measures that satisfy the
required measurement domains under the IMPACT Act. CMS is additionally
proposing the previously finalized All-Cause Unplanned Readmission Measure for
30 Days Post-Discharge from Long-Term Care Hospitals (NQF #2512), in order to
establish the newly NQF-endorsed status of this measure. Finally, CMS is
proposing to begin to publically report quality data by fall 2016, on a CMS
website, such as Hospital Compare.
PPS-Exempt Cancer
Hospital Quality Reporting (PCHQR) Program
Established by the Affordable Care
Act, the PPS-Exempt Cancer Hospital Quality Reporting Program collects and
publishes data on an announced set of quality measures. In the proposed rule,
CMS proposes to collect three new patient safety measures under this program.
Specifically, the rule proposes to add a Clostridium difficile (C.
difficile) infection outcome measure, a Hospital-Onset
Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia outcome
measure, and a measure of Influenza vaccination coverage among healthcare
personnel. CMS also proposes to remove six Surgical Care Improvement Project
(SCIP) measures because it will not be operationally feasible to continue
collecting data on these measures in the future.
Two Midnight Rule
Over the past few years, hospitals
have expressed concerns related to Medicare policies surrounding short
inpatient hospital stays, long outpatient stays that include observation
services, and when payment for short hospital stays is appropriate under
Medicare Part A. CMS has worked to clarify when hospital stays would be
considered inpatient or outpatient for purposes of payment. As part of those efforts,
CMS included a provision in the FY 2014 hospital payment rule establishing a
benchmark that stays expected to last two or more midnights would generally be
considered appropriate for inpatient payment, while stays expected to last less
than two midnights would generally be considered appropriate for outpatient
payment (commonly known as the “Two Midnight Rule”).
In addition, in response to
hospital concerns about medical review, CMS and Congress have prohibited
Recovery Auditor review of patient status on hospital admissions between
October 1 2013, and April 30, 2015 while CMS continues to educate hospitals on
billing under the new rules. The Medicare Access and CHIP Reauthorization
Act of 2015 further extends this prohibition to September 30, 2015 but was not
enacted in time for this information to be reflected in the IPPS proposed rule.
When this prohibition expires, CMS has limited Recovery Auditors to six months
to review a claim for patient status when the hospital bills within three
months of the date of service to allow hospitals to bill for all medically
necessary services under Medicare Part B within the statutory timely filing
limits. CMS is considering feedback, as well as recent MedPAC recommendations,
carefully and expects to include a further discussion of the broader set of
issues related to short inpatient hospital stays, long outpatient stays with
observation services, and the related -0.2 percent IPPS payment adjustment in
the proposed calendar year 2016 Hospital Outpatient Prospective Payment system
rule.
CMS will accept comments on the
proposed rule until June 16, 2015, and will respond to all comments in a final
rule to be issued by August 1, 2015. The proposed rule can be downloaded from
the Federal Register at: https://www.federalregister.gov/public-inspection.
This document is scheduled to
be published in the Federal Register on 04/30/2015 and available online at http://federalregister.gov/a/2015-09245
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