CMS releases FY11 hospital inpatient PPS proposed rule Last Updated: August 14, 2014
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The Centers for Medicare & Medicaid Services (CMS) on April 19 released its FY11 Medicare inpatient prospective payment system (IPPS) proposed rule. Comments are due to CMS by June 18.

While the recently enacted Patient Protection and Accountable Care Act (PPACA) included a number of provisions that impact payment rates for the IPPS, CMS did not include any of these proposed policies and payment rates in this proposed rule for FY 2011. CMS states that it expects to provide further information on the implementation of the law that affects FYs 2010 and 2011 payments in the “near future.”

CMS proposes a -2.9% adjustment to base FY11 inpatient rates to recoup half of the effect of documentation and coding changes remaining as a result of the implementation of Medicare-severity diagnosis-related groups (MS-DRGs) in 2008 and 2009. CMS indicated the other half of the recoupment adjustment would occur in FY12. The agency did not propose a prospective coding adjustment for FY11, leaving 3.9% to be recouped at a later date.

CMS proposes a marketbasket update of 2.4% for FY11 for hospitals that report quality data. Taking into account the -2.9% behavioral offset and outlier and wage index adjustments, hospitals would experience an average decrease in payments of -0.1%. However, Premier expects that the final update will be -0.35% after the -0.25% reduction required by PPACA is applied.

The agency did not propose major changes to its hospital-acquired conditions (HAC) policy, but did suggest refined codes for some existing conditions. However, CMS proposes to add the following eight existing HAC categories to the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program for FY12 payment determination:

  • Foreign Object Retained After Surgery
  • Air Embolism
  • Blood Incompatibility
  • Pressure Ulcer Stages III & IV
  • Falls and Trauma: (Includes: Fracture, Dislocation, Intracranial Injury, Crushing, Injury, Burn, Electric Shock)
  • Vascular Catheter-Associated Infection
  • Catheter-Associated Urinary Tract Infection (UTI)
  • Manifestations of Poor Glycemic Control

CMS proposes to bring the total number of measures in the RHQDAPU program to 55 for reporting in FY 2011 for FY 2012 payment determination. This includes retiring one measure – the AHRQ Mortality for Selected Surgical Procedures Composite – and retaining the other 45 quality measures. In addition to the eight HAC measures listed above, CMS proposes to add two other claims-based measures as follows:

  • PSI-11: Post-Operative Respiratory Failure
  • PSI-12: Post-Operative Pulmonary Embolism (PE) or Deep Vein Thrombosis (DVT)

To allow hospitals to plan for future reporting requirements, CMS proposes a three-year expansion of the RHQDAPU program, proposing to add measures not only for the FY12 payment determination, but also for the FY13 and FY14 payment determinations.

In addition, CMS proposes allowing hospitals to choose one of the four following clinical areas to report measure sets through registries in FY 2011: (1) Implantable Cardioverter; Defibrillator (ICD); Complications; (2) Cardiac Surgery; (3) Stroke; or (4) Nursing-Sensitive Care. However, these measures, if adopted, will not affect payment until 2014. CMS also discusses adding 28 additional measures in subsequent years.

Premier Advocacy is pleased to provide a detailed summary of the proposed FY11 IPPS rule.

A display copy of the proposed rule is posted on the CMS IPPS website. The proposed rule is expected to be published in the Federal Register on May 4.

Other CMS resources:

  • CMS press release on IPPS proposed rule
  • CMS Fact Sheet: Understanding the Document and Coding Adjustment
  • CMS Fact Sheet: Proposed Payment and Policy Changes For Inpatient Stays in Acute Care and Long-term Care Hospitals for FY11

CMS proposes payment policies and rates for LTCHs and psychiatric facilities

The Centers for Medicare & Medicaid Services (CMS), in the proposed rule containing proposed inpatient payment policies, projects a marketbasket update of 2.4% for long-term care hospitals (LTCHs) and an adjustment of -2.5% to account for documentation and coding changes as a result of the adoption of MS-DRGs. Based on these two provisions, CMS estimates that payment to LTCHs would increase by 0.8% in FY11.

CMS is proposing a slight increase in the LTCH outlier threshold for FY 2011, raising it to $18,692. CMS is also proposing to replace “rate year” for LTCHs with “fiscal year,” since policies and payment weights for LTCHs are now being revised on a fiscal year basis.

Like the IPPS proposal, the LTCH proposed rule does not account for provisions in the Patient Protection and Affordable Care Act (PPACA), which reduces LTCH payments by 0.5% in 2011. CMS will have to issue a correction notice to revise the rates accordingly.

Comments on the proposed rule are due to CMS by June 18.

CMS has also posted an inflation update notice for RY11 for the inpatient psychiatric facilities (IPFs) prospective payment system (PPS). The agency typically posts Medicare rate notices when it does not propose policy changes that require public comment.

CMS proposes an average update of 2.26% for IPFs, which accounts for an inflationary update of 2.4%, a negative adjustment of 0.25% mandated by the healthcare reform law and other adjustments. The rates apply to IPF discharges occurring during the rate year beginning July 1, 2010, through June 30, 2011. In the notice, CMS also responds to comments on the IPF PPS teaching adjustment, which it received in response to the agency’s May 2009 IPF PPS notice.

Consolidated healthcare reform legislation now available

The House Legislative Counsel has compiled into a single document the final healthcare reform provisions integrating the amendments made by the manager’s amendment to the Senate bill, as well as those from the reconciliation legislation, into the base text of the Reid bill as introduced. As the Obama administration moves forward with implementation of healthcare reform, this should serve as a good resource.

As a reminder, this and other resources on the healthcare reform law are available on Premier’s healthcare reform website at:

CMS actuary releases new estimates of health reform

An updated actuarial analysis on the Patient Protection and Affordable Care Act (PPACA) estimates that the law would reduce the number of uninsured from 57 million to an estimated 23 million by 2019 and would increase health expenditures by almost 1 percent, or $311 billion from 2010 to 2019. The report also warns that reductions in payments to hospitals and other providers are unlikely to be sustainable on a permanent annual basis.

The analysis, released by Centers for Medicare & Medicaid Services (CMS) Chief Actuary Rick Forster includes changes made by the budget reconciliation bill and has given rise to renewed debate over the cost of reform.

Statements by House Ways and Means Committee Chairman Sander Levin (D-MI) and Health Subcommittee Chairman Pete Stark (D-CA) pointed to the report as evidence of the “value of the investment” in healthcare, citing the findings of expanded coverage and reductions in out-of-pocket healthcare expenses for Medicare beneficiaries.

President Obama nominates Berwick for CMS administrator

The White House officially announced on April 19 that President Obama has nominated Dr. Donald Berwick to be administrator of the Centers for Medicare & Medicaid Services (CMS). Dr. Berwick is currently the president and CEO of the Institute for Healthcare Improvement (IHI) and is a professor at Harvard Medical School and the Harvard School of Public Health. A pediatrician by training, Dr. Berwick is also adjunct staff in the Department of Medicine at Boston’s Children’s Hospital and a consultant in pediatrics at Massachusetts General Hospital.

Among his other accomplishments, Dr. Berwick has served as chair of the National Advisory Council of the Agency for Healthcare Research and Quality (AHRQ), and as an elected member of the Institute of Medicine (IOM). In 1997 and 1998, he served as a Clinton administration appointee on the Advisory Commission on Consumer Protection and Quality in the Healthcare Industry.

Susan DeVore, president and CEO of the Premier healthcare alliance, released the following statement in response to Berwick’s appointment:

“In announcing the appointment of Don Berwick, M.D. as the administrator of the Centers for Medicare & Medicaid Services (CMS), the White House has sent a strong signal of their commitment to implementing reforms in a way that will greatly improve healthcare quality.

“Members of the Premier healthcare alliance believe Dr. Berwick is a strong choice to lead the central healthcare agency charged with implementing healthcare reform over the next decade. While with the Institute for Healthcare Improvement, Dr. Berwick earned respect and admiration from all sectors of healthcare for his ability to understand what drives errors and inefficiencies, challenge the status quo and overcome barriers to achieve continuous quality improvements. With this background, we are confident Dr. Berwick understands firsthand how difficult it will be to implement reforms of such significant scale and magnitude. More importantly, we believe he has the vision and experience to overcome the challenges ahead to drive improvements in pragmatic, effective ways.

“We look forward to working with Dr. Berwick in his new role, and in continuing our efforts to simultaneously improve healthcare quality, eliminate costs, reduce harm and increase satisfaction. We also look forward to working with Dr. Berwick and CMS to drive toward greater accountability in healthcare so that we reward the quality of patient outcomes rather than the quantity of services provided.

“Because the position of CMS administrator is so critical, particularly now that health reform calls for such extensive policy change, we encourage the Senate to confirm Dr. Berwick as soon as possible.”

CMS releases final Medicaid benefit package rule

In a final rule published in the April 30 Federal Register, CMS provides states increased flexibility under an approved state plan to define the scope of covered medical assistance by offering coverage of benchmark or benchmark-equivalent benefit packages to certain Medicaid-eligible individuals.

The rule implements provision of the Deficit Reduction Act of 2005 (DRA) related to the coverage of medical assistance under state-approved plans and language in the Children’s Health Insurance Program (CHIP) reauthorization act regarding plan enrollees under the age of 21.

Before the passage of the DRA, states were required to offer at minimum a standard benefit package to eligible populations including inpatient and outpatient hospital services, among others. The DRA allows states to amend their Medicaid state plans to provide for the use of benefit packages other than the standard benefit package, namely benchmark benefit packages or benchmark-equivalent packages, for certain populations.

The final rule defines what would constitute a benchmark and benchmark-equivalent package and governs which patients can be mandatorily or voluntarily enrolled in benchmark benefit plans. After receiving more than 1,000 comments on the proposed rule released in February 2008, a CMS official stated that it made changes to protect beneficiaries who might be at risk of losing benefits.