CMS releases FY13 hospital inpatient payment proposed rule Last Updated: July 23, 2014
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The Centers for Medicare & Medicaid Services (CMS) on April 24 issued its fiscal year (FY) 2013 Medicare inpatient prospective payment system (PPS)/long-term care hospital (LTCH) PPS proposed rule. Comments are due to CMS by June 25, 2012.

CMS is implementing a prospective 1.9 percent downward documentation and coding adjustment as a result of the payment increases following the adoption of the Medicare severity diagnosis related groups (MS-DRGs) that CMS contends was not a reflection of actual increases in patient acuity. This is the last year of the phased-in reductions and completes the 5.4 percent CMS removed from the base payments. In FY 2013, CMS is also restoring to the base rates the 2.9 percent retrospective adjustment it made in 2011 and 2012 to recoup funds paid in 2008 and 2009 respectively. This ensures that CMS does not continue cutting payments going forward as it has already recouped the funds necessary to cover the excess payments in 2008 and 2009. In addition, CMS is newly proposing an adjustment of -0.8 percent for increases in payment occurring in FY 2010.

In combination with a 3.0 percent market basket and the Affordable Care Act (ACA)-mandated market basket and productivity adjustments, as well as the behavioral offset discussed above, hospitals will see an average payment increase of 2.3 percent between FY 2012 and FY 2013. As required by ACA, this includes a 0.1 percentage point reduction to the market basket, as well as a 0.8 percentage point reduction based on an economy-wide measure of productivity.

Hospital value-based purchasing (VBP) program and reduced payment for readmissions

CMS proposes operational methodologies for both the readmissions and value-based purchasing payments. Beginning in FY 2013, the ACA reduces by up to 1 percent inpatient payments based on each hospital’s readmission rates for acute myocardial infarction, chronic heart failure and pneumonia and establishes a Medicare Value-based Purchasing program that ties 1 percent of payments to a hospital’s performance on a set of quality measures. Both programs will apply to wage-adjusted base operating payments including new technology add-ons, but excluding indirect medical education, disproportionate hospital share hospital payments, outliers and low-volume adjustments.

CMS estimates a value-based incentive payment pool of $956 million in FY 2013. CMS proposes to apply both the 1 percent payment reduction, as well as the payment incentive (if applicable) at the same time starting January 2013. To account for adjustments that should have been made between October 1, 2012 and January 1, 2013 CMS proposes to reprocess all claims during that period in January 2013. In FY 2014 and beyond, CMS proposes to make the adjustments on claims starting October 1 of each year.

For the value-based purchasing program in 2015, CMS proposes four new measures, including the Medicare Spending per Beneficiary measure, two new outcomes measures and one clinical process of care measure.

CMS estimates that under the Hospital Readmissions Reduction Program, Medicare inpatient PPS operating payments will decrease by approximately $300 million (or 0.3 percent of total operating payments) in FY 2013. The readmission payment adjustment will be applied to claims beginning October 1, 2012. CMS will provide hospitals with confidential reports which contain the excess readmission ratios for the three conditions by June 20, 2012 through QualityNet. CMS will provide hospitals with a 30-day period to review and submit corrections beginning the day they receive the confidential report.

Hospital inpatient quality reporting (IQR) proposed measures

For FY 2015, CMS is proposing to reduce the total number of measures from the current 72 measures to 59 measures for FY 2015 payment determination as follows:

  • Retire 17 measures for FY 2015 Hospital IQR Program to reflect recommendations by the National Quality Forum’s Measures Application Partnership and to reduce redundancy:
    • One chart abstracted, SCIP-VTE-1, as the measures process is included in SCIP-VTE-2 “Surgery patients who received appropriate VTE prophylaxis within 24 hours of pre/post surgery”
    • 16 claims-based measures
    • Eight hospital-acquired conditions
    • Five Agency for Healthcare Research and Quality (AHRQ) Patient Safety Indicators (PSIs)
    • Three AHRQ Inpatient Quality Indicators (IQIs)
  • Add one care transition measure to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAPHS) survey, along with two questions for the “about you” section – admission through the emergency department and overall emotional and mental health
  • Add three claims-based measures:
    • Hospital-Level 30-Day All-Cause Risk-StandardizedReadmission Rate (RSRR) Following Elective Total Hip Arthroplasty (THA) and Total Knee Arthroplasty
    • Hip/Knee Risk Complication S: for Hip/Knee complication “Hip/Knee Complication: Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary Total Hip Arthroplasty (THA) and Total Knee Arthroplasty”
    • Add on one chart abstracted measure, Elective Delivery

For FY 2016, CMS proposes adding one structural measure (Use of Safe Surgery Checklist) for a total of 60 measures.

CMS states in the proposed rule that the agency intends to align the quality measures of electronic health records meaningful use with the hospital IQR measures and anticipates only one set of clinical quality measures for both programs.

Hospital-acquired condition (HAC) payment policy

CMS has proposed adding two new conditions, Surgical Site Infection (SSI) Following Cardiac Implantable Electronic Device (CIED) Procedures and Pneumothorax with Venous Catheterization, for the HAC payment for FY 2013. CMS also proposes adding diagnosis codes 999.32 (Bloodstream infection due to central venous catheter) and 999.33 (Local infection due to central venous catheter) to the existing Vascular Catheter-Associated Infection HAC category for FY 2013.
The proposed rule will appear in the May 11, 2012 Federal Register. A Premier summary and further analysis of the inpatient rule are forthcoming.