CMS proposes rule to improve care, payment provisions for Medicare patients

CMS has proposed a rule to update Medicare payment policies and rates for inpatient stays at acute care and long-term care hospitals during fiscal year 2015, according to a press release.

The rule is an extension of the Obama administration’s efforts through the Affordable Care Act to implement hospital care improvements while slowing the long-term rise of health care costs.

Under this rule, CMS estimates a fiscal year (FY) 2015 payment rate update for general acute care hospitals of 1.3%, and an update for long-term care hospitals of 0.8%. The differences in these updates are the result of different statutory and regulatory provisions applicable to each hospital system.

The most significant changes in the new rule are payment provisions which, in an effort to improve the quality of hospital care, will decrease payments for readmissions and hospital-acquired conditions (HACs). Additionally, the rule proposes changes to the Hospital Inpatient Quality Reporting (IQR) program, and details how hospitals can adhere to the Affordable Care Act’s disclosure requirements regarding charges for services. These efforts are intended to encourage greater transparency for patients and the public, according to the release.

The proposed rule calls for input from the public regarding an alternate payment paradigm for short-stay inpatient cases that could also be treated on an outpatient basis; specifically, input is sought on how to define short stays.

Below is a summary of changes that would occur under the proposed rule, according to the release:

Hospital Value-Based Purchasing Program: Established by the Affordable Care Act, the hospital value-based purchasing (VBP) program adjusts payments to hospitals according to the quality of care they provide to patients. Under the new law, CMS will increase the applicable percent reduction – the portion of Medicare payments available for value-based incentive payments – to 1.5% of the base operating DRG payment amounts to all participating hospitals. CMS projects a total amount accessible for value-based incentive payments in FY 2015 of roughly $1.4 billion, and plans to update this assessment in the FY 2015 IPPS/long-term care hospitals final rule.
Hospital Readmissions Reduction Program: As required by law, the maximum payment reduction under the Hospital Readmissions Reduction program will increase from 2% to 3%. For FY 2015, CMS will evaluate hospitals’ readmissions penalties using five measures of readmissions supported by the National Quality Forum. Currently, CMS approximates a decrease in Medicare hospital readmissions of 150,000 between January 2012 and December 2013.
Hospital-Acquired Condition Reduction Program: Under the proposed rule, CMS would implement the Affordable Care Act’s Hospital Acquired Condition (HAC) Reduction Program. Starting in FY 2015, hospitals with the highest HAC rates will see a 1% reduction to Medicare inpatient payments. This effort is designed to promote prevention of HACs and is expected to increase the approximate $25 million in annual savings under the current HAC program.
Quality Reporting Program: Under the proposed rule, CMS plans to revise measures for the Hospital Inpatient Quality Reporting, Long-Term Care Hospital Quality reporting and PPS-Exempt Cancer Hospital Quality Reporting programs. For FY 2015 and 2016, this would mean an alignment of the reporting and submission timelines for clinical quality measures for the Medicare Electronic Health Record Incentive Program with the reporting timelines of the Hospital IQR program.
Wage Index - Updated Labor Market Areas: CMS seeks to more accurately reflect the reality of population shifts and labor market conditions by using the most recent labor market area definitions issued by the Office of Management and Budget, via 2010 Census data. As part of this change, CMS is also proposing a 1-year transition for all hospitals that would experience a decrease in their actual payment wage index due to implementation of the new OMB delineations, and a 3-year transition for hospitals that would be reclassified from “urban” to “rural.”

According to CMS administrator Marilyn Tavenner, these changes are designed to yield improved patient care and additional resources to providers.

“The policies announced today will assist the highly committed professionals working around the clock to deliver the best possible care to Medicare beneficiaries,” Tavenner said in the release. “This proposed rule is geared toward improving hospital performance while creating an environment for improved Medicare beneficiary care and satisfaction.”

CMS is accepting public comments on the proposed rule until June 30, 2014, and will issue a final rule by Aug. 1, 2014. Click here for more information on the payment and quality provisions in the proposed IPPS/LTCH PPS rule.