FY 2014 Inpatient Prospective Payment System Proposed Rule

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1 FY 2014 Inpatient Prospective Payment System Proposed Rule Summary of Provisions Potentially Impacting EPs On April 26, 2013, the Centers for Medicare and Medicaid Services (CMS) released its Fiscal Year (FY) 2014 Medicare Inpatient Prospective Payment System (IPPS) Proposed Rule. The rule proposes updates for FY 2014 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals. CMS proposes to increase IPPS operating rates by 0.8 percent after accounting for inflation and other adjustments required by law, which would result in an overall increase in hospital payments (capital and operating) of $27 million. Only hospitals that successfully participate in CMS Inpatient Quality Reporting program would receive the full 0.8 percent update. All others would receive a penalty equal to a 2-percentage-point reduction in the proposed payment increase. HRS will submit comments to CMS on the FY 2014 IPPS proposed rule by the June 25, 2013 deadline and will update its membership when the final regulation is published in late summer Proposed Coding Updates Cardiac hospitals are expected to experience a payment increase of 1.4 percent in FY 2014 primarily due to proposed changes in relative weights and the proposed application of the frontier state wage index, which requires that hospitals in frontier states not be assigned a wage index of less than The cardiac rhythm device market also is expected to receive favorable payment increases in FY 2014 relative to FY Listed below is a summary of the proposed weighted average of payment estimates for FY 2014 as compared to FY 2013: ICD and CRT-D system implants: +6% ICD and CRT-D generator and ICD lead replacements: +9% Pacemaker and CRT-P implants: +3.7% Pacemaker and CRT-P generator replacements : +4.87% Transcatheter ablations: +2.2% Stand-alone surgical ablations: -2.57% HRS has prepared a table with more detailed information comparing finalized 2013 relative weights and base weights to 2014 proposed rates for relevant MS-DRGs. Proposed Refinement of the MS-DRG Relative Weight Calculation Beginning in FY 2007, CMS implemented relative weights for DRGs based on cost report data instead of charge information. To address the issue of charge compression, where hospitals apply higher charges to lower cost items and lesser charges to higher cost items, CMS created additional cost centers on the Medicare cost report to distinguish implantable devices from other medical supplies; MRIs and CT scans from other radiology services; and cardiac catheterization from other cardiology services. In this rule, CMS proposes to create separate cost to charge ratios (CCRs) for these new cost centers to calculate the relative weights starting in FY Implementation of this policy would increase the total number of CCRs used to calculate relative weights from 15 to 19, with distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. CMS estimates that the largest increase in MS-DRG relative weights would likely occur for MS-DRGs associated with cardiac catheterization and implantable cardiac devices. As with other proposed changes to the MS-DRGs, these proposed changes are to be implemented in a budget neutral manner.

2 Admission and Medical Review Criteria for Inpatient Services CMS also proposes for 2014 that hospital services spanning less than two midnights should be considered and paid for on an outpatient basis. Those who stay longer would have to be admitted and paid under Part A. The starting point for this time-based instruction would be when the beneficiary is moved from any outpatient area to a bed in the hospital in which additional hospital services will be provided. Furthermore, a physician s order for inpatient admission would have to be based on complex medical factors such as patient history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event. CMS would make exceptions to the two-night requirement when there is clear documentation in the medical record supporting the physician s order and expectation that the beneficiary would require care spanning more than two midnights (even if that length of stay is not achieved), or if the beneficiary is receiving a service or procedure designated by CMS as inpatient-only. CMS also would maintain a threeinpatient-day requirement for nursing home coverage, a proposal that has been sharply criticized by physician and hospital groups since patients that are not admitted for three consecutive days and classified instead as observation patients cannot qualify for Medicare's nursing home coverage. Under current policy, hospitals and physicians are prohibited from reclassifying observation patients as inpatients once they have been discharged. According to CMS, this proposed policy is intended to address longstanding concerns from hospitals that they need more guidance on when a patient is appropriately treated and paid by Medicare as an inpatient. It also aims to help beneficiaries who have been staying in the hospital longer as outpatients because of the hospital s uncertainty about Medicare payment if they admit the patient to the hospital. In recent years, the number of cases of Medicare beneficiaries receiving observation services for more than 48 hours, while still small, has increased from approximately 3 percent in 2006 to approximately 8 percent in Even though Medicare recommends that hospitals decide within 24 to 48 hours whether to admit a patient, observation stays exceeding 24 hours have nearly doubled to 744,748. The financial impact of this trend concerns CMS since beneficiaries who are treated for extended periods of time as outpatients receiving observation services may incur greater financial liability than they would if they were admitted as inpatients. Adjustment to MS-DRGs for Preventable Hospital-Acquired Conditions (HACs) not Present on Admission (POA) The HACs and POA Indicator Reporting Program, authorized under the Deficit Reduction Act (DRA) of 2005, requires a quality adjustment in MS-DRG payments for certain HACs, such as surgical site infections (SSIs) Following Cardiac Implantable Electronic Device which was finalized last year despite HRS opposition. Under this program, hospitals are ineligible for additional payments for cases in which designated conditions are not present on admission (i.e., the case is paid as though the secondary diagnosis were not present). CMS is not proposing to add or remove categories of HACs at this time. However, it encourages public dialogue about both previously selected and potential candidate HACs. The full list of HACs is available at: Payment/HospitalAcqCond/Hospital-Acquired_Conditions.html FY 2015 Hospital-Acquired Condition Reduction Program This rule proposes additional measures, scoring and risk adjustment methodologies for the Affordable Care Act (ACA) authorized Hospital-Acquired Condition (HAC) Reduction Program, which offers hospitals incentives to reduce the rate of conditions that patients acquire while receiving treatment for another condition in an acute care health setting, such as surgical site infections. While other federal programs Prepared by Hart Health Strategies, 5/22/13, Page 2

3 include payment adjustments for certain HACs, the HAC Reduction Program further reduces payments for the lowest performing hospitals based on their rates of HACs. As required under statute, beginning in FY 2015 (and effective for discharges beginning on October 1, 2014), hospitals that rank among the lowest-performing 25 percent with regard to HACs will be paid 99 percent of what they would otherwise be paid under the IPPS. This amount will be determined after the application of the payment adjustment under the Hospital Readmissions Reduction and the Hospital Value-Based Purchasing Program described below. CMS proposes to adopt the following measures for the FY 2015 determination under the HAC Reduction Program: Pressure ulcer rate (PSI 3); Volume of foreign object left in body (PSI 5); Iatrogenic Pneumothorax rate (PSI 6); Postoperative physiologic/metabolic derangement rate (PSI 10); Postoperative PE or DVT rate (PSI 12); and Accidental puncture/laceration rate (PSI 15) AHRQ Patient Safety Indicators (PSI) OR Pressure ulcer rate (PSI 3); Iatrogenic Pneumothorax rate (PSI 6); Central venous catheter-related blood stream infection rate (CLASBI) (PSI 7); Postoperative hip fracture rate (PSI 8); Postoperative PE or DVT (PSI 12); Postoperative sepsis rate (PSI 13); Wound dehiscence rate (PSI 14); and Accidental puncture/laceration rate (PSI 15) *this group would be measured as a composite CDC National Health Safety Network Healthcare-Associated Infection Measures CLASBI Catheter-Associated Urinary Tract Infection (CAUTI) Several of the AHRQ measures and both CDC measures are NQF-endorsed, already part of the Hospital IQR Program and are reported on the Hospital Compare Web site. CMS proposes additional measures for future years, including those targeting methicillin-resistant Staphylococcus aurus (MRSA) bacteremia and Clostridium difficile (C. diff) infection. In accordance with the statute, CMS proposes to post hospital scores for each individual measure and a total HAC score on the Hospital Compare Web site. It also proposes to provide hospitals with confidential HAC reports to review and correct prior to the data being made available to the public. Hospital Value-Based Purchasing (VBP) Program In this rule, CMS reviews previously finalized details regarding the FY 2014, FY 2015 and FY 2016 Hospital VBP Program. CMS also proposes numerous new policies for the FY 2016 Hospital VBP Program, including measures, performance standards, and performance and baseline periods. Under the VBP Program, authorized under the ACA, CMS first began applying value-based adjustments to hospital payments beginning with discharges occurring on or after October 1, CMS finalized the Hospital VBP Program s payment adjustment calculation methodology in the FY 2013 IPPS final rule. In the FY 2014 proposed rule, CMS proposes to increase to $1.1 billion the pool of money from which payments will be taken to pay facilities that perform well on quality scores by further reducing the inpatient payment withhold to 1.25 percent in FY 2014 and 2.0 percent by FY The following circumstances are excluded from the program: a hospital that is subject to the payment Prepared by Hart Health Strategies, 5/22/13, Page 3

4 reduction under the Hospital IQR Program for a given year; a hospital for which, during the performance period for the fiscal year, the Secretary has cited deficiencies that pose immediate jeopardy to the health or safety of patients; and a hospital for which there are not a minimum number of measures or cases that apply for the performance period. Measures previously finalized for the FY 2014 Hospital VBP Program include a mix of clinical process, patient experience, and outcomes measures. Those of potential interest to electrophysiologists include: AMI patients receiving fibrinolytic therapy within 30 minutes of hospital arrival; Primary PCI received within 90 minutes of hospital arrival for AMI patients; Heart failure patients discharged home with written instructions or educational material addressing activity level, diet, discharge medications, follow-up appointment, weight monitoring, and what to do if symptoms worsen; SCIP: Prophylactic antibiotic received within one hour prior to surgical incision; SCIP: Prophylactic antibiotics discontinued within 24 hours after surgery end time; AMI 30-day mortality rate; Heart failure 30-day mortality rate; and Pneumonia 30-day mortality rate Measures for FY 2015 will include those listed above, as well as additional outcome measures, such as an AHRQ complication/patient safety outcomes composite measure, which aims to evaluate rates of multiple serious complications that could have been avoided (e.g., central venous catheter-related bloodstream infections and accidental puncture/ laceration rates), as well as an efficiency measure that evaluates Medicare spending per beneficiary. CMS reiterates its decision to maintain these measures for FY 2015 despite concerns expressed by HRS and others regarding inadequate risk adjustment mechanisms, reliance on claims data and inadequate testing. For FY 2016, CMS proposes to remove the following measures from the program because they either topped out or are no longer NQF-endorsed: Primary PCI received within 90 minutes of hospital arrival for AMI patients; and Discharge instructions for heart failure patients. CMS also discusses potentially adding additional efficiency measures for future years to both the Hospital Inpatient Quality Reporting Program and the Hospital VBP Program. One measure CMS is considering would evaluate a hospitals performance on treating Medicare beneficiaries appropriately as a hospital inpatient or a hospital outpatient. The measure would assess the rate and/or dollar amount of billing hospital inpatient services to Medicare Part B, subsequent to the denial of a Part A hospital inpatient claim. This comes in light of CMS' recent proposal that when a Medicare Part A claim for inpatient hospital services is denied because the inpatient admission was determined not to be reasonable and necessary, the hospital may be paid for all of the Part B services that would have been reasonable and necessary had the beneficiary been treated as a hospital outpatient rather than admitted as an inpatient. CMS is also considering the addition of Medicare spending measures specific to physician services such as radiology, anesthesiology, and pathology that occur during a hospital stay. CMS would address these measures in future rulemaking, but currently welcomes feedback. CMS also adopted via previous rulemaking the following domain weights for the FY 2015 Hospital VBP Program. Proposed changes for FY 2016 are listed in parentheses: Clinical Process of Care: 20 percent (10 percent) Patient Experience of Care: 30 percent (25 percent) Prepared by Hart Health Strategies, 5/22/13, Page 4

5 Outcome: 30 percent (40 percent) Efficiency: 20 percent (25 percent) CMS reminds the public that over time, scoring methodologies will be weighted more towards outcomes, patient experience of care, and functional status measures. Hospital Readmissions Reduction Program This program, authorized under the ACA, requires a reduction to a hospital s base operating DRG payment to account for excess readmissions for selected conditions. The payment adjustment was first applied to discharges in FY 2013 and applied to readmissions related to AMI, heart failure, and pneumonia. As required by statute, CMS will increase the maximum reduction in payments under the FY 2014 program from one to two percent. CMS previously finalized policies related to the calculation of the hospital readmission payment adjustment factor and the process by which hospitals can review and correct their data. In the FY 2014 proposed rule, it further refines the measures and methodology to better account for planned readmissions that may occur within 30 days of discharge. CMS does not propose any changes to the ICD- 9 codes used to calculate the aggregate payments for excess readmissions. Beginning in 2015, CMS is required under statute, to the extent practicable, to include under this program four additional conditions identified earlier by the Medicare Payment Commission (MedPAC): (1) CABG surgery; (2) COP; (3) PCI; and (4) other vascular conditions. However, CMS announces in this rule that it is not currently feasible to add readmission measures for CABG, PCI, and other vascular conditions. CMS also notes that inpatient admissions for PCI and other vascular conditions seem to be decreasing, and that these procedures are being performed increasingly in hospital outpatient departments. Hospital Inpatient Quality Reporting (IQR) Program This program, originally authorized under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, requires hospitals to report data on select measures to CMS in order to receive the full annual percentage payment increase. By statute, hospitals that do not participate successfully in the Hospital IQR program will have their annual payment updates reduced by 2.0 percentage points. In this rule, CMS proposes to make several changes to the existing IQR measure set, the administrative processes, and the validation methodologies. For instance, CMS proposes to remove 8 measures from the Hospital IQR Program starting in FY 2016, including the measure, Systematic Clinical Database Registry for Stroke Care Measure. CMS previously adopted a separate stroke measure set that it believes will provide more meaningful and detailed information than this current structural measure, which consists of a general yes/no response. CMS also proposes to adopt five new claims-based measures for the FY 2016 payment determination, including: 30-day All-Cause, Risk Standardized Rate of Readmission Following Acute Ischemic Stroke (Stroke Readmission): Although this measure is currently not NQF-endorsed, CMS believes it targets a prevalent and costly health problem and found no other feasible measures on this topic that were endorsed by a consensus organization. 30-Day, All-Cause Risk-Standardized Rate of Mortality Following an Admission for Acute Ischemic Stroke (Stroke Mortality) Measure: This measure assesses all-cause mortality as opposed to stroke-specific mortality. Although this measure is not currently NQF-endorsed, CMS is proposing to include it for the same reasons mentioned above. Prepared by Hart Health Strategies, 5/22/13, Page 5

6 * Additional information about both of these measures is available at: Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. In addition, CMS proposes to add multiple CDC/NHSN healthcare-associated infection measures to the calculation of the FY 2016 payment determination, including measures targeting CLASBI, CAUTI, MRSA and C. diff. For the FY 2014 Hospital IQR Program and subsequent years, CMS proposes to continue its current policy of publicly reporting data from the Hospital IQR Program on CMS Web sites, such as the Hospital Compare ( as soon as it is feasible and after a 30-day preview period. This would include hospital level data for the individual AHRQ patient safety indicators that are part of the previously discussed composite, as well as the composite measure itself. ***** Prepared by Hart Health Strategies, 5/22/13, Page 6

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