Payment Rule Summary Medicare Inpatient Psychiatric Facility Prospective Payment System: Update Notice for Federal Fiscal Year 2013 August 2012
Table of Contents Overview and Resources... 2 Inpatient Psychiatric Facility Payment Rates... 2 Sequestration Reductions... 3 Wage Index, COLA, and Labor-Related Share... 3 Wage Index... 3 COLA... 3 Labor-Related Share... 3 Adjustments to the Inpatient Psychiatric Facility Payment Rates... 4 ED Adjustment... 4 Teaching Adjustment... 4 Rural Adjustment... 4 Patient Condition (MS-DRG) Adjustment... 4 Patient Comorbid Condition Adjustment... 5 Patient Age Adjustment... 6 Patient Variable Per Diem Adjustment... 6 Outlier Payments... 6 Inpatient Psychiatric Facility Quality Reporting Program... 7 Federal FY2014 and Subsequent Year Payment Determinations... 7 If you have any questions about this summary, contact Kathy Reep, FHA Vice President/Financial Services, by email at kathyr@fha.org or by phone at (407) 841-6230. 1 P a g e
OVERVIEW AND RESOURCES In August 2012, the Centers for Medicare & Medicaid Services (CMS) released two regulations that will update the Medicare fee-for-service (FFS) payment rates and policies under the inpatient psychiatric facility prospective payment system (IPF PPS) for federal fiscal year (FY) 2013. The first regulation is a notice that updates the inpatient psychiatric facility (IPF) payment factors. The second regulation is the federal FY2013 inpatient prospective payment system (IPPS) final rule, which establishes the Affordable Care Act (ACA)-mandated quality reporting program for IPFs. A copy of the update notice and other resources related to the IPF PPS are available on the CMS Web site at https://www.cms.gov/medicare/medicare-fee-for-service- Payment/InpatientPsychFacilPPS/index.html. An online version of the update notice is available at https://federalregister.gov/a/2012-19118. A copy of the final rule that establishes the IPF quality reporting requirements is available on the CMS Web site at https://www.cms.gov/medicare/medicare-fee-for-service- Payment/AcuteInpatientPPS/FY-2013-IPPS-Final-Rule-Home-Page.html. The submission of comments is not permitted on the IPF PPS update notice. The update does not initiate any policy changes and reflects the application of established methodologies that have been previously subject to public comment. The submission of comments is also not permitted on the IPPS final rule. A summary of the notice that updates the IPF payment factors and final rule that establishes the quality reporting program along with Federal Register (FR) page references for additional details are provided below. Program changes will be effective for discharges on or after October 1, 2012, unless otherwise noted. INPATIENT PSYCHIATRIC FACILITY PAYMENT RATES The following table shows the IPF federal per diem base rate and the electroconvulsive therapy (ECT) base rate for federal FY2013 compared to the rates currently in effect (FR page 47230). Final FY2012 Final FY2013 Percent Change IPF Per Diem Base Rate $685.01 $698.51 +2.0 ECT Base Rate $294.91 $300.72 +2.0 The table below provides details of the updates to the IPF payment rates for federal FY2013 (FR pages 47227-47230). 2 P a g e
FY2013 IPF Rate Updates Percent Market Basket (MB) Update +2.7 ACA-Mandated Productivity MB Reduction ACA-Mandated Pre-Determined MB Reduction Overall Update to the Rates (excluding budget neutrality) -0.7 percentage points -0.1 percentage points +1.9 Sequestration Reductions Absent from the update notice is guidance as to how CMS will implement the 2.0 percent sequestration reduction to all lines of Medicare payment set to take effect on January 1, 2013. Sequestration reductions were authorized by Congress as part of the Budget Control Act (BCA) of 2011. It is believed that the 2.0 percent downward reduction will be applied at remittance (the time Medicare contractors pay each Medicare FFS claim) and will be incorporated into the cost report settlement (no FR reference). WAGE INDEX, COLA, AND LABOR-RELATED SHARE Wage Index The labor-related portion of the IPF per diem base rate and ECT base rate are adjusted for differences in area wage levels using a wage index. As in past years, CMS will use the prior year s inpatient hospital wage index, the FY2012 pre-rural floor and pre-reclassified hospital wage index, to adjust payment rates under the IPF PPS for FY2013. A complete list of the IPF wage indexes for payment in FY2013 is available in Tables 1 and 2 of the update notice on FR pages 47244-47266 (FR page 47233). COLA The COLA is made by multiplying the nonlabor-related portion of the per diem base rate and ECT base rate by the applicable COLA factor. For FY2013, CMS will use the same COLA factors used to adjust payments in 2012 (as originally used to adjust payments in 2010 and 2011, which are based on the U.S. Office of Personnel Management s 2009 COLA factors). A list of the FY2013 COLA factors is available on FR page 47236 (FR pages 47235-47236). Labor-Related Share CMS is updating the labor-related share value to 69.981 percent for FY2013, a slight decrease when compared to the current labor share of 70.317 percent. A decrease to the labor-related share will increase payments to IPFs with a wage index less than 1.0 and decrease payments for those with wage indexes greater than 1.0 (FR page 47228). ADJUSTMENTS TO THE INPATIENT PSYCHIATRIC FACILITY PAYMENT RATES For FY2013, CMS will retain the facility and patient-level adjustments currently used under the IPF PPS. The adjustments are described in detail below. 3 P a g e
ED Adjustment For FY2013, IPFs with a qualifying emergency department (ED) will continue to receive an adjustment factor of 1.31, rather than 1.19, as the variable per diem adjustment for day 1 of each stay (see Patient Variable Per Diem Adjustment section). This adjustment is intended to account for the costs associated with maintaining a full-service ED. The ED adjustment applies to all IPF admissions, regardless of whether a patient receives preadmission services in the hospital s ED. The ED adjustment is not made when a patient is discharged from an acute care hospital or Critical Access Hospital (CAH) and admitted to the same hospital s or CAH s psychiatric unit (FR page 47236). Teaching Adjustment IPFs with teaching programs will continue to receive an adjustment to the per diem rate to account for the higher indirect operating costs experienced by hospitals that participate in graduate medical education (GME) programs. CMS will maintain the teaching adjustment factor at 0.5150 for FY2013. The teaching adjustment is based on the number of full-time equivalent (FTE) interns and residents training in the IPF and the IPF s average daily census (ADC). CMS will maintain the following formula to calculate the teaching adjustment: (1 + IPF s FTE resident to ADC ratio) ^ 0.5150. CMS will continue to allow temporary adjustments to FTE caps to reflect residents added due to closure of an IPF or a closure of an IPFs medical residency training program (FR pages 47233-47235). Rural Adjustment IPFs located in rural areas will continue to receive an adjustment to the per diem rate of 1.17. This adjustment is provided because an analysis by CMS determined that the per diem cost of rural IPFs was 17 percent higher than that of urban IPFs (FR page 47233). Patient Condition (MS-DRG) Adjustment For FY2013, CMS will continue to use the Medicare-Severity Diagnosis Related Group (MS- DRG) system used under the IPPS to classify Medicare patients treated in IPFs. Like IPPS, CMS uses the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) as the designated code set for the IPF PPS. Annual changes to the ICD-9-CM coding system made under the IPPS are incorporated into the IPF PPS. As in prior years, principal diagnoses codes (ICD-9-CMs) that group to one of 17 MS-DRGs recognized under the IPF PPS will receive a DRG adjustment. Principal diagnoses that do not group to one of the designated MS-DRGs recognized under the IPF PPS still receive the federal per diem base rate and all other applicable adjustments, but the payment will not include a DRG adjustment. The following table lists the 17 MS-DRGs that are eligible for a MS-DRG adjustment under the IPF PPS for FY2013. These adjustments are the same adjustments applied in 2011 and 2012 (FR pages 47230-47231). MS-DRG Description Adjustment Factor 896 Alcohol/drug abuse or dependence w/o rehabilitation therapy w MCC 0.88 897 Alcohol/drug abuse or dependence w/o rehabilitation therapy w/o MCC 0.88 887 Other mental disorder diagnoses 0.92 894 Alcohol/drug abuse or dependence, left AMA 0.97 881 Depressive neuroses 0.99 886 Behavioral & developmental disorders 0.99 4 P a g e
MS-DRG Description Adjustment Factor 885 Psychoses 1.00 882 Neuroses except depressive 1.02 883 Disorders of personality & impulse control 1.02 895 Alcohol/drug abuse or dependence w rehabilitation therapy 1.02 884 Organic disturbances & mental retardation 1.03 056 Degenerative nervous system disorders w MCC 1.05 057 Degenerative nervous system disorders w/o MCC 1.05 880 Acute adjustment reaction & psychosocial dysfunction 1.05 080 Non-traumatic stupor & coma w MCC 1.07 081 Non-traumatic stupor & coma w/o MCC 1.07 876 O.R. procedure w principal diagnoses of mental illness 1.22 Patient Comorbid Condition Adjustment For FY2013, the IPF PPS will continue to recognize 17 comorbidity categories for which an adjustment to the per diem rate can be applied. The diagnosis codes that generate the comorbid condition payment adjustment are listed on FR page 47232. For each claim, an IPF may receive only one comorbidity adjustment per comorbidity category, but it may receive an adjustment for more than one category. The following table lists the comorbid condition payment adjustments for FY2013. These adjustments are the same adjustments applied in 2011 and 2012. (FR pages 47231-47232). Description of Comorbidity Adjustment Factor Drug and/or Alcohol Induced Mental Disorders 1.03 Developmental disabilities 1.04 Uncontrolled Diabetes Mellitus 1.05 Tracheostomy 1.06 Oncology Treatment 1.07 Infectious Diseases 1.07 Artificial Openings Digestive and Urinary 1.08 Severe Musculoskeletal and Connective Tissue Diseases 1.09 Gangrene 1.10 Renal Failure, Acute 1.11 Renal Failure, Chronic 1.11 Cardiac Conditions 1.11 Poisoning 1.11 Eating and Conduct Disorders 1.12 Chronic Obstructive Pulmonary Disease 1.12 Coagulation Factor Deficits 1.13 Severe Protein Calorie Malnutrition 1.13 Patient Age Adjustment The IPF PPS will maintain the patient age adjustment for FY2013. Analysis by CMS has shown that IPF per diem costs increase with patient age. The following table lists the patient age adjustments for FY2013. These adjustments are the same adjustments applied in 2011 and 2012 (FR page 47232). Age Adjustment Factor Age Adjustment Factor Under 45 1.00 65 and under 70 1.10 5 P a g e
45 and under 50 1.01 70 and under 75 1.13 50 and under 55 1.02 75 and under 80 1.15 55 and under 60 1.04 80 and over 1.17 60 and under 65 1.07 Patient Variable Per Diem Adjustment For FY2013, the per diem rate will continue to be adjusted based on patient length-of-stay (LOS) using a variable per diem adjustment. Analysis by CMS has shown that per diem costs decline as the LOS increases. Currently, variable per diem adjustments begin on day 1 (adjustment of 1.19 or 1.31 depending on the presence of an ED see ED Adjustment section) and gradually decline until day 21 of a patient s stay. For day 22 and after, the variable per diem adjustment remains the same each day for the remainder of the stay. The following table lists the variable per diem adjustment factors for FY2013. These adjustments are the same adjustments applied in 2011 and 2012 (FR pages 47232-47233). Day-of-Stay Adjustment Factor Day-of-Stay Adjustment Factor Day 1 1.19 (w/o ED) or 1.31 (w/ed) Day 12 0.99 Day 2 1.12 Day 13 0.99 Day 3 1.08 Day 14 0.99 Day 4 1.05 Day 15 0.98 Day 5 1.04 Day 16 0.97 Day 6 1.02 Day 17 0.97 Day 7 1.01 Day 18 0.96 Day 8 1.01 Day 19 0.95 Day 9 1.00 Day 20 0.95 Day 10 1.00 Day 21 0.95 Day 11 0.99 After Day 21 0.92 OUTLIER PAYMENTS Outlier payments were established under the IPF PPS to provide additional payments for extremely costly cases. Outlier payments are made when an IPF s estimated total cost for a case exceeds a fixed dollar loss threshold amount (multiplied by the IPF s facility-level adjustments) plus the federal per diem payment amount for the case. Costs are determined by multiplying the facility s overall cost-to-charge ratio (CCR) by the allowable charges for the case. When a case qualifies for an outlier payment, CMS pays 80 percent of the difference between the estimated cost for the case and the adjusted threshold amount for days 1 through 9 of the stay and 60 percent of the difference for day 10 and after. The varying 80 percent and 60 percent loss sharing ratios were established to discourage IPFs from increasing patient LOS in order to receive outlier payments. CMS has established a target of 2.0 percent of total IPF PPS payments to be set aside for high cost outliers. To meet this target for FY2013, CMS is updating the outlier threshold value to $11,600, a 58 percent increase compared to the current threshold of $7,340. The threshold increase will decrease the number of psychiatric cases eligible for outlier payments (FR page 47237). INPATIENT PSYCHIATRIC FACILITY QUALITY REPORTING PROGRAM 6 P a g e
The ACA requires CMS to implement a pay-for-reporting program under the IPF PPS. Currently, IPFs are not required to submit data on quality measures to CMS. Beginning with FY2014, IPFs that do not successfully participate in the Inpatient Psychiatric Facility Quality Reporting (IPFQR) program will be subject to a 2.0 percentage point reduction to the market basket used under the IPF PPS for the applicable year. CMS is required to select the measures for federal FY2014 payment determinations no later than October 1, 2012 and must make quality data submitted by IPFs available to the public on the CMS Web site. Federal FY2014 and Subsequent Year Payment Determinations Using the IPPS proposed and final rulemaking process, CMS developed rules to implement the IPFQR program. For FY2014 and subsequent year payment determinations, CMS is adopting its proposal to implement this program using six National Quality Forum (NQF)- endorsed Hospital-Based Inpatient Psychiatric Services (HBIPS) measures. These measures, developed and maintained by The Joint Commission, are listed by National Quality Strategy Priority below: Patient Safety HBIPS-2: Hours of Physical Restraint Use (NQF #0640) HBIPS-3: Hours of Seclusion Use (NQF #0641) Clinical Quality of Care HBIPS-4: Patients Discharged on Multiple Antipsychotic Medications (NQF #0552) HBIPS-5: Patients Discharged on Multiple Antipsychotic Medications with Appropriate Justification (NQF #0560) Care Coordination HBIPS-6: Post Discharge Continuing Care Plan Created (NQF #0557) HBIPS-7: Post-Discharge Continuing Care Plan Transmitted to Next Level of Care Provider Upon Discharge (NQF #0558) CMS intends to put forward additional measures in future years to expand the IPFQR program. CMS has adopted the following data collection and submission timelines for the IPFQR program measures: Federal FY2014 Payment Determinations: Collection Dates: October 1, 2012-March 31, 2013 (six months) Submission Timeframe: July 1, 2013-August 15, 2013 (45 days) Federal FY2015 Payment Determinations: Collection Dates: April 1, 2013-December 31, 2013 (nine months) Submission Timeframe: July 1, 2014-August 15, 2014 (45 days) Federal FY2016 Payment Determinations: 7 P a g e
Collection Dates: January 1, 2014-December 31, 2014 (12 months) Submission Timeframe: July 1, 2015-August 15, 2015 (45 days) IPFs must follow a number of steps to satisfy the IPFQR program requirements and qualify for the full market basket update. These steps are detailed in IPPS final rule FR display pages 1605-1630. Under the adopted policies, IPFs will be required to collect aggregate data for these measures as opposed to patient-level data. CMS will provide, via the QualityNet Web site at https://www.qualitynet.org, a user manual that will contain links to measure specifications, data abstraction information, data submission information, a data submission mechanism (a Web-based measure tool), and other information necessary for IPFs to participate in the IPFQR program. To handle potential future NQF technical updates/changes to measures adopted for use under the IPFQR program, CMS is adopting its proposal to use a subregulatory process rather than the traditional proposed and final rulemaking process. Under this policy, CMS will notify the provider of non-substantial technical measure updates/changes via the QualityNet Web site. Similar policies have been adopted for the other quality reporting programs under the Medicare prospective payment systems. CMS is adopting its proposal to publicly display IPF quality data collected for FY2014 payment determinations during calendar year 2014. CMS will follow this timeline in future program years. Under the rules and timelines established by CMS, IPFs will have an opportunity to review their data before it is made public (IPPS final rule FR display pages 1563-1630). 8 P a g e