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CMS proposes changes to hospital inpatient payment programs

By Kyle Murphy, PhD

Updates will be coming to the Medicare hospital inpatient prospective payment systems (IPPS) as a result of a rule proposed by the Centers for Medicare & Medicaid Services (CMS). To be published two weeks from now in the Federal Register, the proposed rule would impact payment policies and rates for acute hospitals and long-term care hospitals (LTCHs).

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

The proposed rule addresses Medicare payment policies and rates for IPPS and the LTCH payment system (PPS). For acute care hospitals, the rule proposes a 1.3-percent increase in fiscal year 2015. For LTCHs, CMS is proposing 0.8-percent increase.

The proposed rule also concludes changes to several patient safety and quality improvement programs and the incentives associated with them for inpatient and long-term care settings.

First, the propose rule would implement Affordable Care Act’s Hospital-Acquired Condition Reduction Program which will penalize hospitals with the poorest performance scores with one-percent reductions in Medicare inpatient payments beginning in FY 2015.

Second, the Hospital Readmissions Reduction Program provisions in the proposed rule would increase the maximum payment reductions from 2 to 3 percent. In FY 2015, CMS will use five readmission measures endorsed by the National Quality Forum (NQF) to assess hospital performance.

Third, quality reporting measures for inpatient hospitals, LTCHs, and PPS-exempt cancer hospitals are getting an update. For the inpatient hospitals, CMS is proposing to align reporting and submission schedules for the quality reporting program with the clinical quality measures in the EHR Incentive Program for Medicare.

Fourth, CMS is proposing an increase in the applicable percent reduction for the Hospital Value-Based Purchasing Program to 1.5 percent of the base operating DRG payment amounts to all participating hospitals.

Earlier this week, CMS announced the publishing of a final rule affecting federally qualified health centers (FQHCs). The final rule implements a prospective payment system (PPS) for a subset of Medicare services delivered by FQHCs. Beginning Oct. 1, 2014, payment for FQHC services covered under Medicare Part B will use a newly-established set of payment codes tailored for FHQC services.

Read the proposed rule here. The 60-day comment period for the propose rule begins when the rule is officially published in the Federal Register later this month.

 

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