On August 2, the Center for Medicare & Medicaid Services (CMS) issued the final rule for fiscal year (FY) 2017 Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH) Prospective Payment System (PPS). CMS estimates a rate increase to acute care hospital of 0.95% for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and demonstrate meaningful use of certified electronic health record (EHR) technology. CMS projects total medical spending on inpatient hospital services will increase by about $746 million in fiscal 2017. CMS estimates that LTCH PPS payment will decrease by 7.1%
Key provisions of the 2017 IPPS Final Rule:
The Two Midnight Policy
In the final rule, CMS removed this adjustment for FY 2017, as well as its effects for FYs 2014 through 2016. CMS believes the assumptions underlying the -0.2 percent adjustment were reasonable at the time they were made; however, in light of the unique circumstances surrounding this adjustment, the agency decided to remove it.
Medicare Disproportionate Share Hospital (DSH) Payments
Medicare disproportionate share hospital (DSH) payments will be reduced by 75%, or $49.9 billion, by 2019. CMS will distribute nearly $6 billion in DSH payments in FY 2017, about $400 million less than in FY 2016.
Hospital Inpatient Quality Reporting (IQR) Program
In the final rule, CMS added four new claims-based measures (three clinical episode-based payment measures and one communication and coordination of care measure) starting with the FY 2019 Inpatient Quality Reporting Program (IQR). CMS also removed 15 measures for the FY 2019 payment determination.
Hospital Value-Based Purchasing (VBP) Program
CMS made changes to the Hospital Value-Based Purchasing (VBP) Program by adding two condition-specific payment measures (one for acute myocardial infarction and one for heart failure) beginning with the FY 2021 program year, and a 30-day mortality measure following coronary artery bypass graft surgery beginning with the FY 2022 program year. CMS said the condition-specific payment measures capture payments for all care, including readmissions and subsequent cardiac events, across multiple care settings, services, and supplies during the 30-day episode of care.
Hospital Acquired Conditions (HAC) Reduction Program
CMS made several changes to existing Hospital Acquired Conditions (HAC) Reduction Program policies in the FY 2017 final rule, including changing the program scoring methodology from current decile-based scoring to a continuous scoring methodology.
The final rule was published in the Federal Register on August 22. The rule is effective October 1.
The rule can be found by going to https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-18476.pdf