The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would update fiscal year (FY) 2015 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs). This rule builds on the administration’s efforts through the Affordable Care Act (ACA) to promote improvements in hospital care that will lead to better patient outcomes while slowing the long-term health care cost growth.
CMS projects that the payment rate update to general acute care hospitals will be 1.3 percent in FY 2015. The rate update for long term care hospitals will be 0.8 percent. The difference in the update is accounted for by different statutory and regulatory provisions that apply to each system.
The rule’s most significant changes are payment provisions intended to improve the quality of hospital care that reduce payment for readmissions and hospital acquired conditions (HACs). The rule also includes proposed changes to the Hospital Inpatient Quality Reporting (IQR) Program. The rule also describes how hospitals can comply with the ACA’s requirements to disclose charges for their services online or in response to a request, supporting price transparency for patients and the public.
The proposed rule requests public input on an alternative payment methodology for short-stay inpatient cases that also may be treated on an outpatient basis, including how to define short stays. In addition, the proposed rule reminds stakeholders of the existing process for requesting additional exceptions to the two-midnight benchmark.
Other major proposals include:
- Changes to the Value Based Purchasing Program (VBP) for FY 2015 in which CMS will be increasing the applicable percent reduction to the portion of Medicare payments available to fund value-based incentive payments to 1.5 percent of the base operating DRG payment amount. CMS estimates that the total amount available for value-based incentive payments in FY 2015 will be approximately $1.4 billion, and will update this estimate in the FY 2015 IPPS/LTCH final rule.
- The Hospital Readmissions Reduction Program maximum reduction in payments would be increased from 2 to 3 percent. For FY 2015, CMS proposes to assess hospitals’ readmissions penalties using five readmissions measures endorsed by the National Quality Forum (NQF). CMS estimates that Medicare hospital readmissions declined by a total of 150,000 from January 2012 through December 2013.
- CMS is also proposing to implement the ACA’s Hospital Acquired Condition (HAC) Reduction Program. Beginning in FY 2015, hospitals scoring in the top quartile for the rate of HACs (i.e. those with the poorest performance) will have their Medicare inpatient payments reduced by one percent.
- The proposed rule would revise measures for the Hospital Inpatient Quality Reporting, Long-Term Care Hospital (LTCH) Quality Reporting, and PPS-Exempt Cancer Hospital Quality Reporting Programs. For 2015 and 2016, CMS proposes to align the reporting and submission timelines for clinical quality measures for the Medicare Electronic Health Record (EHR) Incentive Program with the reporting and submission timelines of the Hospital IQR Program.
- Core-based statistical areas (CBSA) would be revised in order to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. CMS is proposing to use the most recent labor market area delineations issued by the Office of Management and Budget (OMB) using 2010 Census data.
CMS will accept comments on the proposed rule until June 30, 2014, and will respond to comments in a final rule to be issued by August 1, 2014. The proposed rule can be found by going to http://www.gpo.gov/fdsys/pkg/FR-2014-05-15/pdf/2014-10067.pdf