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Proposed Inpatient Payment Regulations Released

May 16, 2013:

Nannette Orme, CPC, CCS-P, CPMA, CEMC, Clinical/Technical Editor

It is the time of year when the Centers for Medicaid and Medicare Services (CMS) releases its proposal for regulations that apply to inpatient and long-term care hospitals. Highlights of the proposed rule include payment rates, hospital-acquired conditions (HAC), readmissions, and inpatient definition, among other changes.

Payment Rates
Several factors will affect the payment rate. Initially there is a proposed increase of 2.5 percent in the operating payment rates. However, this will be offset by several reductions. The first is 0.4 percent for the multifactor productivity, and the Affordable Care Act (ACA) also decreases payment by 0.3 percent. The next reduction is the documentation and coding adjustment whereby CMS is required to recoup $11 billion for overpayments paid prior to 2014. This recoupment will be spread over four years; for calendar year (CY) 2014, CMS is proposing to decrease payment by 0.8 percent. The last reduction is 0.2 percent to pay for hospital inpatient services related to inpatient admission and medical review criteria. With all the deductions taken into account, the original 2.5 percent payment increase is reduced to 0.8 percent.

Hospital-Acquired Conditions
The ACA required CMS to improve patient safety in the inpatient setting by penalizing hospitals that do not meet certain metrics regarding HACs, which are conditions that develop after the patient is admitted to the inpatient setting. The proposal would define quality measures to be implemented in 2015, with the lowest quartile of inpatient prospective payment system (IPPS) facilities receiving 99 percent of their calculated payment. The quality measures may be calculated using claims or they may be two measure sets that are part of the Inpatient Quality Reporting (IQR) program.

One of the measure sets would include the following patient safety indicators (PSI):

  • Pressure ulcer rate
  • Volume of foreign object left in the body
  • Iatrogenic pneumothorax rate
  • Postoperative physiologic and metabolic derangement rate
  • Postoperative pulmonary embolism or deep vein thrombosis rate
  • Accidental puncture and laceration rate

Alternatively, there is a proposed composite PSI measure set.

The other measure set would include two infection measures associated with health care:

  • Central-line-associated blood stream infection
  • Catheter-associated urinary tract infections

The final calculation will also take into consideration the patient’s age, sex, and comorbidities. These factors will help to equalize the final calculations for facilities that see a higher volume of sicker patients.

October 1, 2012, was the start date for the Hospital Readmissions Reduction program. Under this program, penalties are assessed using three readmission measures:

  • Heart attack
  • Heart failure
  • Pneumonia

For CY 2014 two new measures to calculate the 2015 penalties are proposed:

  • Hip/knee arthroplasty
  • Chronic obstructive pulmonary disease

For CY 2013 the penalty was 1 percent. For CY 2014 the penalty will increase to 2 percent as mandated by the ACA.

Inpatient Definition
CMS proposes to define an inpatient as a beneficiary who receives care for “at least two midnights.” This change is important to note, as many hospitals have had patients who have been in the hospital as “outpatients” or observation patients for multiple midnights. Hospitals have requested guidance from CMS regarding inpatient status and the uncertainty regarding payment if the patient were admitted to the hospital.

The proposed rule will be on display before being printed in the Federal Register. Facilities are strongly urged to read the rule because the proposed IPPS rule contains provisions other than those highlighted here. CMS is accepting comments until June 25, 2013.


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