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CMS issues proposal for Medicare payment rates

Tuesday April 24, 2012
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The Centers for Medicare & Medicaid Services has issued a proposed rule that updates Medicare payment policies and rates for inpatient stays to general acute care hospitals paid under the Inpatient Prospective Payment System and long-term care hospitals paid under the LTCH Prospective Payment System.

The proposal represents a continuation of efforts to promote improvements in hospital care that will lead to better patient outcomes while lowering the long-term cost growth of healthcare, according to CMS.

CMS projects payment rates to general acute care hospitals will increase by 2.3% in fiscal year 2013. After taking into account the expiration of certain statutory provisions that provided special temporary increases in payments to hospitals, and other proposed changes to IPPS payment policies, CMS projects total Medicare spending on inpatient hospital services will increase by about $175 million in FY 2013.

CMS projects LTCH payments will increase by approximately $100 million, or 1.9%, in FY 2013 under the proposed rule.

For more information on changes to payment rates, see a fact sheet about the proposed rule at http://go.cms.gov/JH4KUJ.

Improving patient care

The proposed rule would strengthen the Hospital Value-Based Purchasing Program to further Medicare’s transformation from a system that rewards volume of service to one that rewards efficient, high-quality care. This program, which was required by the Affordable Care Act, will adjust hospital payments beginning in FY 2013 and annually thereafter based on how well they perform or improve their performance on a set of quality measures.

Specifically, CMS proposes adding the Medicare spending-per-beneficiary measure to the Hospital VBP Program, which would affect payments beginning in FY 2015. This measure would include all Part A and Part B payments (after removing differences attributable to geographic payment adjustments and other payment factors) from three days prior to an inpatient hospital admission through 30 days post-discharge with certain exclusions. The proposed measure would be risk-adjusted for the beneficiary’s age and severity of illness.

The proposed rule also includes a new outcome measure that rewards hospitals for avoiding certain kinds of life-threatening blood infections that potentially develop during inpatient hospital stays. This measure, the central line-associated bloodstream infection measure, supports ongoing work by CMS and other hospital safety leaders to reduce healthcare-associated infections through the Partnership for Patients initiative.

The proposed rule would also strengthen the inpatient quality reporting program. Specifically, CMS proposes to include measures for perinatal care and readmissions, including overall readmissions and readmissions relating to hip and knee replacement procedures, and for the use of surgery checklists designed to reduce errors. CMS also proposes to add a new survey measure to the Hospital Consumer Assessment of Healthcare Providers and Systems measures to assess the quality of patients’ care transitions.

To provide hospitals with an incentive to reduce hospital readmissions and improve care coordination, the Affordable Care Act required CMS to implement a Hospital Readmissions Reduction Program that will reduce payments beginning in FY 2013 (for discharges on or after Oct. 1, 2012) to certain hospitals that have excess readmissions for three selected conditions: myocardial infarction, heart failure and pneumonia. The rule proposes a methodology and the payment adjustment factors to account for excess readmissions for these three conditions.

The proposed rule also builds on CMS’ quality reporting initiatives by proposing the measures that will be used for LTCHs for the FY 2015 and FY 2016 payment determinations and establishing programs and quality measure reporting for psychiatric hospitals that are paid under the Inpatient Psychiatric Facility Prospective Payment System and PPS-exempt cancer hospitals. Additional reporting requirements are also proposed for the ambulatory surgical center quality reporting program.

The proposed rule "establishes the groundwork for extending Medicare’s quality reporting programs beyond general acute care hospitals to other types of facilities," CMS Acting Administrator Marilyn Tavenner, RN, BSN, MHA, said in a news release. "It is part of a comprehensive strategy to use Medicare’s payment systems to foster better care and better value in all settings, thereby reducing overall Medicare spending."

Details are available in a fact sheet at http://go.cms.gov/JwNtPb.

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