Inpatient Facility Coding & Compliance Alert

Do realistic self analysis, and brace your facility to stay unaffected 

CMS issued a proposed rule on April 30 to update Medicare payment policies in 2015 for inpatient stays at general acute care and long term care hospitals, with a view to promoting quality and reducing health care costs. Here’s what you need to know – and how you can share your input.

Prepare for Bottom Line Adjustments

Once you read through the proposed rule, you’ll find several areas of particular interest to hospitals, and they’re not all favorable. For example:  

• Increase in the applicable percent reduction to 1.5 percent of the base DRG payment under the Hospital value based purchasing program that adjusts payments to hospitals based on quality of care they impart.
• Increase in maximum reduction in payment from 2 to 3 percent under the Hospital readmission reduction program and assessing hospital readmissions using National Quality Forum’s (NQF) five readmission measures.
• To implement the ACA’s Hospital Acquired Condition (HAC) reduction program, CMS proposes to reduce the Medicare inpatient payment by one percent for hospitals with the lowest performance. The current HAC program has helped save $ 25 million already and this proposal may serve as a deterrent.
• CMS also proposes to align the 2015 quality reporting timelines for clinical quality measures for the Medicare electronic Health record with that of the hospital Inpatient Quality Reporting program(IQR)

“Hospitals must make realistic projections as to possible losses under these increased percentages” according to Duane Abbey Ph.D., president of Abbey & Abbey, Consultants, Inc.  There will be winners and losers under these programs.  “Even though a hospital does everything it can for these initiatives, losses may still be incurred,” says Abbey.  Also, keep in mind that hospitals are simply trying to retain their full payments as opposed to receiving any additional payments.

Plus: CMS also invites input on alternative payment methodologies for short stay inpatients and the accepted definition of short stays. According to CMS, “In order to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions, we are proposing to use the most recent labor market area delineations issued by the Office of Management and Budget (OMB) using 2010 Census data.” 

The proposed rule also outlines transition time frames. “In order to mitigate potential negative payment impacts due to the proposed adoption of the new OMB delineations, CMS is proposing a one-year transition for all hospitals that would experience a decrease in their actual payment wage index exclusively due to the proposed implementation of the new OMB delineations, and a three-year transition for hospitals currently located in an urban county that would become rural under the new OMB delineation.” 

Input: CMS is accepting feedback on the proposed rule until June 30, 2014. The final rule will be issued by August 1, 2014, and can be viewed at http://ofr.gov/inspection.aspx.