CMS' final IPPS rule for 2016: 10 things to know

CMS has issued its inpatient prospective payments systems final rule for fiscal year 2016, which calls for an increase in Medicare reimbursements to some hospitals in the next fiscal year.

The 2,149-page rule also includes rates for long-term care hospitals. Overall, the rule will apply to about 3,400 acute care hospitals and 435 long-term care hospitals.  

Here are 10 of the most important points to know about CMS' final IPPS rule for FY 2016.

Hospital payments
1. Under the final rule, acute care hospitals that report quality data and are also meaningful users of EHRs will receive a 0.9 percent increase in Medicare operating rates. Hospitals that do not submit quality data would lose a quarter of the market basket update (2.4 percent), and hospitals that are not meaningful users of EHRs would lose one half of the market basket update in FY 2016.

2. CMS arrived at its proposed rate of 0.9 percent (again, which only would apply to hospitals that report quality data and attest to meaningful use) through the following updates: a positive 2.4 percent market basket update, a negative 0.5 update for a productivity adjustment, a negative 0.2 percent update for cuts under the Affordable Care Act and a negative 0.8 percent documentation and coding adjustment as part of the American Taxpayer Relief Act of 2012. Legislators included $11 billion in MS-DRG documentation and coding adjustments in that bill. This meant hospitals and other providers would lose $11 billion in Medicare payments between fiscal 2014 and fiscal 2017 due to past overpayments the government made to hospitals during the transition to MS-DRGs.

Hospital-Acquired Condition Reduction program
3. Under the final rule, hospitals with the poorest performance in reducing HACs, specifically those in the lowest quartile, will have their Medicare pay docked by 1 percent.

Medicare disproportionate share hospital payments
4. As part of the ACA, Medicare disproportionate share hospital payments will be reduced by 75 percent, or $49.9 billion, by 2019. Under the final rule, overall DSH payments will be cut by $1.2 billion in FY 2016, compared to the estimated FY 2015 amount. "The decrease is primarily attributable to continued declines in the number of uninsured individuals since the passage of the Affordable Care Act," according to CMS.

Bundled Payments for Care Improvement initiative
5. In 2011, CMS launched the BPCI initiative, linking payments for multiple services during an episode of care into a bundled payment. In the final rule, CMS thanks commenters for their feedback on policy and operational issues surrounding the potential future expansion of this initiative.

Hospital Inpatient Quality Reporting program
6. Under the final rule, CMS adds seven new measures to the HIQR program. There are three new claims-based measures and one structural measure added for the FY 2018 program and subsequent years, and there are three new claims-based measures added for the FY 2019 program and subsequent years.

Hospital Value-Based Purchasing program
7. In the final rule, CMS makes changes to the Hospital Value-Based Purchasing program, which was established under the ACA. CMS is adding a care coordination measure beginning with the FY 2018 program year and a 30-day mortality measure for chronic obstructive pulmonary disease beginning with the FY 2021 program year.

8. CMS is also removing two measures, effective with the FY 2018 program year.

PSS-Exempt Cancer Hospital Quality Reporting Program
9. Established by the ACA, the PCHQR program collects and publishes data on an announced set of quality measures. In the final rule, CMS finalizes three new patient safety measures under the program. The three new measures are: a Clostridium difficile infection outcome measure, a Hospital-Onset Methicillin-resistant Staphylococcus aureus bacteremia outcome measure and a measure of influenza vaccination coverage among healthcare personnel.

10. The final rule will be published in the Federal Register Aug. 17. Comments on the rule are due Sept. 29, and the rule is effective Oct. 1.

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