BETHESDA, MD 27 August 2012—Medicare payments to acute care hospitals will increase by 2.3% during the 2013 fiscal year compared with fiscal year 2012, for an overall funding increase of about $2 billion, according to the Centers for Medicare and Medicaid Services (CMS).

The estimate was released on August 1 as part of the agency's annual revision of the inpatient prospective payment system (IPPS).

Most of the changes go into effect for hospital discharges occurring on or after October 1, 2012.

Residency funding. One thing that won't change in the IPPS is the funding situation for postgraduate year 2 (PGY2) pharmacy residency programs.

The fiscal year 2004 update to the IPPS abolished the pass-through payments for graduate medical education that had previously funded some PGY2 pharmacy residency programs. CMS indicated at the time that it would reconsider the issue if the PGY2 training is shown to be a necessary condition of employment for clinical pharmacists.

ASHP, in written comments on the proposed IPPS rule for 2013, told CMS that 80% of pharmacy directors who responded to a survey would require newly hired pharmacists to have specialized residency training if enough candidates with such training were available. Nearly 75% of respondents said that the loss of CMS funding for PGY2 residency programs has made it more difficult to hire adequately trained pharmacists.

ASHP has provided similar data to CMS in the past.

As was the case for last year's IPPS update, CMS declined to address PGY2 residency program funding, stating that the issue is "outside the scope" of the IPPS revision proposal.

Curtis E. Haas, director of pharmacy at the University of Rochester Medical Center in New York, said it's shortsighted of CMS to declare that PGY2 residency training is not a job requirement for clinical pharmacists.

"We're a large academic medical center. We have very complex patient needs. And we want pharmacists who are trained to take care of those very high-complexity patients," Haas said. "And I strongly believe, in today's environment, that it requires PGY2 level training."

Haas said the job market for pharmacists has improved recently. Nevertheless, he said, "recruiting people with specialty-level training is still, in our experience, very difficult."

Amy Seybert, chair of the department of pharmacy and therapeutics at the University of Pittsburgh Medical Center (UPMC), said she would "absolutely" use CMS funding to support PGY2 training if the payment mechanism were reinstated.

"We need to expand residency capacity," Seybert said. "We can advance the level of training and the amount if we have more funding for the training programs. That will eventually provide better patient care."

UPMC currently has several ASHP-accredited PGY2 programs that are funded through a combination of institutional support and grants, including support from the ASHP Research and Education Foundation.

Haas wants to expand his medical center's postgraduate year one (PGY1) residency programs next year, and CMS pass-through funding will support that. He would like to expand PGY2 training, but that will require him to demonstrate to hospital administrators a positive return on the investment.

He said his department is discussing funding support for PGY2 program expansion with local pharmacy schools. Another possibility is partnering with a major local insurer to support a combined managed care and ambulatory care PGY2 residency program.

"We can provide a very strong clinical training side in our ambulatory care clinics, and they can provide a very strong managed care training from the population perspective, and we think that would be a nice synergy. So we're exploring that for next year," he said.

Haas hopes to collect data on new or expanded PGY2 programs that will demonstrate a good return on investment and convince the medical center to fund the programs in the future.

It has been so long since CMS funded PGY2 pharmacy residency programs that Haas, Seybert, and other pharmacy directors couldn't recall whether their institutions used the funding mechanism in the past.

"All I know is the current climate without it," said Brian T. Marden, director of pharmacy at Maine Medical Center in Portland.

"We have PGY1's here, so we certainly take advantage of pass-through funding for those" positions, he said.

Marden said residency program expansion is part of his department's business plan. He said it's easy to make a business case for PGY1 program expansion because CMS will fund most of the programs' direct costs.

Making a business case for PGY2 program funding is more difficult, he said.

The medical center recently established its first ASHP-accredited PGY2 residency program, in critical care, with ASHP Foundation support. Marden has proposed new PGY2 programs in critical care, oncology, and infectious diseases, but he doesn't know if the medical center will fund them.

He said his local pharmacy school has agreed to offset some of the costs of the PGY2 positions if the medical center approves them.

"Hospitals today, in the current economic climate, are so focused on the bottom dollar," Marden said. "If we're going to invest in anything, we've got to demonstrate that it's going to save us more money than what we're putting into it. And that's what we're trying to do with our PGY2 expansion."

Marden believes the Medicare program would benefit from having more PGY2-trained pharmacists caring for patients.

"I think by investing in more advanced pharmacy training, you're raising the bar in what pharmacists are able to do as interdisciplinary team members to improve outcomes throughout the country," he said.

Readmissions. Under the 2013 IPPS final rule, hospitals whose 30-day readmission rates for certain conditions are above a benchmark will be reimbursed at a reduced rate that applies to all Medicare inpatients. The readmissions initiative, known as the Hospital Readmissions Reduction Program, focuses on patients with a discharge diagnosis of myocardial infarction, heart failure, or pneumonia.

CMS estimates that the payment reductions will total $280 million, or 0.3% of what would have been paid to hospitals in the absence of the readmissions reduction program.

The intent of the program is not to eliminate all readmissions but "to identify hospitals that have a higher rate of readmissions than would be expected given their case mix," according to the final rule.

ASHP had urged CMS to exclude from its calculations those readmissions that are planned or result from causes unrelated to the initial hospitalization.

In the final rule, CMS adopted two National Quality Forum-endorsed measures that account for certain planned readmissions, such as for maintenance chemotherapy, percutaneous transluminal coronary angioplasty, and cholecystectomy.

CMS declined to differentiate between readmissions that are related to the initial hospitalization and those that are not. According to the agency, many readmissions are likely to be related in some way to the initial hospitalization or its sequelae.

The IPPS final rule for 2013 also includes a quality measure related to transitional care under the Hospital Consumer Assessment of Healthcare Providers and Systems program and measures for perinatal care and the use of surgery checklists under the Inpatient Quality Reporting initiative.