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New Regulations for Medicare’s Inpatient PPS Introduce Another Reduction Program

[September 15, 2013, AJHP News]

Cheryl A. Thompson

BETHESDA, MD 29 Aug 2013—The coming federal fiscal year, according to the Centers for Medicare and Medicaid Services, brings regulations that improve the value and quality of care provided by acute care hospitals that participate in Medicare. These regulations for the inpatient prospective payment system also provide a time-based criterion for determining whether a Medicare beneficiary received inpatient services or observation services.

The regulations along with explanations from the agency, summarized below, were published in the August 19 issue of the Federal Register (PDF).

New program to reduce hospital-acquired conditions. A year from now, one fourth of Medicare-participating acute care hospitals will start incurring a 1% decrease in payments for having the worst rates of preventable hospital-acquired conditions.

The new Hospital-Acquired Condition Reduction Program will assign points to hospitals on the basis of two sets of measures: a composite measure on patient safety from the Agency for Healthcare Research and Quality (see table) and the health-care-associated infections measures from the Centers for Disease Control and Prevention.

A total score will be calculated for each hospital. The higher the score, the worse the rate and hence the performance. Points from the health-care-associated infections measures will count toward the total score almost twice as much as points from the patient safety measures.

Hospitals with a total score in the worst-performance quartile will receive decreased payments.

In the agency’s simulation of the weighted scoring system, nearly half of teaching hospitals had scores in the worst-performance quartile.

For the first year of the program, data on the patient safety measures will come from claims for Medicare beneficiaries discharged from July 2011 through June 2013 and data on the health-care-associated infections will come from submissions to the National Healthcare Safety Network in calendar years 2012 and 2013. The data for the simulation came from earlier Medicare claims and the Hospital Compare website in December 2012.

Not every health-care-associated infection measure will contribute to the score every year. The measures for catheter-associated urinary tract infections and central-line-associated bloodstream infections are part of the program for the fiscal year that starts on October 1, 2014. Surgical site infections are the focus the next year, and infections caused by methicillin-resistant Staphylococcus aureus or Clostridium difficile contribute to the score the following year.

Hospitals’ scores will be reported at the Hospital Compare website.

This program excludes critical access hospitals.

Higher penalty for excessive readmissions. Payments to hospitals with excessive rates of readmissions can be reduced by as much as 2% for discharges as of October 1.

This 2% maximum, part of the Hospital Readmissions Reduction Program, applies to 18 hospitals. These hospitals had the highest rates of Medicare beneficiaries diagnosed with certain conditions and needing more inpatient services within 30 days of discharge during July 2009 through June 2012. During the current fiscal year, which ends September 30, 17 of these 18 hospitals have incurred the maximum payment reduction of 1%.

Acute myocardial infarction, heart failure, and pneumonia continue to be the conditions that form the basis of the readmissions reduction program.

Readmissions because of maintenance cancer chemotherapy, obstetrical delivery, rehabilitation, and transplant surgery do not count against a hospital. Neither do nonacute readmissions for scheduled procedures. Unplanned readmissions within 30 days after discharge but with an intervening planned readmission no longer count. However, readmissions for the purpose of treating an acute illness or complications of care do count.

In the fiscal year that starts October 1, 2014, the readmissions reduction program will target two more conditions: acute exacerbation of chronic obstructive pulmonary disease and elective total hip or knee arthroplasty.

Value-based incentive payments. About $1.1 billion is available to pay out this coming fiscal year in the Hospital Value-Based Purchasing Program. This money comes from reducing the base payment for each discharge in fiscal year 2014 by 1.5%.

The program now has 17 measures.

In addition to the original 13 measures, the program will use the following 4 measures: removal of a urinary catheter before the end of postoperative day 2, 30-day mortality rate for patients with acute myocardial infarction, 30-day mortality rate for patients with heart failure, and 30-day mortality rate for patients with pneumonia.

One measure, pertaining to the ordering of prophylaxis for venous thromboembolism, will not be a part of the program as of October 1, 2014. This measure was deemed very similar to another measure in the program.

The program will add two measures on October 1, 2014: the composite measure on patient safety from the Agency for Healthcare Research and Quality and a measure on the amount Medicare spent per beneficiary.

Presumption of necessity for inpatient services. Medicare’s contractors that look for incorrect payments will start presuming that an admission of a beneficiary for inpatient services was reasonable and medically necessary if the person’s inpatient stay crossed two midnights.

The criterion of two midnights derives from the definition of one Medicare utilization day.

Also, the government generally will presume that outpatient services, including observation services, were provided if the following three conditions were present: the services spanned less than two midnights, Medicare had not designated the services as inpatient-only services, and the medical record lacks clear documentation by the physician of the expectation that the beneficiary would require care spanning at least two midnights.

New technology add-on payments. Prothrombin complex concentrate can generate a new technology add-on payment when administered to a Medicare beneficiary who does not have hemophilia.

FDA in April approved the human-plasma-derived product for use in adults with acute major bleeding and a coagulation factor deficiency caused by warfarin.

A different type of add-on payment is made for the administration of blood-clotting factors. If a Medicare beneficiary with hemophilia receives prothrombin complex concentrate, the hospital is not eligible for the new technology add-on payment.

The add-on payments that started this past fiscal year for fidaxomicin and glucarpidase continue to be available this coming year.

 

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