Pharmacy News

Medicare's Inpatient PPS Continues Focus on Quality, Value

[Updated October 3, 2014]

Cheryl A. Thompson

BETHESDA, MD 01 Oct 2014—With the start of a new federal fiscal year today, Medicare has underway three programs that can alter payments to an acute care hospital on the basis of past performance on measures of patient care, safety, and outcomes.

The three programs, part of the Medicare hospital inpatient prospective payment system (PPS), are officially known as the

  • Hospital-Acquired Condition Reduction Program,
  • Hospital Readmissions Reduction Program, and
  • Hospital Value-Based Purchasing Program.

Pharmacists, said Shekhar Mehta, director of clinical guidelines and quality improvement at ASHP, have the potential to affect hospitals' performance in many of the three programs' clinical areas.

"I think the biggest thing—it's one of the most important things—is to actually collaborate with other professions . . . and also particularly the risk management and performance improvement departments within their own health system," Mehta said.

ASHP's Quality Improvement Resource Center, he added, outlines a lot of the information pertaining to quality initiatives, including those in the Medicare inpatient PPS.

Mehta said pharmacists can also help their hospitals by working on clinical areas, such as hypoglycemic events after the administration of an antidiabetic agent, currently in a reporting-only program. He said such clinical areas can be incorporated in coming years into other programs in the Medicare inpatient PPS.

The two reduction programs and the value-based purchasing program are required by the Patient Protection and Affordable Care Act, which also specifies the penalties and incentive.

Changes to the programs and other parts of the inpatient PPS are explained to healthcare professionals in a document (PDF)External Link from the Centers for Medicare and Medicaid Services (CMS).

The regulatory language and agency commentary (PDF)External Link, totaling 597 pages, were published in the August 22 issue of the Federal Register. Corrections (PDF)External Link were published on October 3.

Below are brief explanations of the three programs in fiscal year 2015.

Hospital-acquired conditions. Payments to 25% of acute care hospitals paid through the inpatient PPS are decreasing by 1% because of those facilities' relatively high rates of preventable hospital-acquired conditions in Medicare beneficiaries in recent years.

Those conditions are accidental puncture or laceration; catheter-associated urinary tract infection; central line-associated bloodstream infection; central venous catheter-related bloodstream infection; iatrogenic pneumothorax; postoperative hip fracture; postoperative pulmonary embolism or deep venous thrombosis; postoperative sepsis; postoperative wound dehiscence; and pressure ulcer.

The relevant time period for all of the conditions except catheter-associated urinary tract infection and central line-associated bloodstream infection was discharges from July 2011 through June 2013. For those two conditions, the time period was January 2012 through December 2013.

The 1% decrease applies to more than base operating diagnosis-related group (DRG) rates. Unlike the other programs' financial disincentives, the 1% penalty incurred through the Hospital-Acquired Condition Reduction Program applies additionally to the add-on payments for outlier cases, disproportionate-share-hospital care, uncompensated care, and indirect medical education.

As of this morning, updated hospital-level data for this reduction program are not publicly available.

The program, starting next October, will include hospital-acquired surgical site infections.

In two years, the program will include methicillin-resistant Staphylococcus aureus bacteremia and Clostridium difficile infections.

Readmissions. The Hospital Readmissions Reduction ProgramExternal Link now applies to five conditions: acute myocardial infarction, chronic obstructive pulmonary disease, heart failure, pneumonia, and elective total hip or knee arthroscopy.

In accordance with federal law, CMS can reduce base operating DRG payments to a hospital by up to 3% for all discharges of Medicare beneficiaries this fiscal year. The amount of the reduction is based on excess readmissions within 30 days for discharges from July 2010 to June 2013 of Medicare beneficiaries initially admitted with one of the five conditions.

In two years, the program will target an additional group of patients: those who recently underwent coronary artery bypass graft surgery.

Value-based purchasing. The Hospital Value-Based Purchasing ProgramExternal Link for fiscal year 2015 has 19 measures or performance standards.

Only 1 measure in use this past year is not part of the fiscal year 2015 program. That measure, pertaining to prophylaxis of venous thromboembolism in surgery patients, was removed because of similarity to another measure in the program.

The 3 new measures in the program are the Agency for Healthcare Research and Quality's composite measure on patient safety, a measure of the amount Medicare spent per beneficiary, and a measure regarding central line-associated bloodstream infections in intensive care units.

CMS funds the program this year by reducing base operating DRG rates by 1.5%. The agency will distribute the money, about $1.4 billion, among hospitals that scored well on the measures.


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