Corporate Compliance

Note from the instructor: CMS releases proposed FY 2015 Inpatient Prospective Payment System (IPPS) payment adjustments, Part II

Medicare Insider, May 27, 2014

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This week’s note from the instructor is written by Judith Kares, JD,regulatory specialist for HCPro.
 
Note from the instructor: CMS releases proposed FY 2015 Inpatient Prospective Payment System (IPPS) payment adjustments, Part II
 
This note is the second in a three-part series focusing on certain adjustments to reimbursement for short-term acute-care inpatient hospital stays covered under Part A. All three of these adjustments are part of CMS’ movement toward “pay for performance” as part of its overall Hospital Quality Improvement Program. Two of these adjustments were implemented under programs that became effective in FY 2013—the Hospital Readmission Reduction Program (HRRP) and the Hospital Value-based Purchasing Program (HVBPP). The third adjustment will become effective in FY 2015 under the yet to be finalized Hospital-acquired Condition Reduction Program (HACRP). All three of these adjustments are discussed in considerable detail in the recently published proposed IPPS rule for FY 2015. (See 79 Fed. Reg. 27978–28384 for more specific information.)
  
In last week’s note, we focused on proposed FY 2015 adjustments to the HRRP. This week, we will focus on proposed FY 2015 adjustments to the HVBPP. Next week, we will conclude this series with a discussion of adjustments under the proposed HACRP.
 
Application of HVBPP adjustments to “base operating portion of the DRG payment”
 
The HVBPP, which applies to most hospitals subject to inpatient reimbursement under the IPPS, became effective for inpatient discharges that occur on and after October 1, 2013. As with the HRRP adjustment, for hospitals subject to adjustments under the HVBPP, the adjustments are made to what CMS refers to as the “base operating portion of the DRG payment.” This refers to the wage-index and/or COLA-adjusted applicable standardized amount for that hospital, plus any applicable new technology add-on payments. In addition, if applicable, the base operating amount used is based on the acute or post-acute transfer amount.
 
The base operating amount does not include, however, disproportionate share hospital, indirect medical education, or low-volume hospital adjustments or any applicable inpatient operating outlier payment. In addition, for purposes of the HVBPP adjustment, the base operating amount does not include any otherwise applicable HRRP adjustment, and vice versa.
 
The Protecting Access to Medicare Act of 2014 extended the program for Medicare-dependent small rural hospitals (MDH) through March 31, 2015. For FY 2015 and subsequent years, CMS is proposing that the base-operating DRG payment amount for MDHs will include the difference between the hospital specific payment rate and the Federal payment rate (as applicable).
 
Hospitals subject to HVBPP adjustments
 
Most short-term, acute care hospitals are subject to HVBPP adjustments for covered inpatient discharges on and after October 1, 2012 (the beginning of FY 2013), with the following exceptions:
 
·         Hospitals that are subject to the reduced update (a 2% reduction to their standardized amount) for that FY for failing to meet CMS’ quality reporting requirements under the Hospital Inpatient Quality Reporting Program;
·         Hospitals for which, during the performance period for that FY, HHS has cited deficiencies that pose immediate jeopardy to the health or safety of patients; and
·         Hospitals for which there are not a minimum number of cases and/or measures that apply to that hospital for the applicable performance period for that FY. To be eligible for incentive payments for a FY, hospitals must meet the minimum requirements set out below:
o   With respect to the Clinical Process of Care Domain, hospitals must have at least 10 cases in each of four measures;
o   With respect to the Patient Experience of Care Domain, hospitals must have at least 100 Hospital Consumer Assessment of Healthcare Providers (HCAHPs) surveys returned;
o   With respect to the Outcomes Domain, hospitals must report at least 10 cases in each of two of the 30-day mortality measures for FY 2014. For FY 2015, hospitals must report at least 25 cases in each of two of the 30-day mortality measures.
o   For FY 2015, with respect to the Efficiency Domain, hospitals must report at least 25 cases.
 
In addition, CMS has exempted Maryland waiver hospitals from the HVBPP for FYs 2013 and 2014 and proposes to exempt these hospitals during the duration of CMS’ new Maryland All-Payer Model, a 5-year hospital payment model, pursuant to an agreement entered into effective January 1, 2014. 
 
Determination and application of HVBPP adjustments
 
Under the HVBPP, value-based incentive payments are to be made in each FY (beginning with FY 2013) to otherwise qualified hospitals that meet or exceed certain performance standards established for the performance period for that FY. As noted above, these value-based incentive payments are to be made in the form of certain adjustments to the hospital’s “base operating portion of the DRG payment”. HHS is responsible for determining both the performance standards and the performance period for each FY. Each hospital’s value-based payment percentage, which is converted to a per-discharge value-based payment amount, is based on that hospital’s Total Performance Score (TPS) for the performance periods for the applicable FY.
 
For each applicable FY, these value-based incentive payments are to be funded by a prescribed percentage reduction (the “applicable percent”) to the total base-operating DRG payments of all participating hospitals for that FY, as determined by HHS. The total amount available for value-based incentive payments for a FY will be equal to the total amount of the payment reductions for all participating hospitals for that FY. For FY 2013, the available funding pool is equal to 1% of the base-operating DRG payments to all participating hospitals for FY 2013 discharges. For FY 2014, the applicable percentage is 1.25%. For subsequent years, CMS has proposed that the size of the applicable percentage will increase, as follows: 1.5% for FY 2015, 1.75% for FY 2016, and 2% percent for FY 2017 and successive FYs. 
 
For hospitals subject to the HVBPP during a FY, CMS is required to make two distinct payment adjustments to the base operating DRG payment amounts for each inpatient discharge: the applicable percent reduction (based upon the applicable percent for that FY) and the value-based incentive payment adjustment for that hospital for that FY. These adjustments are made by applying that hospital’s “value-based incentive payment adjustment factor” for the FY to each inpatient discharge during the FY. The hospital’s value-based incentive payment adjustment factor is determined by subtracting the applicable percent for the FY from the value-based incentive payment percentage for that hospital (if any) for the FY, and then adding that difference to one.
 
Depending upon its TPS, a hospital may receive adjustments under the HVBPP that result in base operating DRG payments that are less than, equal to, or greater than it would otherwise have received. Even if a hospital that is subject to the HVBPP is not eligible for a value-based incentive payment, it will be subject to the applicable reduction for that FY, which will be applied to each discharge during the FY.
 
Determining an eligible hospital’s TPS during FY 2014  
 
As noted above, under the HVBPP, a hospital’s base operating DRG payment for each discharge may be adjusted to account for its TPS during the applicable “Performance Period.” For FY 2014, CMS established three quality domains that identify the measures/dimensions eligible for inclusion in a hospital’s TPS: 
 
·         A Clinical Process of Care Domain, composed of 13 specific clinical measures, adding one new measure to the original 12 from FY 2013;
·         A Patient Experience of Care Domain, composed of 8 HCAHPS dimensions, which remain the same as for FY 2013; and
·         An Outcomes Domain, composed of three 30-day mortality measures. (See 78 Fed. Reg. 50678-50679 for a specific description of these measures/dimensions.)
 
For FY 2014, hospitals’ domain scores are weighted at 45% for Clinical Process of Care, 30% for Patient Experience of Care, and 25% for Outcomes. 
 
For those hospitals eligible to participate in the HVBPP, CMS calculates both an achievement and an improvement score for each of the respective measures and dimensions. The domain score is generally determined based upon whichever is the higher for each measure and dimension. The achievement score is based upon the hospital’s performance during the Performance Period compared to all hospitals’ performance. The improvement score is based upon the hospital’s performance during the Performance Period compared to the hospital’s performance during the Baseline Period. 
 
For FY 2014, CMS established the following Performance and Baseline Periods:
 
·         For the Clinical Process of Care and the Patient Experience of Care Domains, a 9-month Performance Period from April 1, 2012, through December 31, 2012, and a 9-month Baseline Period from April 1, 2010, through December 31, 2010. 
·         For the Outcomes Domain, a 12-month Performance Period from July 1, 2011, through June 30, 2012, and a 12-month Baseline Period from July 1, 2009, through June 30, 2010.
 
Proposed changes for FY 2015
 
For FY 2015, there will be four quality domains: 
 
·         A Clinical Process of Care Domain, composed of 12 specific clinical measures, deleting one measure (SCIP-VTE-1) from FY 2014;
·         A Patient Experience of Care Domain, composed of the same eight HCAHPS dimensions measured during FY 2014;
·         An Outcomes Domain, continuing the three 30-day mortality measures from FY 2014, and adding two additional measures (an AHRQ PSI composite [PSI-90] and CLABSI); and
·         An Efficiency Domain, composed of a single Medicare Spending per Beneficiary measure (MSBP-1). (See 78 Fed. Reg. 50679-50680 for a specific description of these measures/dimensions.) 
 
For FY 2015, CMS will establish the following Performance and Baseline Periods:
 
·         For the Clinical Process of Care and the Patient Experience of Care Domains, a 12-month Performance Period from January 1, 2013 through December 31, 2013 and a 12-month Baseline Period from January 1, 2011 through December 31, 2011;
·         For the Outcomes Domain
o   For the three 30-day mortality measures, a nine-month Performance Period from October 1, 2012, through June 30, 2013, and a nine-month Baseline Period from October 1, 2010, through June 30, 2011;
o   For the AHRQ PSI composite measure, a Performance Period from October 15, 2012, through June 30, 2013, and a Baseline Period from October 15, 2010, through June 30, 2011;
o   For the CLABSI measure, a Performance Period from February 1, 2013, through December 31, 2013, and a Baseline Period from January 1, 2011, through December 31, 2011;
·         For the Efficiency Domain, an eight-month Performance Period from May 1, 2013, through December 31, 2013, and an eight-month Baseline Period from May 1, 2011, through December 31, 2011.
 
For FY 2015, hospitals’ domain scores will be weighted at 20% for Clinical Process of Care, 30% for Patient Experience of Care, 30% for Outcomes, and 20% for Efficiency.
 
Additional resources
 
As noted in last week’s note, hospitals are encouraged to review these changes in the FY 2015 IPPS proposed rule to determine the potential impact on their operations if CMS were to finalize them. Additional resources that provide more specific details on the proposed measures/dimensions for FY 2015 can be found at the following web sites:
 
 FY 2014 IPPS Final Rule (78 Fed. Reg. 50676-50707)
 FY 2013 IPPS Final Rule (77 Fed. Reg. 53567-53614)
 
In next week’s note, we will continue our review of adjustments to IPPS payment, focusing on the proposed HACRP.



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