Corporate Compliance

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

Medicare Insider, June 3, 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 III

This note is the third in a three-part series focusing on certain adjustments to reimbursement for short-term acute-care inpatient hospital stays covered under Medicare 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 (HQIP). 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)—and will continue in effect for FY 2015 and beyond. 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 comprehensive information.)
 
In the last two notes, we focused on adjustments under the HRRP and HVBPP. This week, we will conclude this series with a discussion of adjustments under the proposed HACRP.
 
Identification of hospital-acquired conditions (HAC) as part of CMS’ continuing quality improvement efforts
 
As part of its ongoing HQIP, CMS has established a number of initiatives to identify and reduce the number of HACs among Medicare beneficiaries. HACs are conditions that patients acquire while receiving treatment for another condition in an acute care health setting. HACs include hospital-acquired infections (HAI) such as surgical site infections, as well as conditions such as foreign objects retained after surgery. These conditions often require significant additional resources to treat. They constitute an adverse event for the patient and a financial burden on the healthcare system. CMS believes that many common HACs can be prevented through the proper application of evidence-based guidelines. 
 
In an effort to identify and reduce the occurrence of HACs, beginning in FY 2008, HHS has been ordered to identify conditions that meet all of the following criteria:
 
  • Are high cost or high volume or both;
  • Result in the assignment of a case to a Medicare Severity Diagnosis Related Group (MS-DRG) that has a higher payment when that condition is present as a secondary diagnosis; and
  • Could reasonably have been prevented through the application of evidence-based guidelines. 
 
Since FY 2008, hospitals that are subject to payment for covered inpatient stays under the IPPS have been required to report the appropriate present-on-admission (POA) indicator on their Part A inpatient claims (TOB 011X) for virtually all of the principal and secondary diagnoses that are present at the time of discharge. Beginning with discharges occurring on and after October 1, 2008, if the POA indicator for a HAC reported on the claim is either “N” (Diagnosis was not present at time of inpatient admission) or “U” (Documentation insufficient to determine if the condition was present at the time of inpatient admission), that condition is ignored for purposes of MS-DRG assignment. In that case, although the costs associated with the HACs are treated as covered charges, the hospital is not paid for the HAC-related services. That is, the hospital’s payment may be less than it would otherwise have been, creating a financial incentive to prevent such conditions from arising after admission. 
 
Under the FY 2014 IPPS Final Rule, Maryland waiver hospitals, although not paid under the IPPS, are no longer exempt from the POA indicator reporting requirement for claims submitted on or after October 1, 2013, including all claims for discharges on or after October 1, 2013. They will, however, continue to be exempt from the application of any payment reduction based on the hospital’s reporting of the presence of a HAC at discharge, for which the POA indicator on the claim is either “N” or “U.”
 
Each year HHS identifies (by applicable ICD-9-CM diagnosis codes) a list of those conditions which it has identified as HACs. Not surprisingly, many hospitals have taken exception to the inclusion of certain diagnoses, primarily questioning whether these diagnoses are readily identifiable as being present at the time of admission or whether they are reasonably preventable through the application of evidence-based guidelines. Nevertheless, the list goes on.
 
Several years ago, CMS went even further with respect to three HACs constituting medical errors:
·         Performance of the wrong procedure
·         Performance of the correct procedure on the wrong body part
·         Performance of the correct procedure on the wrong patient
 
These three medical error HACs have been designated as “never events.” Unlike most HACs, never events, and the services related to them, are non-covered services. Never events performed in the inpatient hospital setting must be reported on a separate non-covered claim (TOB 0110).
 
Purpose and overview of the HACRP
 
This brings us to the next step, which is CMS’ establishment of the HACRP. CMS’ goal for the HACRP is two-fold:
 
  • To heighten hospitals’ awareness of HACs; and
  • To reduce the number of incidences by implementing certain payment adjustments to “applicable hospitals” for inpatient discharges occurring during FY 2015 and subsequent FYs. 
 
The amount of payment to “applicable hospitals” subject to HACRP adjustments is to be equal to 99% of the amount of payment that would otherwise apply to such discharges. For purposes of the HACRP, “applicable hospitals” is defined as subsection (d) hospitals that meet certain criteria. Such hospitals generally include IPPS hospitals, Maryland waiver hospitals (subject to exemption, at the discretion of HHS), sole community hospitals, and Indian Health Service hospitals. Hospitals that are excluded from this term include non-IPPS hospitals (e.g., cancer, children’s, long-term care hospitals), critical access hospitals, and territorial hospitals (e.g., those located in Puerto Rico). In addition, in the proposed IPPS rule for FY 2015, CMS proposes to exempt Maryland waiver hospitals from the applicability of the HACRP during the duration of CMS’ new Maryland All-Payer Model, a five-year hospital payment model, pursuant to an agreement entered into effective January 1, 2014.   
 
HACRP payment adjustments would only be made to payments to those applicable hospitals with the worst HAC rates. That is, a payment adjustment under the HACRP would only apply to an applicable hospital that ranks in the top quartile (25%) of all subsection (d) hospitals with respect to HACs acquired during the “applicable period.” HHS would have the discretion to determine the HACs to be counted and the “applicable two-year period” during which the measurement would be taken to determine a hospital’s “Total HAC Score” for a specific FY. 
 
For hospitals subject to adjustments under the HACRP, the adjustments are to be made to the operating portion of the hospital’s DRG payment, and payments are to be equal to 99% of the amount of payment that would otherwise apply to such discharges. In particular, CMS noted in the FY 2014 IPPS Final Rule that the adjustments that are excluded in determining the “base operating portion of the DRG payment” for purposes of determining the HRRP and HVBPP adjustments are not to be excluded for purposes of determining the operating portion of the DRG payment to which any HACRP adjustment is made. In addition, any HACRP adjustment is to be made after any otherwise applicable HRRP and HVBPP adjustments have been completed.
 
CMS has addressed the issue of the actual application of the HACRP payment adjustment to hospital payments more specifically in the proposed IPPS rule for FY 2015.
 
Measure selection and scoring methodology
 
Patient safety is the primary objective for the measures proposed and ultimately selected for FY 2015, including both claims-based and chart-abstracted measures. CMS has designed the HACRP to include currently available, risk-adjusted measures that are reflective of hospital performance. 
 
After much discussion and considerable input from hospitals and other interested parties, CMS has finalized measures in the following two domains for FY 2015:
·         Domain 1, composed of a single Agency for Healthcare Research and Quality (AHRQ) Patient Safety Indicator (PSI) composite measure, AHRQ PSI-90, which is a claims-based measure; and
·         Domain 2, composed of two Center for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN) measures, central line-associated bloodstream infection [CLABSI] and catheter-associated urinary tract infection [CAUTI]), which are chart-abstracted measures.
 
Because these measures are currently undergoing maintenance review by the National Quality Forum, CMS has indicated that, if any significant changes are made to any of these measures, it will issue notice-and-comment rulemaking prior to requiring reporting of that measure. Additional measures are proposed for inclusion in subsequent FYs.
 
For the AHRQ PSI-90 composite measure in Domain 1, point assignment will be based on a hospital’s score for the composite measure (which can be 1–10 points). For the CDC NHSN measures in Domain 2, point assignment to the hospital for each measure will be based on the reliability-adjusted standardized infection ratio (SIR) for that measure (which can be 1–10 10 points). The Domain 2 score will consist of the average of points assigned to the SIR for both measures. Unlike the HVBPP, where a higher score means better performance, under the HACRP, the more points a hospital receives on a measure, the poorer that hospital’s score.
 
For FY 2015, hospitals’ domain scores will be weighted at 35% for Domain 1 and 65% for Domain 2. CMS will use each hospital’s total HAC Score to determine the top quartile of applicable hospitals that will be subject to the payment adjustment, beginning with inpatient discharges on and after October 1, 2014.
 
Collecting and reporting the hospital’s HAC record for the applicable period
 
For FY 2015, CMS will use the 24-month period from July 1, 2011, through June 30, 2013, as the applicable time period for the AHRQ PSI-90 composite measure. The claims for all Medicare fee-for-service beneficiaries discharged during this period will be included in the calculation of measure results for FY 2015. This includes claims data from the 2011, 2012, and 2013 Inpatient Standard Analytic Files. 
 
The CDC NHSN measures, CAUTI and CLABSI, are currently collected and calculated on a quarterly basis; however, for purposes of the HACRP, CMS will also use two years of data to calculate the Domain 2 score. For FY 2015, that two-year period will be calendar years 2012 and 2013—January 1, 2012, through December 31, 2013.
 
To ensure the accuracy of the data used to determine whether a HACRP reduction should be made, HHS is required to provide a confidential report to applicable hospitals containing their HAC record for the applicable period. This gives them an opportunity to review and provide corrections prior to the release of related information to the public.  
 
Additional guidance
 
Hospitals are encouraged to review the sections relating to the HACRP in the proposed FY 2015 IPPS (79 Fed. Reg. 28134-28144) to assure that they understand the implications of these proposed changes for their hospitals if CMS were to finalize them. Additional guidance on the HACRP can be found in the FY 2014 IPPS Final Rule (78 Fed. Reg. 50707-50729).



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