The Centers for Medicare & Medicaid Services this week issued a hospital inpatient and long-term care prospective payment system proposed rule for fiscal year 2011 that would decrease average inpatient payments by 0.1 percent.
The proposed rule includes an initial market-basket update of 2.4 percent for hospitals that submit data on quality measures; hospitals not submitting data would receive a 0.4 percent update.
“The proposals … take a significant step towards improving the accuracy of Medicare payments for inpatient hospital stays while continuing and expanding payment incentives to hospitals to improve the quality and safety of care they furnish to beneficiaries,” said Jonathan Blum, deputy administrator and director for the Center for Medicare.
The proposed rule would apply to approximately 3,500 acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) and approximately 420 long-term care hospitals paid under the Long-Term Care Hospital Prospective Payment System (LTCH PPS), beginning with discharges occurring on or after Oct. 1, 2010.
The rule proposes a cut of 2.9 percent to eliminate the effect of coding or classification changes that CMS says don't reflect real changes in case mix. When coupled with other policy changes, the average decrease in payments would be 0.1 percent, or $142 million.
CMS is proposing to update LTCH rates by 2.4 percent for inflation and apply an adjustment of -2.5 percentage points to eliminate the effect of coding or classification changes. CMS estimates that payments to LTCHs would increase by 0.8 percent, or $41 million.
The estimate does not include the 0.25 percent mandated market basket cut that was included in the Patient Protection and Affordable Care Act. According to the American Hospital Association, when that cut is put into place, average payments will decrease by 0.35 percent compared to FY 2010 payments.
"This policy will undermine hospitals' ability to care for patients and communities across the country," said Rich Umbdenstock, president and CEO of the AHA. “We strongly urge CMS to rethink their analysis regarding the coding offset and hope to work with the agency to eliminate these cuts."
CMS is proposing to add 45 measures to the “Reporting Hospital Quality Data for Annual Payment Update” set for reporting in 2011. However, only 10 of the proposed measures, including rates of occurrence for eight of 10 categories of conditions that are subject to the hospital-acquired conditions (HACs) policy, will be considered in determining a hospital’s FY 2012 update.
The remaining 35 measures, many of which CMS is proposing to be reported through registries, would be considered in determining the hospital’s FY 2013 update, and hospitals would not be required to report all of the proposed registry-based measures.
CMS officials say the proposed use of registries would prevent hospitals from having to report the same data twice.
Blair Childs, senior vice president of public affairs for the Premier healthcare alliance, said he's concerned by CMS’ decision to require hospital quality reporting through registries, which are typically based on proprietary measures provided to hospitals on a fee-for-service basis.
“To ensure the integrity of the program, CMS should clarify that in order to become a qualified registry, all measures tied to payment must be transparent and publicly available,” Childs said. “Without this transparency, CMS risks creating de facto monopolies, requiring hospitals to spend substantial sums to access registries that must be followed in order to qualify for payment. This point becomes even more critical as quality measures form the basis for national payment reforms such as value-based purchasing.”