United States: CMS Proposes FY 2017 Update For Medicare IPPS, LTCH PPS Rates And Policies

CMS has published its proposed rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2017.

With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the proposed rule would increase total IPPS payments by about $539 million in FY 2017 compared to FY 2016. The proposed rule would provide for a 0.9% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHRs).  This update reflects a 2.8% market basket update, adjusted by a -0.5 percentage point multi-factor productivity (MFP) adjustment and an additional -0.75 percentage point adjustment (as mandated by the Affordable Care Act, or ACA), resulting in a 1.55% update to standardized amounts.  This update is subject to an additional -1.5 percentage point documentation and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012, and a one-time increase of approximately 0.8 percentage points to permanently negate the cumulative impact of a controversial "Two Midnight Policy" adjustment adopted in the final FY 2014 rule.

Updates to IPPS hospitals are subject to several quality-related adjustments under the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program (HRRP), the Hospital-Acquired Condition (HAC) Reduction Program, the Hospital Inpatient Quality Reporting (IQR) Program, and the EHR Incentive Program. For instance, hospitals that do not successfully participate in the Hospital IQR Program will be subject to a one-fourth reduction of the market basket update.  Furthermore, hospitals that are not meaningful EHR users are subject to a separate reduction equal to half of the market basket update.  Specific hospital payments can be impacted by a variety of other factors, including penalties for excess readmissions and poor performance under the HAC Reduction Program, and bonuses and penalties under the Hospital VBP Program.

The proposed rule would make numerous changes to hospital quality programs, including updates to various quality measures, performance periods, data submission requirements, and public reporting policies. CMS also proposes to implement the Notice of Observation Treatment and Implications for Care Eligibility Act (NOTICE Act) by specifying the process for hospitals and critical access hospitals to notify an individual, orally and in writing, regarding the individual's receipt of observation services as an outpatient for more than 24 hours and the implications of receiving such services on cost sharing and post-hospitalization eligibility for Medicare coverage of skilled nursing facility services. CMS has developed a standard notice, the "Medicare Outpatient Observation Notice" (MOON) that would include all of the informational elements necessary to fulfill the NOTICE Act's written notice requirement. In addition, CMS addresses, among many other things: proposed changes to MS-DRG classifications and recalibration of relative weights, new technology add-on payment applications, rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis, and distribution of Medicare disproportionate share hospital (DSH) allotments.

With regard to LTCHs, the proposed rule would provide for a standard federal rate of $42,314.31. CMS is updating rates by an adjusted market basket increase of 1.45% (reflecting a 2.7% market basket increase, less a proposed 0.5 percentage point MFP adjustment and an additional 0.75 percentage point reduction required by statute).  Nevertheless, CMS estimates that overall LTCH PPS payments would decrease by 6.9% (approximately $355 million) under the proposed rule.

Although a portion of the estimated decrease is a result from reduced high-cost outlier payments, CMS attributes the bulk of this cut to continued phase-in of the Pathway for SGR Reform Act of 2013, which requires CMS to establish an alternative site-neutral payment rate, generally based on IPPS rates, for Medicare inpatient discharges from an LTCH that fail to meet certain statutory-defined, patient-level clinical criteria, beginning with LTCH discharges occurring in cost reporting periods beginning on or after October 1, 2015. Application of the site-neutral payment rate is subject to a transition period that commenced with cost reporting periods beginning on or after October 1, 2015 through September 30, 2017. During the transition, a blended rate will be paid for Medicare patients not meeting the new criteria. The blended rate will comprise half the site-neutral payment rate and half the LTCH-PPS payment rate. The full site-neutral payment rate applies for all Medicare patients not meeting the new criteria in cost reporting periods beginning on or after October 1, 2017.

Under the patient-level clinical criteria, LTCHs will be reimbursed under LTCH PPS only if, immediately preceding the patient's LTCH admission, the patient was discharged from a general acute care hospital paid under IPPS and the patient's stay included at least three days in an intensive care unit or coronary care unit or the patient is assigned to an MS-LTC-DRG for cases receiving at least 96 hours of ventilator services in the LTCH. Patient's discharge from an LTCH with a principal diagnosis relating to psychiatric or rehabilitation services may not be reimbursed under LTCH PPS.  For any Medicare patient who does not meet the patient-level clinical criteria, the LTCH will be paid a lower "site neutral" payment rate, which will be the lower of (1) the IPPS comparable per diem payment rate including any outlier payments, or (2) 100% of the estimated costs for services.  CMS expects approximately 55% of LTCH cases to meet the patient-level criteria for exclusion from the site neutral payment rate in FY 2017; those cases will be paid based on the LTCH PPS standard federal payment rate (note that LTCHs are subject to a 2.0 percentage point reduction to the annual update for failure to submit data under the LTCH Quality Reporting Program).  CMS estimates that the payments per discharge for LTCH PPS standard federal payment rate cases will increase 0.3% on average.  On the other hand, CMS estimates that the proposed rule would decrease estimated aggregate LTCH PPS payments to site neutral payment rate cases in FY 2017 by approximately $367 million (or approximately 21%).  CMS proposes other revisions to LTCH policies, including consolidation of its "25 percent threshold" policy regulations.

CMS proposed changing the 25% rule that applies to LTCH. Currently, the 25% rule payment adjustments are found in two Medicare regulations, one that applies to Medicare patients admitted from a co-located referring hospital and one that applies to Medicare patients admitted from a referring hospital not co-located with the LTCH. CMS is now proposing a single 25% rule that would apply to LTCH discharges on or after October 1, 2016. Under this proposal, CMS would calculate the percentage of LTCH discharges referred from any hospital on a provider number basis only.

CMS is also proposing to rebase the LTCH-specific market basket for FY 2017. Under the proposal the 2009-based LTCH-specific market basket that is currently used to calculate the standard federal payment rate for LTCHs would be replaced with a 2013-based LTCH-specific market basket that is based on Medicare cost report data from cost reporting periods beginning on or after October 1, 2012 and before October 1, 2013.

The rule was published on April 27, 2016.  CMS will accept comments on the proposed rule until June 17, 2016.  Once finalized, the policies and rates generally will apply to discharges occurring on or after October 1, 2016.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
BakerHostetler
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
BakerHostetler
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions