CMS releases the IPPS Proposed Rule

It’s that time of the year again when some things are for certain – trees and flowers are in bloom creating havoc with allergies, the weather can’t make up its mind if its spring or winter and CMS announces its plans for the coming fiscal year regarding IPPS hospital payments.

Last week CMS released the inpatient prospective payment (IPPS) proposed rule for FY 2013, effective for discharges October 1, 2012.  Overall, CMS is projecting that payment rates to general acute care hospitals will increase by 2.3 percent – a net update after inflation, improvements in productivity, a statutory adjustment factor and adjustments for hospital documentation and coding changes.

Here is a summary of some of the CMS proposals:

• Documentation and coding adjustment (DCA): Proposing to complete the remaining -1.9% prospective adjustment while also making a +2.9%to remove the effect of the FY 2012 one-time recoupment adjustment; the adjustment of -0.8 to the standardized amount and a -0.8% adjustment to the hospital-specific rate would result in a total DCA of +0.2% (-1.9 plus +2.9 plus -0.8) to the standardized amount and a -1.3% (-0.5 plus -0.8) adjustment to the hospital-specific rate.
• Hospital-acquired conditions (HACs–): Proposing two new conditions which include surgical site infection (SSI) following cardiac implantable electronic device (CIED) procedures and pneumothorax with venous  catheterization.
• Graduate medical education (GME) and indirect medical education (IME): Proposing changes related to determining a hospital’s full-time equivalent (FTE) resident cap for GME and IME payments, applications of new teaching hospitals and FTE slots currently held by closed hospitals.
• Hospital inpatient quality reporting (IQR) program: Proposing that starting with the FY 2015 payment determination, an increase to the current validation sample of 18 cases per quarter to 27 cases per quarter to capture data for additional measures; proposing to reduce the total sample size of hospitals included in the annual validation sample from 800 eligible hospitals to 600 eligible hospitals;  proposing several quality measures to be suspended, removed and expanded during the coming fiscal years.
• Hospital inpatient value based purchasing (VBP) program: Several proposals including defining the term “base operating DRG payment amount” as the wage-adjusted DRG operating payment plus any applicable new technology add-on payments and excluding IME, DSH; proposing that in order to fund the VBP program, every eligible hospital would receive a 1% reduction to its base operating DRG payment amount for each discharge in a fiscal year, regardless if that hospital had been determined by CMS to have earned a value-based incentive payment for that fiscal year.
• Hospital readmissions reduction program: Since this program is not budget neutral, CMS is proposing that an applicable hospital’s base operating DRG payment amount be adjusted for each discharge by subtracting the product of the base operating DRG payment amount for such discharge by the hospital’s admission payment adjustment factor for the fiscal year from the base operating DRG payment amount for such discharge; proposing a process that would allow hospitals to review and submit corrections for their readmissions information prior to the information being posted on the Hospital Compare website.
• Other proposals also include various MS-DRG recalibrations, additions and deletions to the complications and comorbidities (CCs) and major complications and comorbidities (MCCs) list and four applications for consideration of new technology add-on payments.

This summary barely unearths the many nuggets that can be found in the display copy  as well as several fact sheets. IPPS hospitals should begin reviewing this document to assess the potential financial impacts and organizational implementation issues and submit comments by June 25. The proposed rule will be published in the Federal Register on May 11.