IPPS final rule fortifies quality reporting, penalties for readmissions

The final rule that updates Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs) includes improvements in the quality of care that limit payment for hospital-acquired conditions and readmissions.

Issued on Aug. 4 by the Centers for Medicare & Medicaid Services (CMS), the rule also supports price transparency by noting the Affordable Care Act requirement to make their charges available to patients and the public.

“Today’s policies further support our efforts to continue improving the care our Medicare beneficiaries receive while also cutting the growth of Medicare costs,” said CMS Administrator Marilyn Tavenner in a release. “This final rule builds on our recent efforts to improve hospital performance while giving hospitals the clarity and resources they need to deliver the best possible patient care.”

The payment rate update to general acute care hospitals will be 1.4 percent in FY 2015, according to CMS, while the rate update for long-term care hospitals will be 0.9 percent.

In this final rule, CMS is increasing the applicable percent reduction for the Hospital Value-Based Purchasing program, the portion of Medicare payments available to fund the value-based incentive payments under the program, to 1.5 percent of the base operating diagnosis-related group (DRG) payment amounts to all participating hospitals. CMS estimates that the total amount available for value-based incentive payments in FY 2015 will be approximately $1.4 billion.

The rule sets the maximum reduction in payments under the Hospital Readmissions Reduction program at 3 percent as required by law, up from 2 percent. For FY 2015, CMS will assess hospitals’ readmissions penalties using five readmissions measures endorsed by the National Quality Forum. CMS estimates that hospital readmissions in Medicare declined by a total of 150,000 from January 2012 through December 2013.

CMS is implementing the Affordable Care Act’s Hospital Acquired Condition Reduction Program so in FY 2015, hospitals scoring in the top quartile for the rate of HACs--those with the worst performance--will receive Medicare inpatient payments reduced by 1 percent. The existing HAC program is currently saving approximately $30 million annually by not providing additional Medicare payment for treatment of certain conditions that are reasonably preventable when those conditions are acquired after the beneficiary has been admitted to the hospital for a different condition, according to CMS.

The rule also encourages high-quality care while decreasing the time and effort to take to report the related information. Certain Meaningful Use reporting requirements will align with the Hospital Inpatient Quality Reporting (IQR) Program. The final rule revises measures for the Hospital Inpatient Quality Reporting, LTCH Quality Reporting and PPS-Exempt Cancer Hospital Quality Reporting Programs.

Access the final rule here.