Policy and Medicine

Payment Penalties May Not Curb Hosptial Aquired Infections

In October 2008 the Centers for Medicare & Medicaid Services (CMS) discontinued additional payments for preventable hospital-acquired conditions (HACs), which according to the American Society for Healthcare Risk Management, included: 

• Vascular-catheter-associated infection
• Catheter-associated urinary tract infection
• Pressure ulcers (stage III and IV)
• Falls and trauma
• Surgical site infection after bariatric surgery for obesity
• Certain orthopedic procedures
• Bypass surgery (mediastinitis)
• Administration of incompatible blood
• Air embolism
• Foreign object unintentionally retained after surgery 

“The idea was that the infections are avoidable, and hospitals should not be paid more money for providing faulty care.”  Four years after doing so, a recent study published in The New England Journal of Medicine found that the policy has had “no effect on curbing infections.”   

Although the policy only cut back an average of six-tenths of a percent of Medicare revenue, according to The Boston Globe, it was a high-profile policy change toward a pay-for-performance approach to reimbursement.

Researchers looked specifically at data from 2006 through 2011 from 398 hospitals in 41 states on central catheter-associated bloodstream infections and catheter-associated urinary tract infections and compared infection data against rates of ventilator-associated pneumonia, which is not under the nonpayment policy. 

The result: Researchers found “no evidence that the 2008 CMS policy to reduce payments for central catheter-associated bloodstream infections and catheter-associated urinary tract infections had any measurable effect on infection rates,” study authors wrote.  The results did not “appear to be affected by whether the hospitals were in states that required reporting of such infections or by other hospital characteristics, such as size, share of patients on Medicare or ownership,” the study’s authors wrote. 

What this might suggest is that government threats for penalties may be the wrong approach.  Instead, it may be more useful for the government to invest in educational resources, such financial support for continuing education (CE) programs, which have proven effective in helping improve HACs. 

Although infections rates have generally dropped since 2006, it was not because of the Medicare penalties, U.S. News and World Report’s HealthDay reported.  “It had really nothing to do with the CMS policy,” Grace Lee, associate professor at Harvard Pilgrim Health Care Institute and Harvard Medical School, told The Boston Globe.  Lee added that the CMS policy “may not have been enough to motivate further change of behavior.” 

Infection rates were already dropping without the CMS policy because hospitals were taking steps to control infections through improvements such as rigorous coding procedures, which may demonstrate better administrative skills rather than better quality, HealthDay noted. 

In addition, many of those 398 hospitals were voluntarily reporting that data even before the payment policy was implemented, which means they may have been further ahead in their infection control efforts than others, thus resulting in no additional slowdown after the penalties, says Lisa McGiffert of Consumers Union, publisher of Consumer Reports. 

The results of this study may trouble hospitals facing penalties for readmissions, which CMS began assessing this month.  For example, American Hospital Association Vice President Nancy Foster told The Wall Street Journal that the study should make policy makers “take a step back and say, ‘Are payment penalties the right way to go; do they actually add to the efforts?’ on reducing infections and other hospital-acquired conditions?” 

Foster told Kaiser Health News that a key piece of any effort to reduce hospital infections is not just to count the number of patients who have problems, but to have a specific, detailed prevention strategy. Preliminary results from the association study found a 40 percent reduction in central line-associated bloodstream infections in intensive care units when they used a team-based approach. 

CMS said, “Taken all together, our policies are working” to reduce infections patients get while in the hospital.  The agency pointed to other efforts, including one program funded by the federal Agency for Healthcare Research and Quality that was tied to a 40% decrease in the rate of the catheter-linked bloodstream infections in hospital intensive-care units. 

Dr. Jeffrey Rothschild, an associate physician at Brigham and Women's Hospital in Boston, suggested that the findings are not unexpected.  “This is a really difficult thing to study, because often the data and discharge coding concerning hospital infections doesn't actually reflect what’s really happening,” Rothschild said. 

Back in June of this year, HHS posted online an updated National Action Plan to eliminate healthcare-associated infections for public comment.  The update confirmed progress in the effort to make healthcare safer and less costly by reducing preventable complications of care, including healthcare-associated infections (HAIs).  This new study, however, may cast down on this progress.   

HHS, however, also laid out its new plan to address HAIs through its Partnership for Patients.  This program may have the potential to address the study’s findings, although the success of the Partnership is too soon to predict.   

While the results of this study cause concern, the Affordable Care Act and the Obama Administration’s stance on improving quality will remain, and government agencies and private insurers will continue to tie payment to quality measures.  For example, beginning in 2015, CMS “will begin financially penalizing hospitals that have the highest rates of certain hospital-acquired health conditions,” reported WSJ. 

CMS Chooses Seven Nursing Facilities to Reduce Hospitalizations

Nursing facility residents often experience potentially avoidable inpatient hospitalizations. These hospitalizations are expensive, disruptive, and disorienting for frail elders and people with disabilities.  Nursing facility residents are especially vulnerable to the risks that accompany hospital stays and transitions between nursing facilities and hospitals, including medication errors and hospital-acquired infections. 

Many nursing facility residents are enrolled in both the Medicare and Medicaid programs (Medicare-Medicaid enrollees).  The Centers for Medicare and Medicaid Services (CMS) research on Medicare-Medicaid enrollees in nursing facilities found that approximately 45% of hospital admissions among those receiving either Medicare skilled nursing facility services or Medicaid nursing facility services could have been avoided, accounting for 314,000 potentially avoidable hospitalizations and $2.6 billion in Medicare expenditures in 2005. 

To address these concerns, CMS recently announced 7 healthcare entities that will take part in a new initiative, known as the “Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents.”  This new effort aims to improve the quality of care for people residing in nursing facilities. 

First announced back in March 2012, the initiative will allow CMS to partner with the seven organizations to implement strategies to reduce avoidable hospitalizations for Medicare-Medicaid enrollees who are long-stay residents of nursing facilities.  The Initiative directly supports CMS’ ongoing work to reduce avoidable hospitalizations for Medicare-Medicaid enrollees.  The organizations include: 

• Alabama Quality Assurance Foundation – Alabama Read More
• Alegent Health – Nebraska Read More
• HealthInsight of Nevada – Nevada Read More
• Indiana University – Indiana Read More
• The Curators of the University of Missouri – Missouri Read More
• The Greater New York Hospital Foundation, Inc. – New York City Read More
• UPMC Community Provider Services - Pennsylvania Read More 

The initiative will allow organizations to implement evidence-based interventions that reduce avoidable hospitalizations.  The enhanced care & coordination providers will collaborate with States and nursing facilities, with each enhanced care & coordination provider implementing its intervention in at least 15 partnering nursing facilities.

The goal of this Initiative is to:  

• Reduce the number of and frequency of avoidable hospital admissions and readmissions;
• Improve beneficiary health outcomes;
• Provide better transition of care for beneficiaries between inpatient hospitals and nursing facilities; and
• Promote better care at lower costs while preserving access to beneficiary care and providers.

Participants in the model – called “enhanced care and coordination providers” –will implement and operate their proposed interventions over a 4-year period.  Each participant is required to partner with a minimum of 15 Medicare-Medicaid certified nursing facilities in the same State where the intervention will be implemented. Nursing facility participation is voluntary.  

Participants proposed evidence-based interventions to accomplish the goals of the initiative in their applications to CMS.  The Initiative did not prescribe a specific clinical model for these interventions.  However, all proposed interventions must:  

• Improve beneficiary safety by better coordinating management of prescription drugs to reduce risk of polypharmacy and adverse drug events for residents, including inappropriate prescribing of psychotropic drugs.
• Bring onsite staff to collaborate and coordinate with existing providers, including residents’ primary care providers and the staff of the nursing facility. 
• Demonstrate a strong evidence base for the proposed intervention and potential for replication and sustainability in other communities and institutions across the country.
• Supplement (rather than replace) existing care provided by nursing facility staff.
• Allow for participation by nursing facility residents without any need for residents or their families to change providers or enroll in a health plan. Residents will be able to opt-out from participating, if they choose.

 CMS estimates that upon implementation, the awarded interventions will reach more than 17,000 beneficiaries over the four years of the Initiative.

CMS Final Rule Inpatient Prospective Payment System, Raises Hospital Payments

General acute care hospitals will see Medicare payment rates rise 2.3 percent in fiscal year 2013, after allowing for other payment and regulatory changes, according to a final rule (almost 200 pages) recently issued by the Centers for Medicare & Medicaid Services (CMS).  This represents a significant increase from the 0.9 percent the agency proposed in April.

Under the final rule for the 2013 Inpatient Prospective Payment System and the Long-Term Care Hospital Prospective Payment System, CMS expects total Medicare spending on inpatient hospital services will increase by about $2 billion in 2013.  Long-term acute care hospitals (LTHCs) will see a 1.7 percent bump in Medicare payments with the new rule.

The American Hospital Association commended CMS for its actions.  “Although we remain concerned that CMS continues to implement unnecessary coding cuts for changes in 2008 and 2009, we are pleased that CMS changed course on the new 2010 proposal that would have challenged hospitals' mission of caring,” AHA President and CEO Rich Umbdenstock said.  AHA was pleased that CMS delayed the full implementation of the 25% rule for LTCHs for an additional year.

With the final rule, CMS added a new outcome measure to the value-based purchasing program set to begin in October, now rewarding hospitals for avoiding central line-associated bloodstream infections.

The rule also determined the methodology of the Hospital Readmissions Reduction Program, which will penalize hospitals for high readmissions for heart attack, heart failure and pneumonia starting in October. Hospitals should expect a 0.3 percent drop (about $280 million) in Medicare payments due to the readmissions program, according to CMS.

In a string of rate increases, CMS also gave skilled nursing facilities a 1.8 percent Medicare payment bump for fiscal 2013.

CMS Opens Anti-Fraud Command Center – Senators Question FPS Effectiveness

The Centers for Medicare & Medicaid Services (CMS) recently announced the Program Integrity Commend Center in Baltimore to what it hopes will speed up anti-fraud efforts.   

It’s a $3.6 million facility.  Equipped with a couple of dozen computer workstations, giant screens and new computerized detection systems, the facility will pull together some of the country’s biggest experts in the government's campaign to fight fraud, the Associated Press reported.  The Obama administration is asking Congress for $2 million to operate the command center. 

Several members from Congress, the Department of Health and Human Services (HHS), and the media, obtained invitations to walk through the new center.  The invitation to cover the event said reporters would see “examples of real-time missions,” but Medicare spokesman Brian Cook acknowledged that all they were shown were “demonstrations” of how the command center is supposed to work. 

Republicans, however, are not yet convinced the brand new facility is worth the taxpayer dollars.  As we noted back in April of this year, Senators from both sides of the aisle expressed concern about CMS’ Fraud Prevention System (FPS) as part of the National Fraud Prevention Program (NFPP), which was adopted by CMS fulfilling the mandates in the Small Business Jobs Act of 2010.  In fact, the system, which went online in mid-2011, had prevented exactly one bad claim by late last year. That totaled $7,591.  The new system and center will have to report to Congress soon on its progress.   

This new command center comes in addition to the recent launch of a ground-breaking partnership among the federal government, State officials, several leading private health insurance organizations, and other health care anti-fraud groups to prevent health care fraud.  “This voluntary, collaborative arrangement uniting public and private organizations is the next step in the Obama administration’s efforts to combat health care fraud and safeguard health care dollars to better protect taxpayers and consumers.” 

Issues with New Command Center and FPS 

Senators Orrin Hatch (R-Utah) and Tom Coburn (R-Oklahoma) said the Obama administration isn’t providing enough information about the FPS and new computer systems being used to identify suspicious Medicare and Medicaid billings.  Computerized screening of claims is at the heart of the command center’s mission.  The Senators requested specific data regarding performance metrics, targeting of claims for review and actual program results.   

“After our offices saw a live demonstration of the FPS, we have concluded there is a significant disconnect between the rhetorical claims made by the administration and the system’s actual current operational status,”  Senators Hatch and Coburn wrote in a letter to CMS Acting Administrator Marilyn Tavenner. 

Although CMS called the system “mature” and spent $77 million to procure the contract for FPS, Hatch and Coburn said “the number of predictive analytic algorithms, or ‘models,’ being applied to the live payment stream are underwhelming at best.  CMS should have hundreds of models in operation, but instead there is a handful, and even the contract fulfillment only requires a few dozen.”

The Senators also noted that very few models were specifically designed to target procedures, services or supplies at high risk for fraud.  They also expressed their concern that the video screen alone cost “several hundred thousand dollars.”   

“Institutionalizing relationships through establishing a (command) center may be useful, but if huge sums of money have indeed been spent on a video screen while other common-sense recommendations may have not been implemented due to ‘resource concerns,’ this seems to be a case of misplaced priorities,” the senators wrote.  They noted that “CMS needs to do a better job prioritizing what claims are under review and how those claims are reviewed.  Rather than merely prioritize the “top 10” possible fraudulent claims or schemes, they recommended that CMS maximize its efforts with law enforcement and its contractors to review dozens, even hundreds, of flagged claims concurrently.   

The Senators noted that CMS seems to agree with the idea that the FPS can demonstrate its effectiveness.  In an announcement earlier this year, CMS said that “reversing the traditional pay-and-chase approach to program integrity is the main goal of the National Fraud Prevention Program (NFPP).”   Despite this rhetorical commitment, the Senators recognized that “CMS has not been fully transparent regarding what progress the agency is making in implementing the system and how successful the efforts of the system have been to date.” 

In hearings, meetings, and public letters over the past several months, the Senators have repeatedly pressed CMS for a set of specific metrics and timelines for the implementation of the FPS and the metrics for measuring its performance, including the agency’s view on “what determines success.”  The responses have been polite, “but vague and largely qualitative.”  The Senators said this is concerning, because the old adage is true: “one cannot manage what one cannot measure.”

CMS, however, touted the new facility, which will bring together clinicians, data analysts, fraud investigators and policy experts in one physical space to “build and improve our sophisticated new predictive analytics that spot fraud, and to then move quickly on a lead, once potential fraud is identified,” Peter Budetti, CMS deputy administrator and director of the Center for Program Integrity, said in a blog post.  That coordination will help authorities move faster on investigations that usually take days or weeks to just hours, according to CMS.

Budetti said the goal is to let the government’s far-flung gumshoes talk directly with the experts running the new computerized detection systems, dramatically reducing the time it takes to conduct investigations.  “Our expectation is that this center will pay for itself many times over,” Budetti said in the AP article.  Medicare currently loses an estimated $60 billion dollars each year to waste, fraud and abuse.

Conducting what amounted to her first formal inspection, HHS Secretary Kathleen Sebelius set the bar high for the command center.  She told staffers it’s time for the government to move beyond its old strategy of “pay and chase,” pursuing fraudsters after Medicare and Medicaid have already paid.  “Preventing fraud and abuse is what this effort is about,” she said.   

The secretary spoke with three groups of staffers: one responsible for developing computer models to query billing data for suspicious patterns; another in charge of investigating data generated by the computer models, looking for mistakes as well as real fraud; and a third handling coordination with law enforcement around the country. Staffers said they expect the coordination to cut the time it takes to investigate suspected fraud schemes from months to days and weeks. 

Request for Information 

In concluding their letter, Senators Hatch and Coburn asked CMS to submit to them by
this past September, the following information: 

• A work plan for the FPS for the next six quarters, outlining specific goals, deliverables, timeframes, and metrics for evaluation.  
• An explanation of how the “One PI” (One Program Integrity –an effort to coordinate all PI pieces adopted by CMS in recent years) fits with FPS and NFPP. 
• An explanation of how the Integrated Data Repository and One PI efforts are now funded.
• An explanation of the need for the “command center” in Baltimore to run the FPS, as well as an account of the expenditures and staffing associated with the new “command center.” Please clarify the role and integration of the ZPIC staff with regard to the new center and what is different about the new center that requires its establishment.
• A specific explanation of how the fraud referrals from the 1-800 Medicare hotline –some of which have reportedly already been examined by the ZPICs and discarded —are now being integrated into the FPS.
• An explanation of the additional steps CMS must take if contractors identify false store fronts for Medicare billing addresses using technologies like Google Earth.
• A detailed explanation of the institutionalized feedback mechanisms CMS has in place to develop new models based on the experience, insight, and advice of all of its program integrity contractors.
• An explanation of how CMS handles cases of alleged or possible fraud that law enforcement declines to pursue.
• A timeframe for when CMS will comprehensively outline how it will assess the success of the FPS system.
• An explanation of what other possible revisions or modifications CMS may be considering to current auditing procedures, including changes to the scope of work for various CMS contractors.
• A detailed breakdown of all costs associated with FPS and the NFPP including administrative, implementation and operational costs.  Please include specific information about how the $77 million paid for the FPS contract is being divided amongst the various contractors and subcontractors working on FPS as well as detailed accounting of all costs, including staffing, for the FPS command center in Baltimore.
• An explanation of why CMS has not to date, been able to solely use FPS to stop any claims before they are paid.
• An explanation of why CMS has not used its exclusion authority to prevent fraudulent providers from continuing to bill the Medicare program. 
• A detailed breakdown of what dollar amount has been recouped as a direct result of enforcement actions taken against providers or suppliers who were first identified as problematic through FPS.
• A detailed explanation of what actions CMS took in response to our identifying more than three dozen physicians and non-physician practitioners with felony convictions or guilty pleas who have retained their Medicare billing privileges and/or the ability to order and refer in the Medicare program in November of last year.  Please details when actions were taken with regard to each individual. 

In addition, the Senators noted the new public-private partnership, and requested the following information (citing vagueness in this proposed partnership): 

• Specifics regarding exactly how this collaboration will work including what entities will be involved, whether HHS/CMS or another entity will be overseeing the effort and a timeline for expected key milestones of the effort.
• A step-by-step explanation of how the information will be shared (e.g., what systems will be used to transmit the data), what authorities allow the exchange of information, what impediments exist to sharing information (e.g., statutory language) and where the information will be stored/analyzed.
• A description of the third party who will be analyzing the data, as well as an explanation of how that entity will be selected and what their capabilities are to integrate and analyze such a large amount of information.
• Specifics regarding what will happen when leads are identified, how that information will be disseminated, and what the process will be for following up on those leads. 

Conclusion 

Just like alot of other projects the CMS Anti-Fraud Center may not be working on opening day but over time that should change considerably.   As with any new venture, it will take some time to work the bugs out.  Hopefully in the end, under the right leadership it will work out.

 

 

CMS Rule and 1 Year Delay on ICD 10 Promises More Time for a Smooth and Coordinated Transition

The Centers for Medicare & Medicaid Services (CMS) have officially pushed back the timeline for healthcare organizations to convert to the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD–10–PCS) for inpatient hospital procedure coding, including the Official ICD–10–PCS Guidelines for Coding and Reporting, from October 1, 2013 to October 1, 2014.   

The U.S. remains one of the few developed countries that has not transitioned to ICD-10 or a clinical modification. ICD-9, which was implemented in the U.S. in 1979, is an antiquated code set that no longer adequately meets the challenge of a 21st century healthcare system. 

 ICD-10-CM/PCS classifications are the foundation for critical national healthcare initiatives such as meaningful use, value-based purchasing, payment reform, quality and quality reporting and patient and population safety. ICD-10-CM/PCS will yield information that will optimize health data, allow for a more uniform health information exchange and create a move to a reimbursement system based on quality and outcomes. 

“We believe the change in the compliance date for ICD-10 gives covered healthcare providers and other covered entities more time to prepare and fully test their systems to ensure a smooth and coordinated transition by all covered entities,” the U.S. Department of Health & Human Services (HHS) said in its 208-page rule.  The regulations are effective on November 5, 2012.  

According to an announcement, which comes on the heels of CMS’s unveiling of the final rule for Stage 2 of Meaningful Use, CMS also will establish a unique health plan identifier (HPID).  Currently, when a health care provider bills a health plan, that plan may use a wide range of different identifiers that do not have a standard format.  As a result, health care providers run into a number of time-consuming problems, such as misrouting of transactions, rejection of transactions due to insurance identification errors, and difficulty determining patient eligibility. The new rule will “greatly simplify these processes.” 

Health plans with the exception of small health plans must obtain an HPID by November 5, 2014. Small health plans must obtain an HPID by November 5, 2015.  Covered entities must use HPIDs in the standard transactions on or after November 7, 2016. An organization covered health care provider must comply with the implementation specifications in §162.410(b) by May 6, 2013.  HHS said providers can expect savings from two indirect consequences of HPID implementation: 

• Decreased administrative time spent interacting with health plans;
• Material cost savings after processes go from manual to electronic formats. 

“HPID’s anticipated 10-year return on investment for the entire healthcare industry is expected to be between $1.3 billion [and] $6 billion,” HHS said.  “These new standards are a part of our efforts to help providers and health plans spend less time filling out paperwork and more time seeing their patients,” HHS Secretary Kathleen Sebelius said. 

Response to CMS ICD-10 Delay 

The American Health Information Management Association (AHIMA) was pleased with CMS’s decision for a one-year delay.  “ICD-10-CM/PCS implementation is inevitable, but today's news gives the healthcare community the certainty and clarity it needs to move forward with implementation, testing and training,” AHIMA CEO Lynne Thomas Gordon said in a statement. “We realize that a few are still apprehensive about the implementation process, and that is why AHIMA remains committed to assisting the healthcare community with its transition to a new code set that will lead to improved patient care and reduced costs.”

Previously, the American Medical Association (AMA) expressed concern over the initial proposal of a one-year delay, calling for two years back in May.  While showing some support for CMS’ recent decision, AMA still expressed concern in its statement.  While AMA appreciated “the administration's decision to provide a one year delay in response to AMA advocacy, … we have urged CMS to do more to reduce the regulatory burdens on physician practices so physicians can spend more time with patients. The AMA recommended that CMS delay the move to ICD-10 by a minimum of two years.” 

The main argument in favor of delay: The sheer number of government programs and deadlines that health IT leaders and organizations face.  

As the AMA recognized, “The move toward ICD-10 comes at a time when physicians are dealing with the implementation of multiple Medicare incentive and penalty programs. Implementing ICD-10 alone requires physicians and their office staff to contend with 68,000 codes – a five-fold increase from the current 13,000 codes.  Physicians are also already trying to engage in new delivery and payment models.  The implementation of ICD-10 will create more challenges for physicians when our Medicare system is broken and cannot provide adequate funding to cover the cost of these additional administrative burdens.” 

The Medical Group Management Association (MGMA), “said in May that the ICD-10 process lacked several steps, and wanted to see a staggering of the implementation dates so that health plans and clearinghouses would be ready one year before providers,” FierceHealthIT reported.  MGMA also noted that HHS did not take particular care to prevent physician practices from experiencing “debilitating cash flow disruptions.” 

MGMA President and CEO Susan Turney said in a statement that the group wants to see ICD-10 pilot tested before it is rolled out.  She noted their lack of confidence in that critical trading partners, including Medicare and Medicaid, “will be ready in time to conduct testing well in advance of the October 2014 compliance date.”  The trade group was also “disappointed that CMS missed a significant administrative simplification opportunity to create true claims revenue cycle transparency with the Health Plan Identifier rule.  By not requiring health plans to enumerate at a more granular level, physicians will continue to face the burden of manually identifying these entities.” 

College of Healthcare Information Management Executives (CHIME) President and CEO Richard Correll said his organization was pleased with the delay—but adds that the industry can’t put off the coding overhaul much longer.  “[A]s HHS itself recognizes, a longer delay would significantly increase the costs of converting to ICD-10,” he said in a statement.  “[W]e urge the department to develop a clear path forward, with benchmarks, so that healthcare industry stakeholders can make the conversion in 2014.” 

The Health Information and Management Systems Society (HIMSS) also praised CMS for giving the industry just a little more breathing room to prepare for compliance.

HHS and Private Payers Announce Partnership to Prevent Healthcare Fraud

Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and Attorney General Eric Holder announced the launch of a ground-breaking partnership among the federal government, State officials, several leading private health insurance organizations, and other health care anti-fraud groups to prevent health care fraud.  “This voluntary, collaborative arrangement uniting public and private organizations is the next step in the Obama administration’s efforts to combat health care fraud and safeguard health care dollars to better protect taxpayers and consumers.” 

The partnership announced Thursday builds on previous collaborations, including HEAT, the Health Care Fraud Prevention and Enforcement Action Team, designed to strengthen data sharing and partnerships at all levels of government. 

The new partnership is designed to share information and best practices in order to improve detection and prevent payment of fraudulent health care billings.  Its goal is to reveal and halt scams that cut across a number of public and private payers.  The partnership will enable those on the front lines of industry anti-fraud efforts to share their insights more easily with investigators, prosecutors, policymakers and other stakeholders.   It will help law enforcement officials to more effectively identify and prevent suspicious activities, better protect patients’ confidential information and use the full range of tools and authorities provided by the Affordable Care Act and other essential statutes to combat and prosecute illegal actions. 

“In the past, we followed a ‘pay-and-chase’ model, paying claims first—then only later tracking down the ones we discovered to be fraudulent. Now, we're taking away the crooks' head start," HHS Secretary Kathleen Sebelius said.   

“This partnership puts criminals on notice that we will find them and stop them before they steal health care dollars,” Secretary Sebelius said.  “Thanks to this initiative today and the anti-fraud tools that were made available by the health care law, we are working to stamp out these crimes and abuse in our health care system.” 

One innovative objective of the partnership is to share information on specific schemes, utilized billing codes and geographical fraud hotspots so that action can be taken to prevent losses to both government and private health plans before they occur.  Another potential goal of the partnership is the ability to spot and stop payments billed to different insurers for care delivered to the same patient on the same day in two different cities.  A potential long-range goal of the partnership is to use sophisticated technology and analytics on industry-wide healthcare data to predict and detect health care fraud schemes.  

Among groups considered at “high risk for fraud” are new home healthcare providers and new durable medical equipment suppliers, but presumably individual physician practices and other provider organizations would be under the more comprehensive scrutiny as well. 

“This partnership is a critical step forward in strengthening our nation’s fight against health care fraud,” said Attorney General Holder.  “This Administration has established a record of success in combating devastating fraud crimes, but there is more we can and must do to protect patients, consumers, essential health care programs, and precious taxpayer dollars.  Bringing additional health care industry leaders and experts into this work will allow us to act more quickly and effectively in identifying and stopping fraud schemes, seeking justice for victims, and safeguarding our health care system.” 

The Executive Board, the Data Analysis and Review Committee, and the Information Sharing Committee will hold their first meeting in September.  Until then, several public-private working groups will continue to meet to finalize the operational structure of the partnership and develop its draft initial work plan.  The following organizations and government agencies are among the first to join this partnership: 

• America’s Health Insurance Plans
• Amerigroup Corporation
• Blue Cross and Blue Shield Association
• Blue Cross and Blue Shield of Louisiana
• Centers for Medicare & Medicaid Services
• Coalition Against Insurance Fraud
• Federal Bureau of Investigations
• Health and Human Services Office of Inspector General
• Humana Inc.
• Independence Blue Cross
• National Association of Insurance Commissioners
• National Association of Medicaid Fraud Control Units
• National Health Care Anti-Fraud Association
• National Insurance Crime Bureau 
• New York Office of Medicaid Inspector General
• Travelers
• Tufts Health Plan
• UnitedHealth Group
• U.S. Department of Health and Human Services
• U.S. Department of Justice
• WellPoint, Inc. 

The partnership builds on existing tools provided by the Affordable Care Act, resulting in: 

• Tougher sentences for people convicted of health care fraud. Criminals will receive 20 to 50 percent longer sentences for crimes that involve more than $1 million in losses;
• Enhanced screenings of Medicare and Medicaid providers and suppliers to keep fraudsters out of the program.
• Suspended payments to providers and suppliers engaged in suspected fraudulent activity.

“There are mutual interests here in doing a better job at detecting what's probably some $80 billion-plus per year in fraudulent payments across private and public sectors,” Richard Migliori, UnitedHealth's executive vice president of health services, told Bloomberg. “There's lot of enthusiasm for doing this right.”  The partnership may lead to sharing billing claims data, which could be mined for aberrations, Migliori added.   

Bloomberg Businessweek noted that the new partnership “falls short of a full data-mining agreement, a long-range goal that the government said would help spot fraud such as when doctors charge different insurers for care delivered to the same patient on the same day in two different cities.”  There are obstacles to providing that information, particularly patient privacy and confidentiality concerns related to sharing claims data, Migliori said. 

Lewis Morris, former Chief Counsel to the Inspector General at HHS, told the New York Times that such collaboration made sense.  

“Most of the criminals who prey on the nation’s health care system are equal opportunity thieves,” Mr. Morris said. “They defraud private health insurance as well as federal programs like Medicare and Medicaid.”  However, Mr. Morris said, “there could be significant challenges in building the level of trust needed to make this partnership truly effective.”  

AHIP President Karen Ignagni is calling the start of the new organization a “major step forward in the fight against fraud and abuse in our health care system.”

“The cost of fraud can far exceed what is paid for falsified claims,” Ignagni says in a statement.  “It can cause real harm to patients who are intentionally exposed to radiation, invasive surgeries, and medications they do not need, or suffer the lasting consequences of receiving a fraudulent diagnosis.”

CMS Medicare Prescription Plans Remain Constant – The Donut Hole is Filled

The Centers for Medicare & Medicaid Services (CMS) recently announced that the average basic premiums for Medicare prescription drug plans are projected to remain constant in 2013.  The average 2013 monthly premium for basic prescription drug coverage is expected to be $30. Average premiums for 2012 were projected to be $30 and ultimately averaged $29.67.  At the same time, since the law was enacted, seniors and people with disabilities have saved $3.9 billion on prescription drugs as the Affordable Care Act began closing the “donut hole” coverage gap.  Savings will increase over time until 2020, when the coverage gap will be closed.  

“Premiums are holding steady and, thanks to the health care law, millions of people with Medicare are saving an average of over $629 each year on their prescription drugs,” said Health and Human Services Secretary (HHS) Secretary Kathleen Sebelius.   

"Millions of people with Medicare have been paying less for prescription drugs thanks to the healthcare law," said Marilyn Tavenner, the head of the Centers for Medicare and Medicaid Services.  "Seniors and people with disabilities have already saved close to $4 billion. In 2020, the doughnut hole will be closed thanks to the Affordable Care Act."

In Maryland, the Baltimore Sun reported that seniors have saved $56.5 million on prescription drug costs because of a provision under health care reform that has eased the Medicare donut hole. 

Today’s projection for the average premium for 2013 is based on bids submitted by drug and health plans for basic coverage during the 2013 benefit year, and calculated by the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.  

The upcoming annual enrollment period – which begins Oct. 15 and ends Dec. 7, 2012 allows people with Medicare, their families and their caregivers to choose their plans for next year by comparing their current coverage and quality ratings to other plan offerings. New benefit choices are effective Jan. 1, 2013. 

Because of the Affordable Care Act, out-of-pocket savings on medications for people with Medicare continue to grow.  Last month, CMS announced that more than 5.2 million people with Medicare have saved over $3.9 billion on prescription drugs in the Medicare Part D donut hole since the law was enacted.  In the first half of 2012, over 1 million people with Medicare saved a total of $687 million on prescription drugs, averaging $629 per person this year. 

As a result of the Affordable Care Act, coverage for both brand name and generic drugs in the coverage gap will continue to increase over time until 2020, when the coverage gap will be fully closed.   

This year, people with Medicare received a 50 percent discount on covered brand name drugs and 14 percent coverage of generic drugs in the donut hole. 

In 2013, Medicare Part D’s coverage of brand name drugs will begin to increase, meaning that people with Medicare will receive a total of 52.5 percent off the cost of brand name drugs (a 50 percent discount and an additional 2.5 percent in coverage) and coverage for 21 percent of the cost of generic drugs in the donut hole.

CMS Releases Final Rule for Stage 2 Meaningful Use Requirements

The Centers for Medicare & Medicaid Services (CMS) recently published the final rule outlining the requirements for Stage 2 of the Meaningful Use incentive program, adopting many, but not all of the provisions they proposed in March. 

Under the Health Information Technology for Economic and Clinical Health (HITECH) Act, part of the American Recovery and Reinvestment Act of 2009 (ARRA), eligible health care professionals and hospitals can qualify for Medicare and Medicaid incentive payments when they adopt and meaningfully use certified electronic health record (HER) technology. 

More than 120,000 eligible health care professionals and more than 3,300 hospitals have qualified to participate in the program and receive an incentive payment since it began in January 2011. That exceeds a 100,000 goal set earlier this year.

That includes more than half of all eligible hospitals and critical access hospitals and 1 out of every 5 eligible health care professionals.  The program is divided into three stages: 

• Stage 1 sets the basic functionalities electronic health records must include such as capturing data electronically and providing patients with electronic copies of health information.
• Stage 2 (which will begin as early as 2014) increases health information exchange between providers and promotes patient engagement by giving patients secure online access to their health information.
• Stage 3 will continue to expand meaningful use objectives to improve health care outcomes.   

ONC already is working on Stage 3 of the program, which won't be implemented until 2016 at the earliest. 

CMS’s 672-page rule delays the Stage 2 requirements to 2014, giving providers more time to meet the Stage 2 criteria.  No provider will have to follow the Stage 2 requirements before then. Stage 2 originally was slated to begin in 2013.  Other changes to the rule include: 

• There will be 20 measures for eligible professionals and 19 for eligible hospitals and critical access hospitals;
• There are two new core objectives: one on the use of secure electronic messaging to communicate with patients, and another requiring hospitals to automatically track medications from order to administration using assistive technology with electronic medication administration records (eMAR);
• Several proposed measurement thresholds--such as for patient engagement and electronic exchange summary of care documents--have been reduced from those suggested in the proposed rule. Specifically for the former, both eligible providers and hospitals now will need "more than 5 percent" of unique patients to view, online, download or transmit their information to a third party (the proposed threshold was 10 percent);
• Batch reporting for medical groups and the process for implementing penalties for not meeting Meaningful Use have both have been finalized;
• An outpatient lab reporting requirement has been added;
• Eligibility of the Medicaid incentive program has been expanded to 12 children's hospitals that originally didn't meet the eligibility requirements. 

As noted by InformationWeek Healthcare, “the final rule does dial back some proposed thresholds. Notably, providers now only have to offer online access to health information and secure messaging for 5% of patients, not 10%, as had been proposed.

The final certification rule adds a requirement that all personally identifiable health data be encrypted while “at rest,” in response to a recommendation from the Health IT Policy Committee, a federal advisory board, and public comments.  

All told, physicians, chiropractors, dentists, physical therapists, and other individual providers have to meet 17 core measures for EHR usage, and also choose three from a menu of six additional measures.  Hospitals must achieve 16 core measures plus three of six menu items.  

In a Thursday conference call with journalists, national health IT coordinator Dr. Farzad Mostashari called the menu items “potentially more relevant to specialists” than those in Stage 1. Many people have criticized the current stage as being skewed toward primary care.  “The big message here is the push on standards-based interoperability of information,” Mostashari said.  “We are staying on course with the roadmap that we set in Stage 1.” 

Eligible providers also must report on nine of a total of 64 specific clinical quality measures, while hospitals need to choose 16 of 29.  Starting with the 2014 reporting period, providers will have to submit their Meaningful Use-related clinical quality measures electronically, Elizabeth Holland, director of health information technology initiatives for CMS, said during the teleconference.  To date, CMS has paid out $6.6 billion in incentive money to about 3,600 hospitals and more than 128,000 individuals, Holland said. 

CMS received 6,100 comments on the proposed rule.  Health and Human Services (HHS) Secretary Kathleen Sebelius the final rule “will lead to more coordination of patient care, reduced medical errors, elimination of duplicate screenings and tests and greater patient engagement in their own care.” 

The Office of the National Coordinator for Health IT's (ONCHIT) Standards and Certification criteria, which weighs in at 474 pages, adopts the certification criteria to support the changes in the program.  It also updates the certification program to make it easier and more efficient, and changed the name of the permanent certification program to “ONC HIT Certification Program.”     

“Certified EHR technology used in a meaningful way is one piece of a broader health information technology infrastructure needed to reform the health care system and improve health care quality, efficiency, and patient safety,” CMS said in a fact sheet explaining the rules.   

CMS also provided additional guidance to stakeholders by issuing answers to three frequently asked questions about changes to the Medicaid electronic health records meaningful use incentive program under Stage 2.  The changes cover determination of patient volume calculations that are intended to ease eligibility requirements, the types of CHIP patients eligible to be considered in Medicaid patient volume, and changes to the base year for hospital incentive payment calculation.   

Among the answers, CMS officials confirmed that there are, in fact, changes to the base year for the Medicaid hospital incentive payment calculation under the Stage 2 rules. "In an effort to encourage timely participation … the rule was amended to allow hospitals to use the most recent continuous 12 month period for which data are available prior to the payment year," CMS officials said. 

CMS also issued a series of tip sheets to help eligible professionals and hospitals transition to Stage 2 of the Meaningful Use requirements on its Website.  The tip sheets include an overview of the new rules, comparison tables between Stage 1 and Stage 2, tips on the clinical quality measures, and explanations of the mechanisms of the hardship exceptions and upcoming payment adjustments.  Electronic health record vendor Greenway, meanwhile, created a nifty sheet detailing the Stage 2 measures and threshold requirements. The sheet also outlines changes from Stage 1.  

Reaction to Final Rule on Meaningful Use Stage 2 

According to FierceHealthIT, initial responses to the final rule thus far, have been mostly positive.  Drex DeFord, CIO of Boston-based Steward Health Care, was pleased with the delay in making the transition to Stage 2.   

John Halamka, CIO of Beth Israel Deaconess Medical Center, also in Boston, wrote in a blog post that with regard to the standards and certification criteria published by ONCHIT, “the vocabulary, transport, and content standards" lined up perfectly with recommendations made by the Health IT Standards Committee.” 

Halamka seemed particularly interested in the fact that Simple Mail Transfer Protocol--which now is part of the base EHR definition--will be the required transport standard for all certified electronic health records.  “[A]ll EHR technology used by [eligible providers, eligible hospitals and critical access hospitals] that meets the [Certified Electronic Health Record Technology] definition will, at a minimum, be capable of SMTP-based exchange,” he said. 

The College of Healthcare Information Executives (CHIME), of which DeFord serves as chairperson for the board of trustees, was happy that CMS added more measures to the menu set, and that they implemented a 90-day EHR reporting period for 2014 for providers to demonstrate Meaningful Use.  

The American Health Information Management Association (AHIMA), meanwhile, praised the decision to maintain patient engagement requirements, even though the threshold for those requirements was lowered.  “We believe patients must be partners and work side-by-side with their providers to achieve the best possible healthcare outcomes,” AHIMA CEO Lynne Thomas Gordon said in a statement.

However, Indranil Ganguly, CIO at Freehold, N.J.-based CentraState Healthcare System, told FierceHealthIT in an email that he was disappointed by the patient engagement measures.  “I understand the desire to drive patient’s online and change behavior, but feel that it is unreasonable to put that burden on the healthcare provider,” he said. 

Additionally, the American Hospital Association (AHA) said the final rule makes the path toward IT adoption for hospitals “more challenging.”  It is disappointed “that this rule sets an unrealistic date by which hospitals must achieve the initial Meaningful Use requirements to avoid penalties,” Linda Fishman, senior vice president of public policy, analysis and development for AHA, said in a statement.  “In addition, CMS complicated the reporting of clinical quality measures and added to the Meaningful Use objectives, creating significant new burdens.”

CMS Begins Penalizing Hospitals for Readmissions

Section 3025 of the Affordable Care Act (ACA) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program, which requires the Centers for Medicare & Medicaid Services (CMS) to reduce payments to Inpatient Prospective Payment System (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012.   

CMS defined readmission as an admission to a subsection (d) hospital within 30 days of a discharge from the same or another subsection (d) hospital.   

“Almost one in five Medicare beneficiaries that leave a hospital end up being readmitted within 30 days,” said Janet Corrigan, PhD, MBA, president and CEO of NQF. “Those readmissions cost about $15 billion annually, and many have the potential to be prevented. These new measures help push us as a nation to address this serious problem.”  

Consequently, Kaiser Health News recently reported that starting in October, more than 2,000 hospitals — including some nationally recognized ones — will be penalized by CMS because many of their patients are readmitted soon after discharge.  “Together, these hospitals will forfeit about $280 million in Medicare funds over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide.” 

The significant penalties levied on hospitals underscore the need for more hospitals and health care providers to receive continuing medical education (CME) to improve their patient outcomes and reduce readmissions.  

Background 

In the FY 2012 IPPS final rule, CMS finalized the readmission measures for Acute Myocardial Infarction, (AMI) Heart Failure (HF) and Pneumonia (PN) and the calculation of the excess readmission ratio, which will then be used, in part, to calculate the readmission payment adjustment under the Hospital Readmissions Reduction Program.   

CMS finalized the calculation of a hospital’s excess readmission ratio for AMI, HF and PN, which is a measure of a hospital’s readmission performance compared to the national average for the hospital’s set of patients with that applicable condition.  As an example, if a hospital received the maximum penalty of 1 percent and it submitted a claim for $20,000 for a stay, Medicare would reimburse it $19,800. 

CMS established a policy of using the risk adjustment methodology endorsed by the National Quality Forum (NQF) for the readmissions measures for AMI, HF and PN to calculate the excess readmission ratios.  CMS did not take into account patients’ racial or socio-economic background. 

The excess readmission ratio includes adjustment for factors that are clinically relevant including patient demographic characteristics, comorbidities, and patient frailty.  Finally, CMS established a policy of using three years of discharge data and a minimum of 25 cases to calculate a hospital’s excess readmission ratio of each applicable condition.  For FY 2013, the excess readmission ratio is based on discharges occurring during the 3-year period of July 1, 2008 to June 30, 2011. 

Hospital Penalties 

The penalties will fall heaviest on hospitals in New Jersey, New York, the District of Columbia, Arkansas, Kentucky, Mississippi, Illinois and Massachusetts, a Kaiser Health News analysis of the records shows.  Hospitals that treat the most low-income patients will be hit particularly hard. 

A total of 278 hospitals nationally will lose the maximum amount allowed under the health care law: 1 percent of their base Medicare reimbursements. Several of those are top-ranked institutions, including Hackensack University Medical Center in New Jersey, North Shore University Hospital in Manhasset, N.Y. and Beth Israel Deaconess Medical Center in Boston, a teaching hospital of Harvard Medical School.  

According to Medicare records, 1,933 hospitals will receive penalties less than 1 percent; the total number of hospitals receiving penalties is 2,211. Massachusetts General Hospital in Boston, which U.S. News last month ranked as the best hospital in the country, will lose 0.5 percent of its Medicare payments because of its readmission rates, the records show.  The smallest penalties are one hundredth of a percent, which 50 hospitals will receive. 

Gundersen Lutheran Health System in La Crosse, Wis., and Intermountain Medical Center in Murray, Utah, were among 1,156 hospitals where Medicare determined the readmission rates were acceptable. Those hospitals will not lose any money.  On average, the readmissions penalties were lightest on hospitals in Utah, South Dakota, Vermont, Wyoming and New Mexico, the analysis shows. Idaho was the only state where Medicare did not penalize any hospital.  

One of the problems with readmissions is that “hospitals have had little financial incentive to ensure patients get the care they need once they leave, and in fact they benefit financially when patients don’t recover and return for more treatment.”

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills.  CMS noted that readmissions alone cost $26 billion in a decade. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.   

CMS has been trying to help hospitals and community organizations by giving grants to help them coordinate patients’ care after they’re discharged.  Leaders at many hospitals say they are devoting increased attention to readmissions in concert with other changes created by the health law. 

Hospitals That Serve Poor Are Hit Harder than Others 

The penalties have been intensely debated.  Studies have found that African-Americans are more likely to be readmitted than other patients, leading some experts to be concerned that hospitals that treat many blacks will end up being unfairly punished. 

Some safety-net hospitals that treat large numbers of low-income patients tend to have higher readmission rates, which the hospitals attribute to the lack of access to doctors and medication these patients often experience after discharge.  

Kaiser’s analysis of the penalties shows that 76 percent of the hospitals that have a lot of low-income patients will lose Medicare funds in the fiscal year starting in October. Only 55 percent of the hospitals treating few poor patients are going to be penalized, the analysis shows.  The hospital industry has emphasized that poor patients are more likely to be readmitted, as they have a tougher time affording medications, often don’t have access to doctors for check-ups and can have difficulty securing transportation to get follow-up care.  Hospitals also have complained that many safety-net hospitals operate on tight margins. 

One hundred hospitals in the group with the most poor patients –12 percent – will receive the maximum penalty from CMS: a 1 percent decrease in their reimbursements starting in October. By contrast, only 47 hospitals, or 6 percent, in the group with the fewest poor patients will receive the maximum penalty, the data show.  Dr. John Lynch, chief medical officer at Barnes-Jewish Hospital in St. Louis, which is receiving the maximum penalty, noted that “Some of the hospitals that are going to pay penalties are not going to be able to afford these types of interventions,” who estimated the penalty would cost Barnes-Jewish $1 million. 

Kaiser’s analysis of the data show that 204 safety net hospitals overcame their patients’ challenges to minimize readmissions to a level that Medicare determined did not warrant any penalty. Among the hospitals with the fewest low-income patients, 379 avoided any penalty.  

Atul Grover, chief public policy officer for the Association of American Medical Colleges, called Medicare’s new penalties “a total disregard for underserved patients and the hospitals that care for them.”  Blair Childs, an executive at the Premier healthcare alliance of hospitals, said: “It’s really ironic that you penalize the hospitals that need the funds to manage a particularly difficult population.” 

Medicare disagreed, writing that “many safety-net providers and teaching hospitals do as well or better on the measures than hospitals without substantial numbers of patients of low socioeconomic status.”  Safety-net hospitals that are not being penalized include the University of Mississippi Medical Center in Jackson and Denver Health Medical Center in Colorado.  “We do not want to hold hospitals to different standards for the outcomes of their patients of low socioeconomic status,” CMS wrote in a regulation issued earlier this month.  The agency added:”"We do not want to mask potential disparities or minimize incentives to improve the outcomes of disadvantaged populations.” 

However, there are a number of aspects at Denver Health that are hard to replicate everywhere. Denver Health, Colorado’s biggest safety net system, includes a 477-bed hospital and eight community primary care clinics.  About a third of its patients are uninsured, another third are on Medicaid. The integrated system and low reimbursement rates create both a financial incentive and an opportunity to provide as much care as possible in the lower cost outpatient settings. 

“We also are a hospital that is often at full capacity,” Dr. Thomas MacKenzie of Denver Health says, “so we certainly have an incentive when we’re busting at the seams…to make sure patients aren’t readmitted unnecessarily.”  Denver Health was also an early adopter of electronic medical records. MacKenzie says easy sharing of patient information between the hospital and clinics effectively keeps admissions down. It also helps those recently discharged get priority in scheduling follow-up appointments, putting them at the head of what can be long wait lists at community clinics. 

But experts say some hospitalizations are simply unavoidable.  “My view is that in the current state of the American health-care system, a 30-day readmission is not a hospital metric, a 30-day readmission rate is a health system metric,” said Dr. P.J. Brennan.

Brennan, the chief medical officer for the University of Pennsylvania Health System, said hospitals are trying to keep their arms around patients after discharge, but a patient’s personal finances, health literacy and access to primary care are beyond the control of any individual institution. 

“No patient should be readmitted within seven days. Seven days is something that every hospital ought to be able to take care of,” Brennan said. “At some point, other factors begin to impact.” 

Moving Forward 

The maximum penalty for readmissions will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year. This year, the $280 million in penalties comprise about 0.3 percent of the total amount hospitals are paid by Medicare.  CMS will also soon penalize or reward hospitals based on how well they adhere to basic standards of care and how patients rated their experiences.  Overall, Medicare has decided to penalize around two-thirds of the hospitals whose readmission rates it evaluated. 

The implementation of penalties for hospital readmissions underscores the need for additional training and education of healthcare providers at hospitals.  Continuing medical education (CME) can address many of these issues and help healthcare providers attain their goals in ensuring patients with the measured conditions are not readmitted. 

 

CMS Final Inpatient Rule

The Centers for Medicare & Medicaid Services (CMS) recently issued a final rule that updates fiscal year (FY) 2013 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs), and builds on the Obama Administration’s work to slow growth in future health care costs by improving patient care. 

The final rule also implements key elements of the Affordable Care Act’s (ACA) hospital value-based purchasing (VBP) and hospital readmissions reduction programs.  The rule advances Administration efforts to tie Medicare payments to quality health care across the delivery system, with new quality reporting measures for general acute care hospitals in FY 2015 and FY 2016; new measures for long-term care hospitals in FY 2016, and new quality reporting programs for psychiatric hospitals and cancer hospitals. In addition, the rule establishes new reporting and other requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program.   

“Hospitals are at the forefront of our strategy to both save money and improve the quality and coordination of care,” said CMS Acting Administrator Marilyn Tavenner. “This rule takes further important steps to ensure all patients receive the best possible care.” 

FY 2013 Payment Update 

Under the final rule, payment rates to general acute care hospitals will increase by 2.8 percent in FY 2013.  The 2.8 percent is a net update after the market basket update, improvements in productivity, a statutory adjustment factor, and adjustments for hospital documentation and coding changes.  The rate increase, together with other policies in the final rule, would increase Medicare’s operating payments to acute care hospitals by approximately 2.3 percent in FY 2013.  After taking into account the expiration of certain statutory provisions that provided special temporary increases in payments to hospitals, and other changes to IPPS payment policies, CMS projects that total Medicare spending on inpatient hospital services will increase by about $2 billion in FY 2013 relative to FY 2012. 

Under the final rule LTCH payments are expected to increase by approximately $92 million or 1.7 percent in FY 2013 relative to FY 2012, this reflects a 1.8 percent payment rate update.  As explained further below, in addition to this 1.8 percent update for inflation (adjusted as required by the statute), to LTCH payment rates will be reduced to 0.5 percent due to the one-time budget neutrality adjustment for discharges on or after December 29, 2012. 

Provisions Promoting Improved Patient Care 

To provide hospitals with an incentive to reduce hospital readmissions and improve care coordination, the Affordable Care Act created a Hospital Readmissions Reduction Program that will reduce payments beginning in FY 2013 (for discharges on or after October 1, 2012) to certain hospitals that have excess readmissions for three selected conditions:  heart attack, heart failure and pneumonia.  The rule finalizes a methodology and the payment adjustment factors to account for excess readmissions for these three conditions. 

The final rule strengthens the Hospital Value-Based Purchasing Program (VBP program) to reward efficient, high-quality care.  This program, which was created by the Affordable Care Act, will adjust hospital payments beginning in FY 2013 and annually thereafter based on how well hospitals perform or improve their performance on a set of quality measures. 

The final rule includes a new outcome measure in the VBP program that rewards hospitals for avoiding certain kinds of life-threatening blood infections that can develop during inpatient hospital stays. This measure, the central line-associated bloodstream infection measure, supports ongoing work by CMS and other hospital safety leaders to reduce healthcare-associated infections through the Partnership for Patients initiative.

The final rule also strengthens the Inpatient Quality Reporting (IQR) program.   

Specifically, CMS is including measures for perinatal care and readmissions, including overall readmissions and readmissions relating to hip and knee replacement procedures, as well as a measure related to whether hospitals use surgery checklists.  CMS is also adding a new survey measure to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) measures to assess the quality of care for patients as they transition from one care setting to another. 

The final rule builds on CMS’ quality reporting initiatives by adopting the measures that will be used for LTCHs for the FY 2015 and FY 2016 quality-based payment determinations and establishing quality reporting for psychiatric hospitals and psychiatric units that are paid under the Inpatient Psychiatric Facilities Prospective Payment System and for PPS-exempt cancer hospitals. Reporting and other requirements are also finalized for the ASCOR program. 

Documentation and Coding 

The final rule would complete all documentation and coding adjustments for FY 2008 and FY 2009 as required by the TMA, Abstinence Education, and QI Programs Extension Act of 2007. The net effect of final documentation and coding adjustments for FY 2013 is an aggregate rate increase of 1.0 percent, a 0.8 percentage point increase from the proposed rule. 

Expiration of Medicare, Medicaid, and SCHIP Extension Act Moratorium 

In the Medicare, Medicaid, and SCHIP Extension Act of 2007, Congress imposed a three-year moratorium that prevented CMS from implementing certain payment policies affecting certain LTCHs and LTCH satellite facilities.  At the same time, the law imposed a moratorium on establishing new LTCHs and LTCH satellite facilities, and on increasing the number of patient beds in existing LTCHs and LTCH satellite facilities, unless an exception applied.  These moratoria were extended for two years in the Affordable Care Act.  

In this rule, CMS finalized: 

• An extension of the existing moratorium on the “25 percent threshold” policy as well as a providing a supplemental moratorium for certain LTCHs and LTCH satellite facilities, pending results of an on-going research initiative to re-define the role of LTCHs in the Medicare program.
• A 1.3 percent reduction (first year of a three-year phase-in) for a permanent prospective budget neutrality adjustment.  The reduction would not apply to discharges occurring on or before December 28, 2012, because the law prohibits its application before that date.  The budget neutrality adjustment reduces the update from 1.8 percent to 0.5 percent. 

The statutory moratorium on new LTCHs and LTCH satellite facilities as well as an increase in beds in existing LTCHs and LTCH satellite facilities will expire on December 29, 2012.  The five-year statutory delay in the application of the “IPPS comparable” per diem payment option under the short stay outlier policy will also expire for discharges occurring on or after December 29, 2012.