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FY 2010 Medicare Inpatient PPS Final Rule

FY 2010 Medicare Inpatient PPS Final Rule. FY 2010 Final Inpatient PPS. Published in August 27 Federal Register. Market basket update of 2.1% for hospitals reporting quality measures (otherwise 0.1% update). On average, 1.6% increase in operating payments.

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FY 2010 Medicare Inpatient PPS Final Rule

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  1. FY 2010 Medicare Inpatient PPS Final Rule

  2. FY 2010 Final Inpatient PPS • Published in August 27 Federal Register. • Market basket update of 2.1% for hospitals reporting quality measures (otherwise 0.1% update). • On average, 1.6% increase in operating payments. • Postpones behavioral offset for changes in documentation and coding as a result of the implementation of MS-DRGs until FY 11. • Continues full teaching adjustment to capital payments. • Reduces labor-related share for those hospitals with a wage index over 1.0 from 69.7% to 68.8%. • Removes 1, combines 2 and adds 4 new quality measures (total of 46).

  3. Behavioral offset • Proposed behavioral offset of 1.9% for changes in documentation and coding as a result of MS-DRG implementation, with 6.6% in estimated cuts remaining for FYs 11 and 12. • Final rule postpones the cuts until FY 11 and suggests a 5-year transition . • CMS will wait until complete data set for 2009 is available to assess appropriate magnitude of the cut. • Postpones proposed 2.5% offset to hospital-specific rates of Sole Community and Medicare Dependent Hospitals • This is higher because payments to SCHs/MDHs were not previously reduced by 0.6% as they were for other hospitals.

  4. Capital payments • CMS has broad legal discretion related to capital payments. • Believes that hospital capital margins are too high. • Had planned to cut teaching adjustment to hospital capital payments in halfin FY 09, but reversed by Congress. • CMS proposed to remove the adjustment in FY 10.  • Final rule reverses proposed cut providing a full teaching adjustment to capital payments. • CMS will continue to monitor the capital margins.

  5. Quality measurement— FY 2011 • To be consistent with NQF standards in referencing measures combining two: • PSI-04 Death Among Surgical Patients with treatable serious complications (will use this name going forward); • Nursing Sensitive Failure to Rescue will be combined into a single measure. • Expands current set of chart abstracted measures from 25 to 27 by adding: • SCIP-Infection-9: Postoperative Urinary Catheter Removal on Postoperative day 1 or 2; • Scip-Infection-10: Perioperative Temperature Management. • Two new Structural Measures: • Participation in a Systematic Clinical Database Registry for Stroke Care; • Participation in a Systematic Clinical Database Registry for Nursing Sensitive Care. • Must report 46 measures in FY 10 for full payment in FY 11.

  6. Quality measurement • Much more gradual approach than FY 09 proposal and 2 of 4 measures are based on administrative data. • Does not adopt any measures based on proprietary methodologies or algorithms this year, but assesses participation in such registries in FY 10 and considers them for FY 12 . • Alters chart validation process to review 48 charts/year from a sample of 800 hospitals rather than 20 charts/year from every hospital starting part way into 2012. • Revises validation requirement to 75% to pass. • Does tee up an extensive expansion of chart-abstracted measures for FY 12.

  7. Electronic health records • Anticipates testing of EHR-based submission of measures using interoperable standards likely finalized in late CY 09: • ED Throughput, • Stroke, and • Venous Thromboembolism (VTE). • Expects to have technical ability to accept the EHR-based data as early as July 1, 2010 (Providers can volunteer to participate). • Will publish Federal Register notice with more information. • Premier supports testing the direct link from EHRs, but expressed concern about some of the particular measures.

  8. Quality measurement— FY 2012 • Outcomes measures: • AHRQ PSI, • AHRQ IQI, • SCIP, • ICD Complications, • Hospital Acquired Infections, and • Complications Index. Process measures: • AMI Statin use, • ED Throughput, • PCI, • Stroke, • VTE, • Cardiac Surgery, and • Nursing Sensitive Care Premier measure

  9. Hospital-acquired conditions The Deficit Reduction Act required CMS to: • Identify by October 1, 2007 at least two preventable complications of care that could cause patients to be assigned to a higher-paying DRG when present as a secondary diagnosis: • The conditions must be high cost, high volume or both • The  conditions must be reasonably preventable by the hospital through the application of evidence-based guidelines. • To determine which complications occurred during the stay, hospitals must submit the secondary diagnoses that are present on admission (POA) when reporting payment information beginning in FY 08. • For FY 09, such preventable complications will NOT lead to the patient being assigned to a higher-paying DRG. • If the patient has another CC/MCC (that is not a HAC) then the case will STILL get the higher DRG .

  10. Hospital-acquired conditions Hospitals will not qualify for higher payment for the following HACs: • Object left in during surgery (acute reaction to foreign substance) • Air embolism • Blood incompatibility • Catheter-associated urinary tract infections • Pressure ulcers (Stages III/IV) • Surgical site infections (e.g., Mediastinitis after CABG, certain orthopedic and Bariatric surgeries ) expanded in 2009 • Vascular catheter-associated infections (e.g. blood stream infection) • Hospital-acquired falls leading to injuries (including fractures, dislocations, intracranial injury, crushing injury and burns) - two new codes in 2010 • DVT/PE after hip and knee replacement* - new in 2009 • Poor glycemic control (Ketoacidosis & Coma- hypoglycemic & hyporosmolar) new in 2009 • *There is no payment ramification for PE

  11. Wage index • Requires CMS to propose area wage index changes for FY 09 inpatient PPS based on MedPAC report due June 30, 2007 that considers: • problems associated with labor market definitions; • modification or elimination of geographic reclassifications and other adjustments; • the use of Bureau of Labor Statistics data to calculate relative wages; • minimizing variations in wage index adjustments between and within metropolitan statistical areas and rural areas; • the feasibility of applying all components of the proposal to other settings, including HHAs and SNFs; • methods to minimize the volatility of wage index adjustments while maintaining the budget neutrality; • the effect on healthcare providers and on each region of the country; • implementation of proposal, including the transition methods; and • occupational mix issues such as staffing practices, effect on quality of care and alternative recommendations. • First report released May 4 at http://www.acumenllc.com/reports/cms/

  12. Wage index • Section 508, which provides reclassification for certain hospitals, expires • Continues phase in of modification of the average hourly wage criteria that hospitals must meet in order to qualify for geographic reclassification (for FY 11 applications due Sept. 2009) • Rural hospitals would need an average hourly wage of at least 86% of the area to which they seek reclassification • Urban hospitals and groups would need an average hourly wage of at least 88% • Continues phase-in of implementation of rural floor, below which urban areas cannot drop, in a manner that is budget neutral within each state over 3 years • 50% state-level BN and 50% national BN In FY 10 • 100% state-level BN and 0% national BN in FY 11

  13. Market basket • Rebases MB from 2002 to 2006 data • Revises MB categories • Adds blood and blood products; • Adds administrative and business support; • Adds financial services; and • Combines photo supplies with similar chemical products. • Revises price proxies as proposed • Labor-related share for areas with wage index above 1.0 reduced from 69.7% to 68.8% (proposed 67.1%), which will reduce payments for primarily urban areas • Labor-related share for areas with wage index below 1.0 remains at 62.0% per law

  14. IME and DSH • Includes in DSH patient percentage (DPP) calculation those patient days associated with maternity patients who were • Admitted as inpatients, and • Receiving ancillary labor and delivery services at census hour • Specifies 3 approved reporting methods for Medicaid fraction of DPP—date of admission, date of discharge, or dates of service • For cost-reporting periods on or after 10/1/09: • excludes patient days for observation services from the DPP • excludes patient days associated with observation patients who are subsequently admitted in the calculation of both the DSH and IME adjustments.

  15. Direct graduate medical education • Clarifies that a “new” medical residency training program for IME/GME cap purposes must receive accreditation “for the first time,” rather than a reaccreditation of a program that existed previously at the same or another hospital. • Hospitals must consider whether : • The program directors are new, • The teaching staff are new, • The residents are new, • The program been relocated from a closed hospital, • The program is part of an existing program’s FTE cap, and • Other aspects of relationship between hospitals, such as degree to which original hospital continues to operate its own program.

  16. New technology add-on payments • Five applications, with two approved: • CardioWest Temporary Total Artificial Heart System (continued approval) • Spiration IBV valve system to limit airflow into leaking lung (newly approved) • LipiScan coronary imaging system (denied approval) • Collar Injection chemotherapy infusion for Acute Myeloid Leukemia (application withdrawn) • AutoLitt laser for brain tumor removal (application withdrawn) • Adds third criteria to determination of “substantially similar”—whether the new use involves the treatment of the same or similar disease and the same of similar patient populations • Concerned CMS continues to limit payment for new tech

  17. Outliers • To qualify for outlier payments in FY 10, the cost of the case must be more than the DRG, including add-ons, plus the fixed loss threshold of $23,140 (compared to 24,240 proposed), for CMS to then cover 80% of the balance. • This is up from the FY 09 threshold of $21,065 as CMS estimates it will overspend on outliers by 0.3% in FY 09.

  18. Emergency Medical Treatment and Labor Act (EMTALA) • CMS proposes to alter the regulations related to the waiver of EMTALA requirements during disasters and clarifies: • Waiver of sanctions only if inappropriate transfer is “necessitated by” (proposed “arises out of”) emergency; • Waiver of sanctions only if hospitals do not discriminate on the basis of an individual’s ability to pay; and • Secretary has right to apply policy to only certain portion of an emergency area or a portion of the emergency period.

  19. Rurals • For MDHs paid on 2002 cost reports, CMS applies a cumulative budget neutrality adjustment of 0.98 (1.74%) to FYs 1993 through 2002 to correct a previous error. • Removes the requirement that a patient be “physically present” at the CAH for it to receive 101% of costs, but clarifies that the patient must either: • Receive outpatient services at the CAH on the same day, or • The specimen must be collected by an employee of the CAH. • CAH operated clinical diagnostic labs will now have to meet provider based rules to get 101% of costs, but CMS will not make determinations for CAH ambulance services (as proposed). • Changes payment for method II CAHs from 101% to 100% of reasonable costs

  20. Practical implications to think about? • Large payment reductions due to behavioral offset in FY 11? • Payments reductions due to lower labor-related share? • Loss of geographic reclassification? • Additional documentation needed for MS-DRGs or POA? • Process changes to implement new quality measures? • More nurses to abstract data for quality reporting? • Staff/systems/costs to test EHR submission of measures? • Reductions in DSH payments? • Fewer cases qualify for outliers? • Compliance with changes to cost-reporting process for devices?

  21. Contact information Danielle A. Lloyd, MPH Senior Director, Reimbursement Policy Premier Inc. 444 N. Capitol St, NW, Suite 625 Washington, DC 20001-1511 Phone: 202.879.8002 Fax: 202.393.0864 E-mail: danielle_lloyd@premierinc.com Web site: http://www.premierinc.com/

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