hooper, lundy & bookman, inc.© hfma – august 10, 2011 hospital ipps legislative and...

Hooper, Lundy & Bookman, Inc.©

HFMA – August 10, 2011

Hospital IPPS Legislative and Regulatory Policy Update

John R. Hellow310-551-8155

[email protected], Lundy and Bookman, P.C.

The statements and opinions contained herein represent only the views of John R. Hellow


2

Medicare Spending 1999 and 2009


3

Per Capita Medicare Spending by Sector 2000-

2008


4

Overview of Recent Developments

I. Patient Protection & Accountable Care Act of (“ACA”), enacted March 23, 2010

II. Health Care & Education Reconciliation Act of 2010 (HCERA) (ACA fix legislation)

III. FY 2011 IPPS Final RuleIV. American Jobs and Closing Tax Loopholes Act of

2010, H.R. 4213 V. Preservation of Access to Care for Medicare

Beneficiaries and Pension Relief Act of 2010, Pub. L. 111-192

VI. FY 2012 IPPS Final Rule


5

Changes Affecting Medicare IPPS Payments to Acute Care Hospitals in

FY 2011

FY 2011 Payment Changes A. Mkt. Basket +2.4%

B. ACA Adj. - 0.25%

C. Doc. & Co. -2.9% = -0.9%a) Extensions Act of 2007 CMS to recoup for FYs

2008-09 excess of case mix Δ – real case mix increases, during FYs 2010 and 2012

b) Disagree with CMS over real case mix increase


6

Components of FY 2012 IPPS Payment Changes

A. Market Basket1. Latest Market Basket Updates can be found on CMS

Website at http://www.cms.gov/MedicareProgramRatesStats/04_MarketBasketData.asp#TopOfPage

2. FY 2012 Final Rule Uses an Update of 3%


7

Market Basket cont’d

B. ACA Market Basket Adj. IPPS FYs 2012 – 2019 Fiscal Year Market Basket -

Adjustment

2012 .1%

2013 .1%

2014 .3%

2015 .2%

2016 .2%

2017 .75%

2018 .75%

2019 .75%

Similar if not identical market basket adjustments apply beginning in FY 2012 and thereafter for long term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospital services. There is no cut to the overall SNF market basket.


8

Changes Affecting Medicare Payments to Acute Care

Hospitals, cont’d

C. Productivity Adjustment 1. Applies Beginning in FY 2012,

2. Negative adjustment of 1% for FY 2012

3. 10-year moving average of changes in the annual non-farm productivity, as determined by the Secretary,

4. Can result in a market basket increase of less than zero,

5. Payments in a current year may be less than the prior year, and

6. Applies to other provider types.


9


Hospitals, cont’d

D. Documentation and Coding Adjustments1. Section 7(b)(1)(A) of Pub. L. 110-90

a. Make an adjustment to the average standardized amounts in order to eliminate the full effect of the documentation and coding changes on future payments.

b. Does not specify when CMS must apply the prospective adjustment, but merely requires CMS to make an “appropriate” adjustment.

c. Full prospective adjustment of ‑3.9 percent remaining.

2. Section 7(b)(1)(B) of Pub. L. 110-90 a. Requires CMS to make an adjustment in FYs 2010, 2011, and/or 2012

b. Determined a total recoupment of -5.8 percentage points.

c. FY 2011: Finalized an adjustment of -2.9 percentage points; half of the 5.8 percentage points.

d. FY 2012: Still remaining an additional 2.9 percentage points for recoupment.


Example of Proposed Adjustments to IPPS Update for FY 2012 and Possible

Adjustments Thereafter

2011 2012Est.

2013

Est.

2014

Est.

2015

Est.

2016

Market Basket 2.4% 3.0% 2.9% 3.0% 2.9% 2.9%

ACA Reductions

Market Basket -0.25% -0.1% -0.1% -0.3% -0.2% -0.2%

Productivity NA -1.0% -1.0% -1.1% -1.0% -1.0%

Subtotal 2.15% 1.9% 1.8% 1.6% 1.7% 1.7%

MS-DRG DCI Adjustments

’08-09 Recoupment -2.9% 0.0 (net) 2.9% NA NA NA

Prospective Reduction NA -2.0% -1.9% NA NA NA

Cape Cod Decision 1.1%

Net Update -0.9% 1.0% 2.8% 1.6% 1.7% 1.7%10


11


Hospitals, cont’d

E. Medicare DSH Reductions – Reduced to 25% of current level +

add’l amount calculated as product of three factors:1. Aggregate amount of payments by which total DSH payments have

been reduced;

2. FYs 2014 – 2017 a factor of 1 minus percentage change from 2013 in number of uninsured individuals under 65, minus 0.1% (for 2014) and minus 0.2 % (for 2015, 2016 and 2017); for fiscal years 2018 - 2019, a factor of 1 minus the percentage change of uninsured minus 0.2 %;

3. A factor equal to the percent, for each hospital, that represents the quotient of (i) the amount of uncompensated care for such hospital, as estimated by the Secretary for a period chosen by the Secretary, and (ii) the aggregate amount of uncompensated care for all Medicare DSH hospitals.


12


Hospitals, cont’d

F. DSH Changes CMS Ruling 1498-R1. CMS recalculates SSI percentage based on new

matching method;

2. CMS includes non-covered/exhausted Part A days in DSH in Medicare fraction but not Medicaid fraction;

3. CMS includes L&D days in DSH calculation; and

4. Moots PRRB appeals seeking relief on three SSI related issues.


13

Changes Affecting Medicare Payments to Acute Care Hospitals,

cont’d

G. Hospital Value-Based Purchasing –ACA § 30011. ACA Requirements

a. Applies to discharges on and after 10/1/2012;

b. Funded through base operating DRG reductions, 1 percent in 2013, 1.25 percent in 2014, 1.5 percent in 2015, 1.75 percent in 2016 and 2 percent thereafter;

c. Incentive measures include ACI, HF, pneumonia, certain surgeries, patient experience of care (i.e., HCAHPS survey), healthcare acquired infections and spending per beneficiary;

d. Incentives distributed by performance score and vary on score;

e. Certain hospitals excluded –cited for immediate jeopardy, or too few measures or cases; and

f. New measure must be posted on Hospital Compare website 1 year prior to implementation.


14

Value Based Purchasing, cont’d

2. April 29, 2011 Final and FY 2012 Final Rulesa. 2011 Final Rule set measures to be used in 2013, discharges

on and after 10/1/2012 and initial measure set for FY 2014

b. 2012 Final Rule adds total spending per beneficiary efficiency measure to FY 2014 initial set with May 15, 2012 as the beginning of the performance measure period.

1) Equation used to measure efficiency has errors, but example is correct.

2) Spending per beneficiary will span 3 days prior to and 30 days after discharge

c. Eight HAC measures in final rule to begin March 3, 2012.


15


cont’d

H. Payment Adjustment for HACS – ACA § 30081. Discharges on and after 10/1/2014 – hospitals in top quartile of risk

adjusted HAC measure receive only 99% of total PPS payments;

1. Public disclosure of HACs in such hospitals;

1. Report by 1/1/2012 about extending to other provider types; and

1. FY 2012 Rule:

a. Adds 5 non-controversial ICD-9 codes to existing HACs, and

b. Defers adding contrast induced acute kidney failure.


16


cont’d

I. Hospital Readmissions Reduction Program1. ACA Provisions

a. Fiscal years commencing and and after 10/1/2012;

b. Conditions subject to measure are high value or high volume as selected by Secretary;

c. Law compares risk adjusted actual and expected readmissions;

d. Excludes readmissions unrelated to prior discharge or planned readmissions

e. Adjustment factor is the greater of: (a) 1 minus the ratio of payments for excess aggregate readmissions for a condition to the aggregate payments for such condition (expected readmissions?) admissions, or (b) a floor adjustment of .99 for FY 2013, .98 for 2014, or .97 for FY 2015 and thereafter;

f. Applies to base operating DRG.


17

Hospital Readmissions Reduction Program, cont’d

2. FY 2012 Final Rulea. Two part rulemaking – this year focus is on conditions and

readmissions for FY 2013, measures and methods to determine readmission rates and public reporting, FY 2013 rulemaking will focus on payment.

b. Current Rulemaking –

1) Conditions – heart attack, heart failure and pneumonia

2) No additional modifications for unrelated readmissions or planned readmissions beyond what is in measure specifications – CMS’ view is that this is statutory


18

Hospital Readmissions Reduction Program, cont’d

3) Risk Adjustment Measures – only include diagnosis, age and gender, CMS said no to including race and life circumstances

4) Performance Measurement Period – Proposed 3 years July 1, 2008 to June 30, 2011 – Industry wants shorter more current data and CMS is reviewing periods between 1 and 3 years.


19


cont’d

J. Hospital Wage Index – ACA §§ 3137 and 31411. Section 508 reclassifications extended to 9/30/2010;

2. Criteria used to determine geographic reclassifications must revert to the criteria that were in effect as of September 30, 2008, until 1 year after wage index reform report submitted by HHS;

a) Geographic Reclass window closed before more lenient criteria restored

b) CMS should reopen window only for newly qualified

3. Effective for discharges occurring on or after October 1, 2010, the wage index for hospitals located in “frontier states” shall not be lower than 1; and

4. Budget Neutrality calculated on national basis.


20

Wage Index Changes, cont’d

5. Pension Costs – FY 2012 Proposed Rulea. Wage Index Purposes

1) Must be funded

2) Contributions reported on cash basis

3) Use three year average for wage index in 2013 and beyond

4) Industry view is this favors underfunded plans vs overfunded plans

b. Cost-Finding Purposesa. Same as above but not three year averaged, but

b. Limited to 150% of consecutive 3-year average in 5 most recent

c. Exception process for unusual situations on the 150% limit

6. Expiration of Imputed Rural Floor –CMS extends for FY 2012 and 2013 in Response to Comments


21

Wage Index Changes, cont’d

7. Adjustment Based on Commuting Patternsa. Outmigration calculated using FY 2005 Final Rule,

plus

b. Use of post reclassified wage indices


22


cont’d

K. MDH Program extended through 10/1/2012, ACA § 3124.

L. Temporary Improvements Low Volume Hosp., ACA § 3125.

1. Within 15 versus 25 mile from nearest hosp.,

2. Less than 1600 Medicare discharges, previously Total 800 discharges,

3. Percentage increase in payments from 25% to 0% based on decreasing scale from 200 to 1600 Medicare discharges,

4. Hospitals with 201 to 300 Medicare discharges = add-on of 23.33 %, and with 301 to 400 discharges = 21.66 %


23


cont’d

M. Proposed FY 2012 Operating Outlier Threshold1. CMS proposed $23,375

2. Industry proposes $21,660a. CMS underestimating prior year underpayment

b. CMS not correctly measuring CCR rate of change

c. CMS including HMO days, and improper charges (e.g., clotting factor

3. CMS settled on $22,385


24

Proposed FY 2011 Operating Outlier Threshold, cont’d


25

Outlier Reconciliation

Change Request 7192 Effective April 1, 2011 Available on CMS website Outlines Guidelines for Medicare Contractors for

Outlier Reconciliation for IPPS, IRF, IPS, LTCH and OPPS


26


cont’d

N. Hospital Inpatient Quality Reporting Program (formerly known as RHQDAPU)

1. Retirement of Measures

a) Retire Agency for Health Research and Quality (AHRQ) composite surgical mortality measure,

1) Measure developer does not support the use of this measure for public reporting and comparison across hospitals,

2) Measure was neither NQF-endorsed nor HQA approved

b) Retiring 8 Measures for FY 2014

1) Seven measures topped out – uniformly high

2) One measure – timing of receipt of initial antibiotic – created adverse unintended consequences


27

Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU)

Program, cont’d

2. EHR – CMS is considering future efforts on requiring EHR vendor certification that incorporates quality measure data that can be directly transmitted to CMS data warehouse

3. 4 New Measures for 2014

a) Central line insertion adherence percentage

b) Catheter-Associated urinary tract infection

c) Medicare spending per beneficiary

d) Participation in systemic clinical data base registry for general surgery

4. 17 New Measure Proposed Measures for 2015 included 3 new healthcare associated infections


28

Hospital Services Furnished Under

Arrangement

1. FY2012 Proposed Rule Clarifies Under Arrangement for “Routine Services”

2. “Routine Services” cannot be provided under arrangement, only diagnostic or therapeutic services

a. If provided in the hospital, they are considered to be provided by the hospital and subject to hospital quality controls

b. If provided outside the hospital they are under arrangement and prohibited;

c. If provided in another hospital the patient must be discharged to the other hospital


29

Changes in CoPs Hospital Rehabilitation and Resp.

Therapy

A. Rehab Services1. Can be ordered by all licensed practitioners if,

2. Privileges authorized by medical staff

3. In accordance w/hosp policies and state law

4. Ordering practitioner responsible for care of patient.

B. Respiratory Care Services1. NP and PAs included in licensed practitioners

2. Same as Rehab above

3. No requirement that MD countersign orders


Budget Control Act of 2011

A. Established Sequestration Process By Amending Gramm-Rudman if Legislature Cannot agree on at least $ 1.2 Trillion in Additional Cuts by January 15, 2012;

A. Sequestration Must Result in at least $1 Trillion of the $1.2 Trillion Required in Cuts;

A. Medicare is Limited to a 2% Cut for Patient Care Services for Parts A and B and monthly contract amounts for Parts C and D per Gramm-Rudman Section 256(d);

A. Anything not Covered by Section 256(d) is not Similarly Limited in the Size of Cuts; and

B. The 2% limit on Medicare is Expected to Save $48 Billion from FFY 2013-21.

hooper, lundy & bookman, inc.© hfma – august 10, 2011 hospital ipps legislative and...

Documents

lundy bookman

medicare payments

medicare ipps payments

dsh changes cms

medicare dsh hospitals

market basket contd

acute care hospitals

aca market basket