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CMS Releases FY 2019 IPPS Proposed Rule and Request for Information

April 27, 2018

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PRESS CONTACTS
Mary Mullaney, Director, Hospital Payment Policies
Phoebe Ramsey, Sr. Regulatory Analyst, Quality & Payment Policy
Andrew Amari, Hospital Policy and Regulatory Specialist

The Centers for Medicare and Medicaid Services (CMS) April 24 released the Inpatient Prospective Payment System (IPPS) proposed rule containing changes to Medicare payment policies and rates under the IPPS for fiscal year (FY) 2019. Included in the proposed rule is a Request for Information (RFI) on health information sharing among providers and hospital price transparency for beneficiaries. The following are key provisions of interest in the 1,883 page long display copy of the proposal.

Inpatient Hospital Update. For FY 2019, CMS is proposing an increase of approximately 1.75 percent in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users.

Disproportionate Share Hospital (DSH) Payment Adjustment and Uncompensated Care Payment. CMS projects that proposed estimated Medicare DSH payments, and additional payments for uncompensated care made for FY 2019 would increase by approximately 1.3 percent overall as compared to the estimate of overall payments including Medicare DSH payments and uncompensated care payments that will be distributed in FY 2018.

CMS is proposing to update its estimates of the three factors used to determine uncompensated care payments for FY 2019. CMS will continue to use its Office of the Actuary (OACT) uninsured estimates as part of the development of the National Health Expenditures Accounts (NHEA) in the calculation of Factor 2. To determine Factor 3 for FY 2019, Worksheet S-10 data will be used in the calculation of hospitals’ share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S-10 for FYs 2014 and 2015 with proxy data regarding a hospital’s share of low-income insured days for FY 2013.

In addition, CMS is proposing the following policies: (1) for providers with multiple cost reports beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital’s cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years would be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant cost-to-charge ratios (CCRs) and potentially aberrant uncompensated care costs.

Documentation and Coding Adjustment. CMS is proposing to make an adjustment of +0.5 percent to the standardized amount for FY 2019 consistent with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10). This would be a permanent adjustment to payment rates.

Indirect Medical Education (IME) Adjustment. CMS estimates that the IME adjustment for FY 2019 will increase IPPS payments by 5.5 percent for every approximately 10 percent increase in a hospital’s resident-to-bed ratio.

Direct Graduate Medical Education (DGME). CMS proposes a change to GME affiliation agreements. The proposal would allow new urban teaching hospitals to loan slots to other new urban teaching hospitals beginning July 1, 2019. The prohibition on these hospitals from loaning their cap slots to other “existing teaching hospitals” does not change. CMS also announced the opportunity to apply for available slots due to the closing of two teaching hospitals. Hospitals that wish to apply for slots from the closed hospitals’ full-time equivalent residents must submit applications directly to the CMS central office not later than July 23, 2018.

Closed hospitals:

  • Affinity Medical Center – IME FTE Resident Cap = 22.36; DGME FTE Resident Cap = 22.48
  • Baylor Scott & White Medical Center (Garland, TX) – IME FTE Resident Cap = 12.52; DGME FTE Resident Cap = 13.53

Electronic Health Record (EHR) Incentive Programs. CMS is proposing changes to the Medicare and Medicaid EHR Incentive Programs in an effort to promote interoperability, improve flexibility, and decrease burden. The focus will be on measures that require the exchange of health information between providers and patients. Additionally, CMS is renaming the “Meaningful Use” program “Promoting Interoperability.”

CMS also proposes that, beginning in 2019, hospitals will be scored under an updated methodology that includes a combination of new and existing Stage 3 measures broken into a smaller set of four objectives and scored based on performance and participation. To reduce burden associated with the updated scoring methodology, the agency is proposing changes to the EHR reporting periods in 2019 and 2020 to allow more time for EHR developers and vendors to test and incorporate the new scoring system and measures, but the applicable incentive payment year and payment adjustment years would remain unchanged.

Public Reporting of List of Standard Charges. Effective Jan. 1, 2019, Medicare will require hospitals to post online in a machine readable format a list of their current standard charges and to update them annually. This could be the chargemaster itself or another design, as long as it is in a machine readable format. CMS is also seeking comment on a number of other concerns, such as how “standard charges” should be defined, requirements to inform patients of out-of-pocket costs, and enforcement of price transparency requirements.

Outlier Fixed Cost Threshold. CMS is proposing an outlier fixed-loss cost threshold for FY 2019 equal to the prospective payment rate for the MS-DRG, plus any IME, empirically justified Medicare DSH payments, estimated uncompensated care payment, and any add-on payments for new technology, plus $27,545.

Hospital Quality and Value-Based Purchasing Programs. Regarding changes to the Medicare quality programs, CMS is proposing its first significant measure changes to the five hospital quality and value-based purchasing programs since announcing its “Meaningful Measures” framework in Fall 2017, removing measures that are “topped out,” no longer relevant, or where the burden of data collection outweighs the measure’s ability to contribute to improved quality of care. Overall, CMS proposes to remove a total of 19 measures from the five hospital reporting programs and “de-duplicating” (removing a measure from one program, but retaining the measure in another) an additional 21 measures beginning in FY 2019.

These removals and de-duplications will have the greatest impact on the Hospital Inpatient Quality Reporting (IQR) program (39 measures removed or de-duplicated) and the Hospital Value-Based Purchasing (VBP) program, and include removing all safety measures under the VBP program’s Safety domain as duplicative with the Hospital-Acquired Conditions (HAC) Reduction Program. CMS is not proposing changes to the measures under the HAC Reduction Program or the Hospital Readmissions Reduction Program (HRRP).

Additionally, CMS is proposing to revise the VBP program’s domain weighting beginning in the FY 2021 program year to account for the proposed removal of the Safety domain by increasing the weight of the Clinical Care domain (proposed to be renamed as the Clinical Outcomes domain beginning in FY 2020) to 50 percent when calculating hospitals’ total performance scores. The Person and Community Engagement and the Efficiency and Cost Reduction domains would remain weighted at 25 percent each.

Relatedly, the agency is proposing to simplify the scoring methodology under the HAC Reduction Program, seeking comment on two alternative scoring methodologies, with a noted preference towards an Equal Measure Weights policy where CMS proposes to remove the domains, and instead apply an equal weight to each measure for which a hospital has a measure score in the Total HAC Score calculations.

CMS also provided an update on accounting for social risk factors in the context of value-based purchasing programs, asserting that dual eligibility is the most powerful predictor of poor health care outcomes. The agency intends to include measure rates for certain measures stratified by patients’ dual eligible status beginning in Fall 2018 in hospitals’ confidential feedback reports. The agency seeks additional feedback on accounting for social risk factors to improve health disparities amount patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measurement, and plans to continue to work with the Office of the Assistant Secretary for Planning and Evaluation (ASPE), the public, and other key stakeholders to identify policy solutions to achieve the goals of attaining health equity for all beneficiaries and minimizing the unintended consequences of such policies adopted in its value-based purchasing programs.

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