Rule emphasizes quality and cost savings

Case managers work to improve transitions

When the Inpatient Prospective Payment System (IPPS) final rule for 2012 was issued, the Centers for Medicare and Medicaid Services (CMS) stated that its goal is to encourage hospitals to provide higher quality of care at a lower cost and to promote greater efficiencies across all care settings and throughout the entire health system.

The emphasis on improving the quality of care gives case managers the opportunity to work with their hospital's clinical documentation specialists and quality staff to make sure that all three groups are aligned toward the common goal of improving patient quality, documenting appropriately, and getting paid appropriately for the effort, says Michael Taylor, MD, vice president of operations at Executive Health Resources, a Newton Square, PA, healthcare consulting firm.

"In the IPPS for 2012, CMS is sending an unmistakable message that quality is going to affect the hospital's bottom line. This, along with the changes that will occur when ICD-10 goes into effect in 2013, means that improved documentation by physicians and other staff is going to be necessary, not only to meet quality reporting demands, but to satisfy the type of documentation required for the expanded coding fields under ICD-10.

The good news for hospitals in the final rule is that CMS backed away from a proposed .5% decrease in the payment rate for hospitals that report quality data. Instead, the final rule sets a payment increase of 1% for hospitals that participate in the Inpatient Quality Reporting project. CMS says the difference between the proposed and final payment rate is based on using more recent data to calculate the market basket update and the adoption of a lower documentation and coding adjustment than originally planned.

In the final rule, CMS announced plans for a Medicare spending-per-beneficiary performance measure that will go into effect in fiscal 2013. The performance measure will calculate Part A and Part B payments for beneficiaries starting from three days before a hospital admission until 30 days after discharge. CMS plans to use the measure for its Inpatient Quality Reporting program and for the Value-Based Purchasing program required by the Affordable Care Act. CMS has not yet released details on how it will use the information to calculate hospital reimbursement.

"The implementation of a global spending-per-admission performance measure means hospitals are going to be evaluated on all of the Part A and Part B beneficiary spending during the specified time period," Taylor says. "If hospitals fail to prepare patients for discharge, and they are readmitted or visit the emergency department or incur other outpatient spending, it could have an effect on the hospital's bottom line." (For more details on the Medicare spending-per-beneficiary and Value-Based Purchasing initiatives, see next month's issue of Hospital Case Management).

In the final rule, CMS added four new quality measures, all involving infection control, to the Inpatient Quality Reporting program. Hospitals will be required to report data on catheter-associated urinary tract infections beginning in fiscal 2014. They will be required to report on influenza vaccinations among healthcare providers, methicillin-resistant staphylococcus aureus (MRSA) bacteremia, and C-difficile standardized infection ratios, beginning in 2015.

In addition CMS eliminated seven quality measures that have "topped out," including aspirin at arrival for heart attack, ACE inhibitor or angiotensin receptor blocker for left ventricular systolic dysfunction; beta blocker prescribed at discharge for heart attack; smoking cessation advice for heart attack, heart failure, and pneumonia; and appropriate hair removal for surgical patients. ("Topped out" means that the measure has a high, unvarying performance among hospitals with little opportunity for improvement, and that consumers would not be able to see meaningful distinction in performance among hospitals.) The final rule also deletes the timing of initial antibiotic for pneumonia patients, but it keeps the appropriate initial antibiotic selection as a quality measure.

CMS clarified that the three-day payment window, which bundles services provided at a clinic wholly owned by the hospital with hospital services, applies to diagnostic and non-diagnostic services. To read the final rule in its entirety, see:


For more information contact:

  • Michael Taylor, MD, Vice President of Operations at Executive Health Resources, Newton Square, PA. E-mail: