Proposed IPPS rule focuses on quality

New diagnoses are targeted

The continuing shift toward basing hospital reimbursement on quality emphasized by the Centers for Medicare & Medicaid Services in the Inpatient Prospective Payment System (IPPS) proposed rule for 2014 raises the stakes for hospitals, especially those that treat a lot of Medicare patients.

“The case managers’ job is more important than ever as they take the lead in making sure their hospitals score well and don’t lose reimbursement,” says Susan Wallace, MEd, RHIA, CCS, CDIP, CCDS, director of compliance/inpatient consultant for Administrative Consultant Service, a healthcare consulting firm based in Shawnee, OK.

In the proposed rule, CMS announced new diagnoses being targeted in its readmissions reduction program and Value-Based Purchasing Program and announced a new program to impose financial penalties on hospitals that perform poorly on the new Hospital-Acquired Conditions Reduction Program, beginning in fiscal 2015.

The penalties are rising in all of the CMS quality programs, Wallace points out. By October 2014, when the Hospital-Acquired Conditions Reduction Program goes into effect, hospitals stand to lose as much as 3% of their base operating MS-DRG payment in the readmission reduction program, up to 1.5% in the Value-Based Purchasing Program, and 1% in the Hospital-Acquired Conditions Reduction Program.

The new Hospital-Acquired Conditions Reduction program will begin in 2015, and hospitals that rank in the lowest 25% will receive a 1% reduction in the base operating MS-DRG payment. “The program is in addition to the current hospital-acquired conditions program, which does not pay for treatment for certain hospital-acquired conditions and does not replace that program,” Wallace says.

In the first year of the Hospital-Acquired Conditions Reduction Program, CMS proposes to score hospitals on six patient safety indicators (pressure ulcer rate, volume of foreign objects left in the body, iatrogenic pneumothorax rate, postoperative physiologic and metabolic derangement rate, post-operative pulmonary embolism or deep vein thrombosis rate, and accidental puncture and laceration rate) and two healthcare-associated infection measures—central line-associated bloodstream infections and catheter-associated urinary tract infections. When scores are calculated, risk factors such as patient age, gender, and comorbidities and complications will be taken into account so as not to unfairly penalize hospitals that care for sicker patients.

“Since the results are risk adjusted, it is important for the record to include complete patient demographic information, and for physician documentation to clearly and completely identify comorbidities,” Wallace says.

Maximum reduction in the readmission reduction program will rise to 2% beginning in October 2013. CMS proposes to revise its methodology for calculating penalties to take planned readmissions for heart failure, acute myocardial infarction, and pneumonia into account. The agency proposes to add two new measures beginning in fiscal 2014—readmissions for elective hip and knee arthroplasty and chronic obstructive pulmonary disease (COPD), which applies to patients with a principal diagnosis, or acute respiratory failure as a principal diagnosis with a secondary diagnosis of COPD.

CMS announced new discharge status codes that indicate a planned acute care hospital readmission. For example, one code specifies discharged to home and self care with a planned acute care inpatient readmission. “It’s really important for the discharge documentation to be clear when there is a plan for the patient to come back as an inpatient,” Wallace says. One example is a patient who is discharged after an acute myocardial infarction who is scheduled to come back for a coronary artery bypass grafting procedure, she adds.

In the proposed rule, CMS announced that it has developed an expanded algorithm to identify planned readmissions and plans to apply it in fiscal 2014 but does not yet plan to use the discharge status codes to distinguish between planned readmissions and unplanned readmissions, Wallace says.

CMS announced that it is considering adding a measure to value-based purchasing in fiscal 2017 that assesses a hospital’s performance in treating Medicare patients appropriately as inpatients or outpatients.