2015 IPPS Proposed Rule – Major Highlights

On April 30, 2014, the Centers for Medicare & Medicaid Services (CMS) released the proposed hospital inpatient payment rule that would update fiscal year 2015 Medicare payment policies and rates for inpatient stays at general acute care and long term-care hospitals. The rule will be officially published in the Federal Register on May 15, and comments are due June 30 this year. Here are some of the major highlights of the 1,688-page proposed rule, scheduled to go into effect in October this year.

Payments 
The payment rate update to general acute care hospitals will be up 1.3 percent in FY 2015; however, hospitals that don’t submit quality data would lose a quarter of the market basket update .i.e 2.7 percent - and hospitals that are not meaningful users of Electronic Health Records (EHR) would lose another quarter of the market basket update. According to the agency, if these proposals are effective, the total Medicare payments to acute care hospitals would go down by $241 million!

Medicare DSH Payments 
Medicare disproportionate share hospitals (DSH) payments will be decreased 75 percent by 2019 (or $49.9 billion), as part of the Patient Protection and Affordable Care Act (PPACA).  The just-released proposed rule would cut overall Medicare DSH payments by 1.1 in FY 2015, as compared to the
previous FY 2014.

Alternative to Two-Midnight Rule

The much-criticized Two Midnight Rule has not been functional since it became effective; the agency had introduced the policy to better observe Medicare pay for short inpatient pays and ensure inpatient admissions are medically necessary. Several healthcare systems however considered it as arbitrary. The agency has called for public comments to find another payment system for Medicare short inpatient stays and has requested providers to define short inpatient stays and suitable payments for them.

$ 1.4 Billion in Value-Based Incentives

In financial year 2014, CMS took back 1.25 percent of Medicare pay at hospitals paid under IPPS. The ensuing $1.1 billion was dispersed to hospitals based on how well they performed on healthcare quality measures such congestive heart failure. For the coming year, the agency will keep 1.5 percent of Medicare payments, resulting in about $1.4 billion in value-based incentives.

HRR Program & Better Quality Healthcare

The Hospital Readmissions Reduction Program aims to bring into line Medicare pay with better healthcare quality. The program punishes hospitals for heart attack, heart failure and pneumonia 30-day readmission rates for Medicare patients that are more than estimated, after adjusting for patients’ illness severity. In the coming year, the agency will increase the maximum penalty from 2 to 3 percent. New measures will include total hip/total knee arthroplasty and chronic obstructive pulmonary disease.

HAC Reduction                               

CMS has also proposed to start the HAC Reduction program. Effective October 2014, hospitals with the worst performance in reducing HACs would lose 1 percent of their Medicare pay.

To read the complete 2015 IPPS Proposed Rule, click here. Alternatively, you can also stay tuned to the monthly Inpatient Facility Coding & Compliance Alert to get a clearer picture on how the provisions of the 2015 Rule would impact your hospital/facility – and at the same time keep up with the latest inpatient coding and billing updates.