How Will CMS’s Inpatient Payment Regulations in 2015 Impact your Facility?

Your facility must make realistic projections for possible losses. Remember:  Hospitals are just trying to hold on to their full pay as opposed to receiving any extra pay.

On April 30, 2014, CMS issued a proposed rule to update Medicare payment policies in 2015 for inpatient stays at general acute care and long term care hospitals, with an aim to promote quality and reduce healthcare costs. Here’s what your hospital needs to know: 

Gear up for bottom-line adjustments

• There are several areas that hospitals need to know – and everything is not good news. Some highlights include:
•  Raise in the relevant percent reduction to 1.5 percent of the base DRG pay under the Hospital value based purchasing program (HBVP).
• Boost in maximum reduction in payment from 2 to 3 percent under the Hospital readmission reduction program
• Assessing hospital readmissions using National Quality Forum’s (NQF) five readmission measures
  CMS proposes to decrease the Medicare inpatient payment by one percent for hospitals with the lowest performance
• The agency also proposes to bring into line the 2015 quality reporting timelines for clinical quality measures for the Medicare electronic Health record with that of the hospital Inpatient Quality Reporting program (IQR).

 What hospitals need to do? Hospitals must make realistic projections for possible losses under these increased percentages. Although a hospital does everything it can for these initiatives, losses may still be suffered. Moreover, it also needs to be remembered that hospitals are just trying to hold on to their full pay, as opposed to receiving any extra pay.

Moreover, the agency also invites input on alternative payment methodologies for short stay inpatients and the established definition of short stays. CMS is proposing to use the most recent labor market area delineations issued by the Office of Management and Budget (OMB) using 2010 Census data in order to maintain a more precise and up-to-date payment system that reflects the reality of population shifts and labor market conditions.

The proposed rule for 2015 also sketches time frames. To reduce potential negative payment impacts because of the proposed adoption of the new OMB delineations, the agency has laid down a one-year transition for all hospitals that would experience a decrease in their actual payment wage index wholly due to the proposed implementation of the new OMB delineations and a 3-year transition for hospitals presently located in an urban country that would become rural under the new OMB delineation.

The agency is accepting comments on the proposed rule until June 30, 2014. The final rule will be out by August 1, 2014. You can find it at http://ofr.gov/inspection.aspx.

To further understand how the provisions of the 2015 IPPS affects your hospital and how to brace your facility to stay unaffected, stay tuned to Inpatient Facility Coding & Compliance Alert.