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Proposed Rule Continues Shift to Value-Based Care

On April 18, the Centers for Medicare and Medicaid Services released a fact sheet  on the proposed rule for the 2017 Hospital Inpatient Prospective Payment System (“IPPS”).  If adopted, the changes would affect patients discharged on or after October 1, 2016.  

IPPS reimburses hospitals for services using a national base payment rate that is adjusted for the geographic market and patient’s condition. The current objectives include moving towards a measurable set of quality goals and no longer focusing on the quantity of care given to patients.

Proposed changes would increase payment by .9% for those acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (“IQR”) program and are meaningful electronic health record (“EHR") users. However, those who do not successfully participate in the Hospital IQR Program and do not submit quality data will receive a reduction in reimbursement.

Highlights of the proposed rule include: 

Hospital Acquired Conditions (“HAC”) Reduction Program

  • This program creates an incentive to reduce hospital-acquired conditions by imposing a negative adjustment to the poorest performing hospitals. Proposed measures would change the existing ranking system to a continuous scoring methodology and incorporate additional patient safety standards.       

Hospital Readmissions Reduction Program (“HRRP”)

  • Under this program, a reduction is applied to the hospital’s base operating Diagnosis-Related Group (“DRG”) payment for excess readmissions with selected medical conditions, including heart failure and attacks, pneumonia and chronic lung disease, hip and knee replacement and artery bypass grafts.        

Notification Procedures for Outpatients Receiving Observation Services

    • The Notice of Observation Treatment and Implications for Care Eligibility act (“NOTICE”), enacted in August of 2015, requires facilities to notify individuals who are receiving observation services for more than 24 hours. Under NOTICE, the patient will be given the Medicare Outpatient Observation Notice (“MOON”) and both the reason for and possible financial and post-hospitalization consequences of his observation status will be explained. 

IQR Program

  • IQR is a pay-for-reporting program that was established by the Medicare Prescription Drug, Improvement and Modernization Act.  As part of the proposed modifications, additional electronic clinical quality measures (“eCQMs”) will be adopted and the validation process will be changed. 

The proposed rule can be found in the Federal Register Here

Nancy Clark is a Manager in the Health Care Services Group. Her expertise focuses on coding and documentation audits, which includes chart review and report compilation.

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