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Insights

May 06, 2014

CMS Releases FY 2015 IPPS Proposed Rule: Policies Continue to Focus on Modifying Payment Due to Quality Improvement

Published

May 06, 2014

On April 30, CMS released the Fiscal Year (FY) 2015 Inpatient Prospective Payment Systems (IPPS) proposed rule.

The proposed rule contains minimal adjustments to the system broadly, with provisions simply codifying legislative mandates.

General acute care hospital payments are proposed to increase by 1.3 percent; however, due to reductions from quality programs, disproportionate share hospital (DSH) changes, the expiration of certain statutory provisions, and other proposed provisions, total IPPS operating payments will decrease by approximately 0.8 percent.  Other providers will continue to be integral to hospitals’ efforts to meet value-based purchasing and quality improvement metrics.  In addition, MS-DRG payment rates remain largely unchanged from the current fiscal year.  However, certain orthopedic-, spine-, and implantable cardiac defibrillator-related MS-DRGs will see an average of five to six percent payment increase if finalized as proposed.

Public comments are due by June 30.

View proposed FY15 IPPS.

For select proposed IPPS highlights, see below:

For select proposed IPPS highlights, see below:

  • CMS Requests Input on Developing an Alternative Payment Methodology for Contentious “Two-Midnight Rule” Policy. For certain short-term inpatient stays currently considered outpatient, CMS seeks comments on how to define these stays and how to define the appropriate payment.
  • Increase in Hospital Charge Transparency Moves Forward. Per the ACA, CMS establishes guidelines for hospitals regarding the requirement of making public either their standard charges for services or policies on how the public may request to review the list of charges.

    Increase in Hospital Charge Transparency Moves Forward. Per the ACA, CMS establishes guidelines for hospitals regarding the requirement of making public either their standard charges for services or policies on how the public may request to review the list of charges.

  • Hospital Payment Adjustments Continue to Add Pressure and Focus on Quality Performance. Hospitals failing to report in the Hospital Inpatient Quality Reporting (IQR) program will be subject to a one-fourth reduction of the market basket update.  Similarly, hospitals that are not meaningful Electronic Health Record (EHR) users will be subject to a one-fourth reduction of the market basket update.  The maximum penalties are also increasing under the Hospital Readmissions Reduction Program (HRRP) and the Hospital Value Based Purchasing (VBP) Program to three percent and 1.5 percent respectively for FY 2015.  Lastly, the hospitals with the worst performance under the Hospital Acquired Conditions (HAC) Reduction program will face a 1 percent reduction.

    Hospital Payment Adjustments Continue to Add Pressure and Focus on Quality Performance. Hospitals failing to report in the Hospital Inpatient Quality Reporting (IQR) program will be subject to a one-fourth reduction of the market basket update.  Similarly, hospitals that are not meaningful Electronic Health Record (EHR) users will be subject to a one-fourth reduction of the market basket update.  The maximum penalties are also increasing under the Hospital Readmissions Reduction Program (HRRP) and the Hospital Value Based Purchasing (VBP) Program to three percent and 1.5 percent respectively for FY 2015.  Lastly, the hospitals with the worst performance under the Hospital Acquired Conditions (HAC) Reduction program will face a 1 percent reduction.

  • New Measure Added to Readmissions Program in FY 2017. CMS plans to add only coronary artery bypass graft surgical procedures to the HRRP in FY2017.  

    New Measure Added to Readmissions Program in FY 2017. CMS plans to add only coronary artery bypass graft surgical procedures to the HRRP in FY2017.  

  • Focus on Quality Leads CMS to Propose Significant Revisions to IQR and Adds High Profile Infections to VBP. CMS proposes removing 22 topped-out measures (2 of which were already removed) and adding 11 new measures to the IQR program for FY 2017.

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