CMS lifts inpatient hospital payment rates by 0.9 percent, beefs up value-based payment measures

The Centers for Medicare and Medicaid Services will lift the rate it pays inpatient hospitals in 2016 by 0.9 percent, the agency announced Friday, as long as facilities participate in the Hospital Inpatient Quality Reporting Program and demonstrate meaningful use through the use of electronic health records.

The Centers for Medicare and Medicaid Services will lift the rate it pays inpatient hospitals in 2016 by 0.9 percent, the agency announced Friday, as long as facilities participate in the Hospital Inpatient Quality Reporting Program and demonstrate meaningful use through the use of electronic health records.

The new rate is a drop from the 1.1 percent hike proposed earlier this year.

[Also: Key items from the proposed 2016 rule]

The change, which takes into account a 2.5 percent market basket adjustment minus 0.5 percent for productivity, 0.2 percent tied to the Affordable Care Act and 0.8 percent from the American Taxpayer Relief Act , applies to 3,400 acute care hospitals.

The final rule also bolsters CMS's plans to convert the way it pays hospitals from a fee-for-service to a value-based reimbursement model.

According to CMS, hospitals that do not participate in the quality reporting program will see the market basket rate slashed by 25 percent and those that fail to show meaningful use will lose half of their market basket increase. CMS said it will also add extra penalties for readmissions and failures tied to value-based purchasing.

Under the final rule, CMS will also enforce two payment rates for long-term hospitals, one standard rate and another site-neutral rate to be applied to services that don't meet criteria for the standard rate. As a result, CMS expects long-term care hospitals to see $250 million less in payments for the year. However, for the cases that do meet requirements for the standard rate, those payments will be 1.7 percent higher in 2016.

As for uncompensated care payments under the agency's Disproportionate Share Hospital regulations, CMS said it will distribute $6.4 billion to cover those expenses in 2016, $1.2 billion lower than 2015 due to the drop in the uninsured rate as a result of the Affordable Care Act.

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CMS also plans to add seven new quality measurements to its Hospital Inpatient Quality Reporting program, four that will take effect in 2018 and three in 2019. It is also adjusting the program so that hospitals may choose to submit only four of the 28 electronic clinical quality measures in 2016 to be applied to 2018 payment rates.

CMS will also expand its value-based purchasing program to include a measure for care coordination beginning in 2018 and a 30-day mortality measure for chronic obstructive pulmonary disease beginning in 2021.

Lastly, the agency is softening its pneumonia readmission penalty to account for extraordinary circumstances like natural disasters. It also said it will continue to measure how socioeconomic differences across the country affect readmissions and is in the midst of a two-year trial to determine a risk adjustment based those factors.

Here is the full rule:

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