Key items from the proposed 2016 inpatient prospective payment system rule

Centers for Medicare and Medicaid Services proposes changes to quality reporting, readmission fines and disproportionate share hospital payments.

The Centers for Medicare and Medicaid Services last week proposed changes to the inpatient prospective payment system in a 1,500-page document that tackles payment rates for acute and long-term care hospitals, changes to the disproportionate share hospital system, and updates readmissions program and quality reporting guidelines.

Here are some key points from the proposal, which is expected to be updated in the summer.

1. Payment rate

The proposal would raise the payment rate by 1.1 percent for acute hospitals showing meaningful use of electronic health records, factoring in a 0.8 recoupment charge to recover about $11 billion that was tied to overpayments for Medicare diagnosis-related groups tied to the American Taxpayer Relief Act of 2012.

CMS said that it expects  total Medicare spending on inpatient hospital services to increase by $120 million in fiscal 2016.

The proposal continues the penalties for readmission and hospital-acquired conditions.

2. Two-midnight rule

Since this measure for classifying inpatient vs. outpatient stays is so controversial, CMS has proposed more time to gather feedback.

3. Value-based purchasing

The proposal would add a care coordination measure to the program by 2018 and a 30-day mortality measure for chronic obstructive pulmonary disease by 2021. At the same time, CMS is proposing to remove two measures starting in 2018.

4. Hospital-acquired conditions

Proposal keeps penalties and expands the population for two measures already in the program.

5. Readmissions

While the proposal keeps the penalty program in place, CMS said it would refine the readmission measure tied to pneumonia and adopt an extraordinary circumstance option that accounts for things like natural disasters, which can affect readmissions.

Also, after recent criticism that the program does not fairly take into account socioeconomic factors tied to readmissions, CMS said it researching the issue and could propose a risk adjustment by October 2016.

6. Long-term care hospitals

These facilities must still submit quality data to CMS, but the proposal adds an additional three quality measures that relate to skin integrity, mobility and falls. CMS also said it plans to begin reporting quality data on long-term care hospitals by fall 2016 in a format similar to its existing Hospital Compare site.

7. DSH Payments

CMS said it plans to keep the disproportionate share formula that began in 2014, and will distribute $6.4 billion in uncompensated care payments in 2016, $1.3 billion less than 2015, to account for the declines in the number of uninsured.

Here’s the full report:

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