March 12, 2015
1

Medicare “Doc Fix”,
Medicare rural extenders and
2MN partial enforcement delay expires
March 31
Annual proposed
Medicare regulations released (i.e.
IPPS)
Mid April
April 15
Congress must take action on budget resolution
Summer
Nation’s debt ceiling must be lifted
New fiscal year begins for 2016
October 1
2

Medicaid
DSH Cuts
3

• Budget Proposal Includes : o Cancels sequestration replacing with other harmful cuts o Hospital-based outpatient department siteneutral reductions ($29.5b/10yrs) o Reductions to IME Payments ($16.26b/10yrs) o Redirecting $5.25b to train 13,000 new primary care physicians o Reduction to Medicare CAH Payments
($2.5b/10yrs) o Reductions to Post-Acute Care Providers ($113.56 b/10yrs) o Extends Medicaid DSH reductions for an additional year through 2025 ($3.29b/1 yr)
4

Congress
Should:
Support predictable, full reimbursement to hospitals and health systems – ($25b in reductions is already on the books, over 10 years)
Support hospital and health system innovation
Permanently extend the MDH and LV adjustment programs/payments
Secure relief from 2-Midnight Rule and ensure fairness in the Medicare RAC program
5

6

FFY 2015 Standardized Amount = $5,437.85
Marketbasket Update
ACA-Mandated Productivity Reduction
ACA-Mandated Predetermined Reduction
ATRA-Coding Adj.
Overall Rate Change (excluding BN)
Operating
Rate
+2.9%
-0.5%
-0.2%
-0.8%
+1.4%
Hospital-
Specific Rate
+2.9%
-0.5%
-0.2%
-
+2.2%
Additional Mandated Adjustments for Non-compliance
FFY 2015 FFY 2016 FFY 2017
IQR Reporting Program -0.25% -0.25% -0.25%
Electronic Health Records -0.25% -0.50% -0.75%
7

• Adoption of new OMB delineations for FFY 2015
– Based on 2010 census data
• Transition Period
– 1-year transition for all hospitals that experience negative impacts due to the implementation of the new OMB definitions
– 3-year transition for hospitals that are were urban and became rural
– CAHs previously located in a rural area and become urban will have 2-years to reclassify as rural to retain
CAH status.
8

• ACA mandates application of a new DSH payment formula beginning FFY 2014
– 25% of DSH payments will continue to be paid to each hospital based on the current formula
– 75% of DSH payments must be distributed to DSH eligible hospitals based on each hospital’s level of uncompensated care compared to total uncompensated care for all eligible hospitals
• The uncompensated care payment must be reduced to reflect decreases in the national percentage of uninsured individuals
9

Factor 1: 75% of total DSH payments to fund uncompensated care payments
Final rule: $10.038 billion
Factor 2: Adjust for the change in the national uninsured rate—based on CBO projections
Final rule: $7.648 billion—based on a 23.81% reduction
Factor 3: Multiply by the hospital’s UCC payment factor (each hospital’s UCC as a percent of total UCC for all DSH-eligible hospitals)
• Proxy for uncompensated care = Medicaid days plus Medicare SSI days
• Interim payment as a per-discharge adjustment to the IPPS rate
10

Beginning April 1, 2015
– Low-Volume Hospital Adjustment:
• Criteria will revert to the more restrictive requirements previously in effect
– 25 mile/800 discharges
– Medicare Dependent Hospital Status:
• MDH status will expire
• Payment will revert to 100% PPS rate
11

12

Affordable Care Act (ACA)-mandated
• Value-Based Purchasing (VBP) Program
• Hospital Readmissions Reduction Program (HRRP)
• Hospital-Acquired Conditions Reduction Program
(HACRP
)
National programs increase financial risk each year:
13

Implementation October 1, 2014
(FFY 2015)
Medicare IPPS hospitals that fall in the bottom 25 th quartile will receive a 1.0% penalty
Penalty is applied to total Medicare inpatient payments
30-day review period
14

Domain 1:
PSI-90
Composite
FFY 2015
FFY 2016
Domain 2:
Central Lineassociated
Blood Stream
Infection
(CLABSI)
Domain 2:
Catheterassociated
Urinary Tract
Infection
(CAUTI)
Domain 2:
SSI Following
Colon Surgery
& SSI
Following
Abdominal
Hysterectomy
Domain 2:
MRSA and C-
Difficile
FFY 2017
Adopted in the FFY 2015 IPPS Final Rule
15

• Data from a two-year applicable period
• FFY 2015 HACRP —July 1, 2011 to June 30, 2013
• FFY 2016 HACRP —July 1, 2012 to June 30, 2014
• FFY 2015 HACRP—Data from CY’s 2012 and 2013
• FFY 2016 HACRP —Data from CY’s 2013 and 2014
Adopted in the FFY 2015 IPPS Final Rule
16

Scores for all program eligible hospitals are separated into deciles for scoring
All Hospitals with a valid score will receive a score of 1 – 10
Top performing hospitals will receive a score of 1
Worst performing hospitals will receive a score of 10
17

FFY 2015
Domain 1
@ 35%
Domain 2 @
65%
FFY 2016
Domain 1 @
25%
Domain 2 @
75%
FFY 2017
Domain 1 @
25%
Domain 2 @
75%
Adopted in the FFY 2015 IPPS Final Rule
18

Total HAC Score is used to determine the top quartile
(worst performing) hospitals who receive the payment penalty
Payment Penalty = 1.0%
Reduction to total IPPS
Payments
Total HAC Score
1.0%
Reduction
No Payment
Reduction
60%
50%
40%
30%
20%
10%
0%
100%
90%
80%
70%
19

New York City
Western New York
Rochester Regional
Iroquois – Central
Iroquois – Northeastern
Nassau-Suffolk
Northern Metropolitan
Statewide
United States Impact
Source: FFY 2015 IPPS final rule
# Hospitals
Penalized
17
2
3
6
5
4
4
41
724
Total Impact
($15,651,600)
($1,465,800)
($1,567,000)
($2,707,700)
($1,457,800)
($5,313,600)
($1,947,200)
($30,110,700)
($350,389,400)
20

Applies to subsection (d) hospitals
Program is self-funded by hospital “contribution”
Budget-neutral
VBP performance determines adjustment factor
*Applied to Inpatient PPS Rate
30-day hospital preview period
* Payment reductions exclude IME, DSH, low-volume hospitals, and outliers .
21

Measure ID Measure Description
AMI–7a
AMI–8a
HF–1
PN–3b
PN–6
SCIP–Inf–1
SCIP–Inf–2
SCIP–Inf–3
SCIP–Inf–4
SCIP–Inf–9
SCIP–Card–2
SCIP–VTE–2
Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival
Primary PCI Received Within 90 Minutes of Hospital Arrival
Discharge Instructions
Blood Cultures Performed in the ED Prior to Initial Antibiotic Received in Hospital
Initial Antibiotic Selection for CAP in Immunocompetent Patient
Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision
Prophylactic Antibiotic Selection for Surgical Patients
Prophylactic Antibiotics Discontinued Within 24 Hours After Surgery End Time
Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose
Postoperative Urinary Catheter Removal on Post Operative Day 1 or 2
Beta Blocker Prior to Arrival That Received a Beta Blocker During the Perioperative Period
Appropriate Venous Thromboembolism Prophylaxis Within 24 Hours of Surgery
Removed: SCIP-VTE-1: Surgery Patients with Recommended Venous thromboembolism Prophylaxis Ordered
Measure ID Measure Description
Communication with Nurses
Communication with Doctors
Responsiveness of Hospital Staff
Pain Management
Communication about Medicines
Hospital Cleanliness & Quietness
Discharge Information
Overall Rating of Hospital
National
Threshold
1
80.00%
95.35%
94.12%
97.78%
95.92%
98.64%
98.64%
97.49%
95.80%
94.89%
97.18%
97.40%
National
Benchmark
2
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.77%
99.99%
100.00%
100.00%
Minimum
Standards
4
10 Cases
National Floor
3
47.77%
55.62%
35.10%
43.58%
35.48%
41.94%
57.67%
32.82%
National
Threshold
1
76.56%
79.88%
63.17%
69.46%
60.89%
64.07%
83.54%
67.96%
National
Benchmark
2
85.70%
88.79%
79.06%
78.17%
71.85%
78.90%
89.72%
83.44%
Minimum
Standards
4
100 Surveys
22

Measure ID
MORT–30–AMI
MORT–30–HF
MORT–30–PN
PSI-90* (New)
HAI-1* (New)
Measure ID
SPP-1* (New)
Measure Description
Acute Myocardial Infarction (AMI) 30-Day Mortality Rate (converted to survival rate for VBP)
Heart Failure (HF) 30-Day Mortality Rate (converted to survival rate for VBP)
Pneumonia (PN) 30-Day Mortality Rate (converted to survival rate for VBP)
Patient Safety Indicator Composite
Central Line-Associated Blood Stream Infection (CLABSI)
Measure Description
Spending Per Hospital Patient With Medicare
National
Threshold
1
84.75%
88.15%
88.27%
0.6162
0.4370
National
Benchmark
2
86.24%
90.03%
90.42%
0.4500
0.0000
Minimum
Standards
25 Cases
4
National
Threshold
1
Median Ratio
Across All
Hospitals**
National
Benchmark
2
Mean Ratio of
Top 10%
Hospitals**
3 Cases
1 Predicted
Infection
Minimum
Standards
4
25 Cases
23

FFY 2015
POC @
20%
HCAHPS @
30%
Outcomes
@ 30%
Efficiency
@ 20%
FFY 2016
POC @
20%
HCAHPS @
30%
Outcomes
@ 30%
Efficiency
@ 20%
FFY 2017
POC @ 5%
HCAHPS @
25%
Outcomes
@ 25%
Efficiency
@ 25%
Safety @
20%
Adopted in the FFY 2015 IPPS Final Rule
24

New York City
Western New York
Rochester Regional
Iroquois – Central
Iroquois – Northeastern
Nassau-Suffolk
Northern Metropolitan
Statewide
Source: FFY 2015 IPPS final rule
# of Winners # of Losers Total Impact ($)
8
3
12
74
15
8
14
14
9
18
11
76
-
6
24
8
($863,000)
($72,100)
$770,900
$497,100
($219,400)
($2,121,100)
($137,200)
($2,144,800)
25

PSI-90
CLABSI
SSI-Colon
SSI- Abdominal Hysterectomy
MRSA
C-Difficile
Program
Year
FFY 2015+
FFY 2015+
FFY 2016+
FFY 2016+
FFY 2017+
FFY 2017+
VBP
X
X
X
X
X
X
HACRP
X
X
X
X
X
X
26

Hospital can either maintain full payment levels or be subject to a hospital-specific payment penalty
Three-Years of aggregate claims data used
HRRP adjustment factor applied to the “inpatient
PPS base operating DRG payment amount”
30-day hospital preview period
27

AMI
FFY’s 2015 and 2016
Heart
Failure
Pneumonia
Chronic
Obstructive
Pulmonary
Disease
(COPD)
Total Hip
Arthroplasty
(THA) and
Total Knee
Arthroplasty
(TKA)
Coronary
Artery
Bypass Graft
(CABG)
Surgery
FFY 2017 and beyond
Adopted in the FFY 2015 IPPS Final Rule
28

New York City
Western New York
Rochester Regional
Iroquois – Central
Iroquois – Northeastern
Nassau-Suffolk
Northern Metropolitan
Statewide
United States Impact
Source: FFY 2015 IPPS final rule
# Hospitals
Penalized
40
17
14
21
16
20
22
150
2635
Total Impact
($18,909,100)
($886,700)
($1,032,400)
($2,972,800)
($1,523,400)
($10,028,800)
($8,769,900)
($44,123,100)
($428,000,000)
29

• Connect the dots internally
• Monitor CMS’ 30-day preview reports for performance
• Advance internal quality initiatives
• Successfully participate in other Medicare initiatives with quality components
− EHR Program
− Post-acute care pay-for-reporting programs
− New delivery/payment models (ACOs/payment bundling)
30

31
CMS Fact Sheet

32
CMS Fact Sheet

33

• Effective for dates of admission on or after
October 1, 2013
• Applies to acute care inpatient hospitals, LTCHs,
CAHs, and Inpatient Psychiatric Facilities
Final Rule
Established
Requirements for inpatient admission order
2-midnight benchmark
2-midnight presumption
Major Concern : Some patients admitted for short stays are clinically dissimilar from true observation patients
34

• May 2014 (FFY 2015 IPPS Proposed Rule)CMS solicited comments on a potential Medicare payment methodology for short inpatient hospital stays
• August 2014 (FFY 2015 IPPS Final Rule)CMS did not adopt a short-stay policy but stated that it
“looks forward to continuing to actively work with stakeholders to address the complex questions of how to further improve payment policy for short
inpatient hospital stays”
• May 2015 (FFY 2016 IPPS Proposed Rule) –CMS could propose a short stay payment policy
35

• Provide more appropriate and adequate reimbursement for medically necessary inpatient services that span less than two midnights;
• not apply to those procedures on the “inpatient-only” list;
• be budget neutral and all savings should be redistributed back to the IPPS base DRG rate;
• Design similar to CMS’ Transfer Policy;
• Hospitals should eligible for all add-on payments that they would otherwise receive (e.g., DSH, IME)
FFY 2015 IPPS Proposed Rule
36

• Beneficiaries requiring short-stay inpatient hospital stays reimbursed under this policy should be considered an inpatient and costsharing obligations should be calculated under
Medicare Part A;
• Should not increase the administrative burden for hospitals, physicians, and other medical providers; and
• Allow adequate time for hospitals to implement the short stay payment policy prior to its effective date .
FFY 2015 IPPS Proposed Rule
37

• January 2015 Public Meeting
– Targeted DRG approach
• Pro: Reduces payment cliff between 1-day inpatient stays and outpatient stays
• Con: Creates a new payment cliff between 1-day inpatient stays and greater than 2-day inpatient stays.
• Did not receive consensus
– RAC Reform
• March 2015 Public Meeting
– RACs would target hospitals with highest rates of inpatient short stays utilization
– Modify RAC’s contingency fee based on its claim denial overturn rate
– Shorten RAC look-back period to better align with rebilling process
– Include observation stay towards the SNF 3-day qualifying stay
– Evaluate a formulaic payment policy to penalize hospitals with excess levels of short inpatient stays
38

MedPAC’s January 2015 Public Meeting
39

AHA Letter to CMS offered other options for consideration:
– Transfer Policy-based Short Stay Policy
• Using a fixed multiplier of 2x per diem rate for the 1 st day would not reimburse hospitals appropriately ( original recommendation in our FFY 2015 IPPS comment letter )
– Major Diagnostic Category (MDC) Policy
• Creates one short-stay DRG that includes all the DRGs in that MDC
• Adding 26 new short-stay DRGs
• Would exclude MDC 15 (Newborns and Other Neonates)
– Targeted DRG Policy
• Similar to MedPAC proposal
• Adding 61 new short-stay DRGs
40

AHA Letter to CMS offered other options for consideration:
– MDC Medical/Surgical Policy
• Creates one short-stay DRG for all the medical DRGs within the MDC and another for all the surgical DRGs
• Adding 49 new short-stay DRGs
– Base DRG
• Creates one short-stay DRG by combining all the DRG severity levels for a base DRG
• Adding 333 new short-stay DRGs
– DRG Refinement
• Creates two separate sets of DRG weights (one for short-stays/one for non-stay)
• Adding 739 new short-stay DRGs
41

Short-Stay Payment Options
MDC
MDC Medical/Surgical
Targeted DRGs
Base DRG
DRG Refinement
Total Payments Redistributed by
Short-Stay Model
$631m
$492m
$206m
$487m
$486m
42

43

• February 2014: Current RAC contracts were to expire
• August 2014: New RAC contracts delayed due to pre-award protest
• December 2014: CMS extended current RAC contracts to perform reviews through Dec 2015
• December 2014: CMS releases new RAC improvements for new RAC contracts
• February 2015: Current RACs can begin reviews of outpatient therapies
44

ADR limits will be adjusted to reflect lower denial rates
Patient status reviews: Limit RAC look-back to 6-months from date of service, if hospital submits claim within 3-months of the date of service
RACs have 30-days to complete complex reviews and notify providers
RACs must wait 30-days to allow for a discussion period before sending the claim to NGS
RACs will not receive a contingency fee until after the 2 nd exhausted level of appeal is
CMS established a Provider Relations Coordinator
45

• HANYS continues to support the “Two-Midnight Rule” legislation that would establish a short stay payment policy or extend the partial enforcement delay in the interim
• Continue to work with the AHA and CMS to help inform the development of an adequate and appropriate short stay policy
• Litigation:
– 0.2% payment cut to inpatient hospitals
– Still awaiting a motion by the judges
• HANYS continues to urge NYS Congressional Delegation to co-sponsor the “Medicare Audit Improvement Act
(H.R .1250/S. 1012)”
46

47

• Started February 2015
• Providers will be selected randomly
• Medicare post-payment 3 to 5 day inpatient hospital stays, but will not limit its review, on following DRGs: o DRG 195—Pneumonia, organism unspecified o DRG 872—Unspecified septicemia o DRG 192—Obstructive chronic bronchitis with (acute) exacerbation o DRG 689—Urinary tract infection, site not specified o DRG 684—Acute kidney failure, unspecified o DRG 308—Atrial fibrillation o DRG 602—Cellulitis o DRG 068—CVA o DRG 293—Acute on chronic diastolic heart failure o DRG 312—Syncope & collapse
• Sample size up to 10 Medicare inpatient hospital claims
48

• Notification letter will be sent at least four weeks prior to the visit
• At least 2 nurse reviewers will conduct the MMR
• Duration of review one-day on-site
49

– Director, Economics, Finance, and Information
– (518) 431-7687 or mgraham@hanys.org
50

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