On April 24, CMS issued the FY 2019 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule, which CMS proposed several changes aligned with its goals of creating a patient-centered healthcare system and reducing the burden on hospitals to allow them more flexibility to be able to operate more effectively.

Major Changes in the LTCH PPS Proposed Rule

Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs: The goal of these changes is to “focus on interoperability, improve flexibility, relieve the burden, and place emphasis on measures that require the electronic exchange of health information between providers and patients.” In order to accomplish this goal, CMS described the following proposals:

  • Rename all EHR incentive programs to “Promoting Interoperability.”
  • Reiterate that all eligible hospitals and Critical Access Hospitals under this program are required to use the 2015 edition of certified EHR technology (CEHRT) in 2019.
  • State that the EHR reporting periods in 2019 and 2020 will be a minimum of a continuous 90-day period.
  • Create new prescription monitoring and opioid related measures to assist with the agency’s overall initiative to treat opioid and substance use disorders.

Transparency in Prices: The goal of these proposed changes are to encourage price transparency by improving access for patients.

  • Update CMS guidelines to require hospitals to make their list of standard charges public online for patients to access.
  • Request for Information: CMS is requesting information from the public regarding what the current barriers are that prevent providers from informing patients about out of pocket costs. Additionally, CMS is requesting additional suggestions for changes that need to be made in order to make prices more transparent for patients and what the providers’ role would be in those changes.

Meaningful Measures: The proposed changes overall would reduce the number of measures acute care hospitals are required to report across the 5 quality and value-based purchasing programs. The proposals would remove a total of 19 measures from the quality programs, de-duplicate another 21 measures, and adopt 1 claims-based readmissions measure. The measures were removed if they were duplicative, being performed highly by a majority of providers (“topped out”), or were a significant burden on providers. The measures changed affect the following programs:

  • Hospital Inpatient Quality Reporting (IQR) Program
  • Hospital Value-Based Purchasing (VBP) Program
  • Hospital-Acquired Conditions Reduction (HAC) Program
  • Hospital Readmissions Reduction Program
  • PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
  • Long Term Care Hospital Quality Reporting Program (LTCH QRP)

Additionally, CMS is seeking comments on moving the implementation of modifications to the LTCH CARE Data Set from April to October.

Changes to Payments: The proposed changes in the IPPS rates would result in a 2.1% increase in IPPS operating payments. Additionally, with the proposed changes in other payments areas resulting in a 1.3% increase in IPPS payments, the total increase in IPPS payments is expected to be 3.4% for hospitals. CMS projects that the total Medicare spending on inpatient hospital services will increase by about $4 billion in FY 2019. Moreover, the proposed changes in LTCH PPS payment rates would result in a decrease of about 0.1%, or $5 million, in FY 2019 in an effort to phase out the dual payment rate system.

  • IPPS
    • Increase the operating payment rates by approximately 1.75% for general acute care hospitals paid under the IPPS that successfully participate in the Hospital IQR Program and are meaningful EHR users.
    • Increase Medicare uncompensated care payments by approximately $1.5 billion, totaling the distributed amount of uncompensated care payments in FY 2019 to $8.25 billion.
    • Update LTCH PPS standard Federal Payment rate by 1.15%.
    • Eliminate the 25% threshold policy. This would be done in a budget neutral manner by applying a one-time permanent adjustment rate of -0.9% to the LTCH PPS standard Federal payment rate.

Burden Reduction: CMS outlined several proposals in order to reduce the number of hours hospitals spend on paperwork in an effort to achieve the goal of creating a patient-centered healthcare system. Among the several changes proposed, CMS included:

  • Revise its regulations to allow certain hospitals excluded from the IPPS to operate IPPS-excluded units. CMS reasoned that this change would be acceptable due to the introduction of the inpatient psychiatric facility prospective payment system (IPF PPS) and the inpatient rehabilitation facility prospective payment system (IRF PPS).
    • CMS provided the following example within the proposed rule: An LTCH operating a psychiatric unit would receive payments under the IPF PPS for all patients discharged from the psychiatric unit and the LTCH would receive payments under the LTCH PPS for patients not discharged from the psychiatric unit.
    • CMS would also revise § 412.25(d) to include that an IPPS-excluded hospital is only able to have one of the same type of the IPPS-excluded unit.
    • CMS proposed that this change would take effect with cost reporting periods that begin on or after October 1, 2019.
  • Revise its regulations so that an IPPS-excluded satellite of an IPPS-excluded unit of an IPPS-excluded hospital would not have to comply with separateness and control requirements so long as it is not co-located within an IPPS hospital.
    • CMS plans to add a new paragraph within § 412.22(h)(2)(iii)(A) that states that beginning on October 1, 2018, this proposed change is effective.

For any questions regarding this proposed rule, or for assistance in any other healthcare regulatory and operational matters for your organization, please contact Advis through our website or give us a call at 708-478-7030.

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