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Federal Register – CMS-1588-P; FR 5/11/12 – Proposed rules

The proposed rules were officially released today for Inpatient Acute PPS services in FY 2013 (10/1/12 – 9/30/13).  Today marks the 45 day window for hospitals to request withdrawal of a wage index reclassification that is determined to be lower than their native CBSA. 

Unfortunately, the proposed rules are based on the wage information published in February 2012 and that does not contain complete information or all of the finalized wage data.  CMS posted the final wage index file updated through May 4, 2012 that will be used in the final rules issuance.  Hospitals have one more chance to review this information to confirm that data has been posted accurately.  Any errors found in this data must be reported to CMS by June 4, 2012.

We are in the process of creating an updated wage index file using the May 4^th data and will make this available in a future news you need to know distribution.

Below are links to other summaries recently released summarizing the FY 2013 proposed rules:

Powers Pyles Sutter & Verville PC – 5/4/12

King & Spalding – Hospital Medicare Update – 5/9/12

Proposed Rules – IP PPS Acute Rules FY 2013

CMS 2010 SSI Data File Posting/Removal – Sloppy Oversight

From: Toyon Associates – 5/4/12

As reported to you in a separate e-mail on Wednesday (5/2), CMS temporarily released the 2010 SSI file for use in the calculation of the Medicare DSH reimbursements.  After review of the data released, it was clear that something was seriously wrong with the file, as matched SSI days declined by 30% over FY 2009.

Prior to the March 2012 release of the SSI data for FYE 2006 – 2009, the Provider community had been waiting for over two years for SSI information.  This delay has backed up the finalization of tens of thousands of Hospital cost reports. 

What is disturbing about the temporary post on Wednesday is the utter lack of reasonableness testing of the 2010 file.  A quick summary of the past 4 years would clearly point out that something didn’t work in the 2010 match.  Check this summary that was put together as we were analyzing the released data in total:

 A simple check of the files prepared for the previous three years would have clearly demonstrated that something was wrong.  If CMS would be so careless in releasing this type of data, what else have they been allowing out that has not had appropriate review for reasonableness?

The impact of this CMS release was jaw dropping.  Those hospitals and hospital systems that pulled the data Wednesday morning were already reporting to their senior management the devastating financial impact of the new percentages.  Given the long delay in SSI issuance, the financial impact of the SSI is projected for multiple years.  Nationally, this erroneous SSI file impacted billions of dollars in Medicare DSH entitlements.

I believe the Provider community has every reason to expect better and more careful analysis by CMS of the data they release.  Hopefully, this is a bit of a wake-up call for CMS. 

CMS posted the 2010 SSI ratios earlier today on their website. In review of the ratios in this file, we found that over 90% of hospitals had a decrease in the SSI% compared to 2009. For our clients, the reductions averaged 27%.

After performing further analysis of the file and comparing the results to prior years, we found that total 2010 SSI-matched days were 30% lower than 2009.   The 2009 SSI days were reasonably close to the days for both 2007 and 2008. We concluded that there is clearly something wrong with the 2010 data.

We were able to reach CMS this afternoon and in a conversation with Tzvi Hefter, he acknowledged that there was something wrong with the data. Tzvi stated that the 2010 data file will be removed from the website.  The 2010 SSI file should therefore be disregarded, as CMS will be working on correcting this file. For those of you that pulled the file earlier today, you can now breathe a little easier given the drastic reductions that would have taken place to your allowable DSH entitlements.

If you have any questions, please contact me at 925-685-9312.

Ron Knapp

Executive Vice
President

Federal Register – CMS-1588-P; Filed 4/24/12; FR date 5/11/12 – Proposed rules CMS filed the proposed rules on Tuesday 4/24 for FFY 2013.  I have included several links below concerning this 1,313 page document and related tables.  CMS is proposing a net increase of 2.1%  (3.0% market basket less .9% ACA required reductions) for providers that report the required quality measure information and .1% for providers that do not.  After consideration of coding adjustments related to FFY 2008 – 2010, the adjusted PPS rate increase is 2.23% as compared to FFY 2012.  Overall Capital PPS rates increased .71% compared to FFY 2012.
Included below is a table summarizing the changes to the PPS rates:

Preliminary wage index information changed significantly in California.  The rural statewide average index increased 3% from 1.1950 in FFY 2012 to 1.2321 in the preliminary FFY 2013 rules.  Santa Cruz has the highest wage index in the Country at 1.7326, topping the 1.7 level for the first time that I am aware of.  The San Francisco wage index increased slightly below 6% to 1.6344. We have been informed that there appears to be an error in this index as the Occupational Mix adjustment had not been properly applied.  Included below is a 3 year comparison of the wage index for California, Minnesota, Nevada and Washington.

There are two significant reimbursement additions of note for FFY 2013 related to the Hospital Readmission Reduction program and implementation of the Value Based Purchasing (VBP).   Both of these programs are requirements of ACA.

Hospital Readmission Reduction Program

• Effective October 1, 2012
• Hospital Specific in its application.  New CMS Table 15 contains the adjustment factor to be applied to each Hospital
• Factor will be used to adjust the PPS base rate
• The maximum reduction in FFY 2013 is 1%.  This adjustment factor maximum will be increased to 2% in FFY 2014 and 3% in FFY 2015.
• The adjustment is derived from an analysis of the readmission rates for the following 3 procedures:
• Pneumonia
• Heart Failure
• Acute Myocardial Infarction
• CMS is proposing to expand the readmission analysis to 4 procedures in FFY 2015
• CMS Table 15 contains the hospital specific impact based on services covering 7/1/07 – 6/30/10.  The final rules will use updated information covering 7/1/08 – 6/30/11.

Hospital Value Based Purchasing Program

• Effective October 1, 2012
• Hospital Specific in its application.  New CMS Table 16 contains the adjustment
  factor to be applied to each Hospital.
• Factor will be used to adjust the PPS base
  rate.  Implementation of this is
  projected to take place on January 1, 2013. Inpatient service claims will
  be reprocessed back to October 1, 2012.
• The Value Based Purchasing pool increases over the
  next 5 years:
• FFY 2013 – 1.00%
• FFY 2014 – 1.25%
• FFY 2015 – 1.50%
• FFY 2016 – 1.75%
• FFY 2017 – 2.0%

• CMS Table 16 contains the net adjustment factor that will be applied to the PPS base rate.  The 1% PPS rate reduction is included in this overall factor.  The table in  the proposed rule will be updated in the final rule that will include data  covering 7/1/11 – 3/31/12.

Other
Changes of Note

• Outlier threshold increases to $27,425 for FFY 2013  from $23,375 in FFY 2012
• Medicare Dependent Hospitals (MDH) program will end on September 30, 2012.  CMS has  proposed rules related to the timing of those MDH’s that will be submitting requests to become a Sole Community Hospital.
• The Low Volume Adjustment additional two year (FFY 2012 -2012) reimbursement formula change implemented by ACA will revert to the original methodology on October 1, 2012.
• Available Bed Days used for Medicare DSH and IME will be modified to include Labor and Delivery bed days consistent with their treatment of observation, swing-bed and hospice days.  This provision would be effective for cost reporting periods beginning on or after October 1, 2012.
• New teaching programs establishment of the residency cap are proposed to be developed over a five year window instead of the current three year window.  This is proposed to be effective on or after October 1, 2012.

This is simply our first pass of these proposed rules. Other important items discovered will be shared with you in a future e-mail.

CMS links related to the proposed rules:

• Inpatient PPS Fact Sheet
• Proposed Rule Tables
• Proposed Rule Data & Impact Files

See more: Inpatient PPS FY 2013 Rates for Acute Hospitals