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Tag: Value-based

OPPS Final Rule – CY 2019

In This Edition:

  • CY 2019 Medicare OPPS Final Rule
  • Pricing Transparency Revisited
  • Hospital Value Based Purchasing Data Published
  • Hospital-Specific Rate Refresher

OPPS Final Rule – CY 2019
CMS-1695-FC drafted on 11/2/2018; Published in the Federal Register on 11/21/2018 and corrected notice issued on 11/30/2018

On November 2, 2018, the Centers for Medicare & Medicaid Services (CMS) finalized changes that remove unnecessary and inefficient payment differences between certain provider and supplier types so patients can have more affordable choices and options. The final rule with comment period updates and revises policies under the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.

The polices in the calendar year (CY) 2019 OPPS and ASC Payment System final rule with comment period will further advance the agency’s priority of creating a patient-centered healthcare system by achieving greater price transparency, and significant burden reduction so that hospitals and ambulatory surgical centers can operate with better flexibility and patients have access to the tools they need to become active healthcare consumers.

Overall, the final rule is projected to result in an estimated increase of $360M (or 0.6%) in payments to providers, ranging from -1.6% decreases for rural hospitals in the New England region up to 1.6% increases for rural hospitals in the West South Central region.

For more information regarding this Final Rule, see below:

Fact Sheet Link

Federal Register Link

Medicare OPPS Base Rates
CMS is proposing a base rate increase of 1.35% for hospitals that submit OQR quality data and 2.1% for ASCs that submit ASCQR quality data.

APC Changes
As expected, CMS has finalized the weighting changes to APC weights for CY2019, along with new APC codes and new HCPCS codes.  Below is a listing of the largest changes in weighting between CY2018 and CY2019 APCs:

Click here for a table of the full APC weighting comparison between CY2018 and CY2019.
Click here for a table of the new HCPCS codes effective 7/1/2018.

Other APC Changes
CMS has created three new comprehensive APCs (C-APCs) for ears, nose, and throat (ENT) and vascular procedures.  CMS will also remove four procedures from the inpatient-only list and add one procedure to the list.

Click here for a table of the changes to the inpatient-only procedures.

Changes to Quality Reporting
CMS is finalizing several changes to the OQR reporting in an effort to reduce burdens on hospitals, including the removal of 8 measures from the OQR (1 from CY2020 and 7 from CY2021).  CMS will also remove the three recently revised pain communication questions, starting with services on Oct. 1, 2019, to address concerns that providers might feel pressure to offer opioids in order to raise survey scores.

Click here for a table of the 8 OQR measures proposed to be removed.
Click here for a table of the 26 OQR measures required for CY 2020 and here for a table of the 15 ASCQR measures required for CY2020.

Off-Campus Payment Policy Changes
CMS remains concerned with the shift of services from freestanding physician offices to hospital provider-based departments (PBDs).  As a result, they are proposing several significant changes that will negatively impact OPPS reimbursement for these facilities:

Expansion of PFS Rate for All Clinic Visits:  CMS will extend the reduced Physician Fee Schedule (PFS) rate for clinic visits (HCPCS code G0463) to all off-campus PBDs, even those excepted under Section 603.  (Note:  The PFS payment rate is approximately 60% less than the OPPS rate.)  CMS will phase in this policy by paying 70% of the OPPS rate in 2019, then reducing payment to 40% of the OPPS rate in 2020 and future years.  CMS estimates that the impact of this change is expected to reduce reimbursement to hospitals by $380M in FY2019 and $760M in FY2020 and beyond.

Restricting “Clinical Families of Services” – Cancelled:  CMS decided not to finalize its requirement that excepted off-campus PBDs be limited from expanding services to any clinical family of services from which it did not furnish and bill during the period from 11/1/2014 to 11/1/2015.  Such items and services would have been paid at the reduced PFS rate applied to non-excepted off-campus PBDs.  New items or services within a clinical family of service would have continued to be paid under OPPS, as this would be considered a “service expansion.”  Even though this policy was not finalized, CMS indicated that it has the authority to do so and will continue to monitor these PBDs and service growth.

New “ER” Modifier:  Finally, CMS will require a new “ER” modifier to identify services in off-campus ER departments.  The modifier would be reported on the UB-04 form and would be required on every line for outpatient services furnished in an off-campus provider-based emergency department.  This is meant to address the MedPAC recommendation for CMS to assess the extent to which OPPS services are shifting to off-campus ER departments.  (Critical access hospitals would be exempt from this reporting requirement.)

Changes to Drug Payment Policy
In response to the President’s Commission on Combating Drug Addiction and the Opioid Crisis, CMS has changed the packaging policy for certain drugs.  CMS will also change the payment for separately payable drugs for non-excepted off-campus PBDs to the same lower Average Sales Price (ASP) minus 22.5% (or 77.5% of ASP) that excepted off-campus PBDs receive.  Currently these non-excepted departments receive 106% of ASP for these drugs.  Rural SCHs, Children’s, and Cancer hospitals would be exempt.

Click here for a table of the drugs and biologicals with pass-through status expiring on 12/31/2018.

Other News

Pricing Transparency Revisited – Action Required by 1/1/2019
CMS is updating their guidelines regarding the requirements to comply with Section 2718(e) of the Public Health Service Act for hospitals to make public a list of the hospital’s standard charges. Previously issued guidelines required hospitals to 1) make public a list of standard charges (whether that be the chargemaster itself or in another form of the hospital’s choice), or 2) make known the hospital’s policies for allowing the public to view a list of those charges in response to an inquiry.

Effective January 1, 2019, CMS is revising their guidelines to remove the requirement to make known the hospital’s policies for allowing the public to view a list of those charges in response to an inquiry. Hospitals will now be required to make available a list of their standard charges via the internet in a machine-readable format and require that these lists be updated at least annually.

 In the proposed rule, CMS solicited comments on various questions to include defining standard charges, type of information beneficial to patients, informing patients of their out-of-pocket costs, and greater transparency around patient obligations. In the final rule, CMS did not respond directly to public comments but published a separate FAQ document, which can be accessed here.

Toyon’s Take:  Toyon recommends the following actions to comply with this change:

  • List the charges at gross amounts (i.e., not adjusted for discounts to third-party payers, charity, self-pay, etc.)
  • Calculate the average charge per case for each MS-DRG and include with the list of standard charges (Use FY 2011-2016 publicly available info as a guide at this link)
  • For services subject to variable pricing (e.g., drugs, supplies, and implants subject to an internal mark-up policy that are variable to acquisition price), develop an average charge from the most recent period (e.g., quarter, year)
  • Publish the list in a machine readable format (e.g., txt, csv, xlm, etc.). Note:  PDF is not considered an acceptable format.
  • Update at least annually the publicly available chargemaster
  • Include an advisory statement that the published charges are to be used as a guide and that actual charges incurred and patient obligation may differ
  • The format is at the hospital’s discretion, and CMS did not specifically address the inclusion of hospital charge codes and CPT/HCPCS

For additional information, please contact Robert Howey at robert.howey@toyonassociates.com.

 Hospital Value-Based Purchasing Program Update for FFY 2019
On December 3, 2018, CMS released the final hospital value-based purchasing (VBP) incentive payment adjustment factors in Table 16B on its website for FFY 2019. The payment factors are effective for Medicare discharges on or after October 1, 2018, and are applied to the adjusted base operating MS-DRG payment. Each participating hospital’s payment rate is inclusive of a 2 percent contribution to the VBP payment pool ($1.9B) and adjustment factors greater than 1.0 represent those receiving payments above their contribution.

The payment factors are based on each hospital’s total performance score (TPS) measured on four equally weighted domains: Clinical Care (Mortality), Patient and Caregiver-Centered Experience, Patient Safety, and Efficiency/Cost Reduction. The breakeven TPS score for FFY 2019 was 35.15 (up from 34.60) and over 55 percent of hospitals will receive higher Medicare payments from the previous year. The highest performing hospital will receive a net increase in IPPS payments of 3.67 percent, and the lowest performing hospital will incur a net decrease in IPPS payments of 1.59 percent.

Click here for a table of estimated VBP payment impacts to each hospital.

For additional information, please contact Robert Howey at robert.howey@toyonassociates.com.

Hospital-Specific Rate Updates – A Refresher
When calculating a Sole Community or Medicare Dependent Hospital’s hospital-specific rate (HSR) each year, remember that any hospital-specific adjustment factor (e.g., IQR or EHR reduction factor) is only applicable for discharges occurring during that Federal Fiscal Year.  Those reduction factors are not cumulative in nature and should not be carried forward.

The HSR should be tabulated each year by adjusting the hospital’s most recent base period rate by the full, non-reduced cumulative update factors applicable to all hospitals for each fiscal year since the latest rebasing.  And then only for the current Federal Fiscal Year should any hospital-specific adjustment factors be applied to the hospital for that one year.

For additional information, please contact Ron Knapp at ron.knapp@toyonassociates.com.

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FFY 2019 IPPS Proposed Rule – Analysis

The new FFY 2019 IPPS proposed rule has been released, and our experts at Toyon have completed their initial analysis. We think this is “News You Need to Know.”

We have nearly doubled our staff over the past couple of years and expanded our client base nationwide. We are committed to serving our clients and, as reimbursement continues to become more complex, we have hired experts in key areas of reimbursement so we get it right the first time. Our team plans to keep you updated going forward with the “News You Need to Know.”

In this Edition:

  • FFY2019 Medicare IPPS Proposed Rule
  • Other Recently Published Rules

IPPS Proposed Rule – FFY 2019

CMS-1694-P drafted on 4/24/2018; Published in the Federal Register on 5/7/2018

On April 24, 2018, the Centers for Medicare & Medicaid Services (CMS) proposed changes to empower patients through better access to hospital price information, improve patients’ access to their electronic health records, and make it easier for providers to spend time with their patients. The proposed rule updates Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS), effective for discharges on or after October 1, 2018.

The policies in the IPPS and LTCH PPS proposed rule would further advance the agency’s priority of creating a patient-driven healthcare system by achieving greater price transparency and interoperability – essential components of value-based care – while also significantly reducing the burden for hospitals so they can operate with better flexibility and patients have the information they need to become active healthcare consumers.

These changes result in the elimination of 25 total measures across 5 programs with well over 2 million burden hours reduced for hospital providers impacted by the IPPS proposed rule, saving them $75 million.

Overall, the proposed rule is projected to result in an estimated increase of $4.1B (or 3.4%) in payments to providers, ranging from 0.7% increases for smaller, rural hospitals up to 3.1% increases for larger urban hospitals in the Pacific Region.

Medicare IPPS Base Rates

CMS is proposing a base rate increase of 1.5% for hospitals, mostly driven by a market basket increase of 2.8%.

Click here for the full base rate calculation table and comparison to prior year.

MS-DRG v 36 Changes

As expected, CMS is proposing to recalibrate the MS-DRG weights for FFY2019. One noteworthy change is the inclusion of maternity-related DRGs in MDC 14, as discussed by CMS in the FFY2018 Proposed and Final Rules. Below is a listing of the largest changes in weighting between v35 and v36 of the MS-DRGs:

Click here for a table of the MS-DRG v35 to v36 comparison.

Post-Acute Care Transfer Policy Changes

Effective 10/1/2018, patients discharged to hospice by a hospice program are to be included as transfer cases, as required by the Bipartisan Budget Act of 2018. The discharge status codes 50 or 51 will now be subject to the transfer policy.

Changes to Wage Index

CMS has calculated an occupational mix-adjusted national average hourly wage of $42.948428861. Of note, 255 hospitals will receive the rural floor. Thirty-five Massachusetts hospitals will receive an additional $49M (1.4%) due to the application of the rural floor. In addition, Connecticut hospitals will also experience a significant benefit ($90M) from the rural floor.

Click here for a comparison of current and prior WIFs in Table 3.

Three notable changes to wage index are being proposed by CMS for FFY2019:

1)   Removal of “other” wage-related costs

CMS has stated that only 8 hospitals out of 3,000+ IPPS hospitals in the wage index data reported “other” wage-related costs correctly. Beginning with FFY2020, CMS is proposing to remove “other” wage-related costs from the wage index calculation entirely.

2)   Changing the “Lock-in” date for rural-designated hospitals

Based on current regulations, for a hospital’s wage data to be recognized in the rural wage index for the upcoming FFY, a hospital’s rural filing date (“lock-in” date) must be no later than 70 days prior to the second Monday in June of the current FFY, and the application must be approved by CMS in accordance with the regulations specified at 42 CFR 412.103. In the current year, this “lock-in” date is April 2, 2018.

CMS is proposing to revise the “lock-in” date such that a hospital’s application for rural reclassification must be approved by the CMS Regional Office no later than 60 days after the public display of the IPPS notice of proposed rulemaking in the Federal Register, in an effort to eliminate errors. This date would then be variable dependent upon the Regional Office’s statutory requirement to approve all requests within 60 days of receipt and will also depend upon the capacity of the Regional Office to timely approve a rural status application.

3)   Request for public comments on wage index disparities

CMS recognizes that there are disparities in wage reporting and regulations and sees an overall need for improving the wage index system. As such, CMS is requesting public comments related to this topic.

For additional information, please contact Ryan Sader at ryan.sader@toyonassociates.com.

UCC DSH Payments

CMS is proposing to increase Medicare DSH UC payments by $1.5B, to $8.3B in FFY 2019.

Although CMS is proposing to use three years of data to determine each hospital’s Factor 3 proportion, for next year’s rule making CMS is considering shifting to only one year of data (i.e., UC cost from FY 2016 cost reports).  Be aware that these payments may yet change for FFY2019. CMS is considering using cost report data through May 2018, as opposed to data through February 15, 2018 to determine the final FFY2019 hospital UCC DSH payments. For hospitals that reported excessive uncompensated care on their 2014 and 2015 cost reports (i.e., when uncompensated care costs are greater than 50% of total hospital costs), CMS will recalculate the hospital’s uncompensated care based on estimates from the hospital’s next cost reporting year, if they cannot justify their reported numbers.

Hospitals have 60 days to notify CMS (at Section3133DSH@cms.hhs.gov) of any inaccuracies in CMS’ table of uncompensated care data, which can be found at the link below. This includes reviewing CMS’ table of combined data for merged hospitals. After the FFY2019 IPPS Final Rule is published later this summer, hospitals will have until August 31, 2018 to review and submit comments on the accuracy of their data. Toyon will be using our S-10 UCRS database to assist our clients with confirming their data.

If a hospital filed multiple cost reports in the same fiscal year, CMS is proposing to eliminate the step of combining data across the multiple reports. CMS will now use the cost report that is closest to 12 months and annualize the data.

Toyon strongly recommends hospitals verify their 2014 and 2015 uncompensated care cost as published in the CMS file “FY 2019 IPPS Proposed Rule: Medicare DSH Supplemental Data File” below. Toyon has identified several issues with the CMS’ uncompensated care data in the Healthcare Cost Report Information System (HCRIS) database, so it is critical to verify that your hospital’s data is accurate.

Regarding hospital financial assistance policies, CMS states “…nothing prohibits a hospital from considering a patient’s insurance status as a criterion in its charity care policy. A hospital determines its own financial criteria as part of its charity policy.” This clarifying language may help hospitals more accurately capture uncompensated care related to all uninsured accounts going forward.

Finally, it is important that hospitals be prepared for CMS’ proposed new requirement of submitting uncompensated care support on future cost reports. See the section below related to Additional Cost Reporting Requirements.

Click here  for the DSH Supplemental PUF data.

Click here for the Analysis of UCC DSH Factor 1.

For additional information, please contact Fred Fisher at fred.fisher@toyonassociates.com.

 

Graduate Medical Education Changes

CMS proposed to allow “new” teaching hospitals to participate in Medicare affiliated group agreements (AGA) under certain limited circumstances. In the past, new teaching hospitals could only participate in an AGA if it resulted in an increase to the cap of the new teaching hospital. Effective for new AGAs beginning 7/1/2019 and after, this proposal would allow two or more new teaching hospitals to participate in an AGA, including a reduction to one or more of the hospital’s caps. To qualify, the FTE cap transfer would have to be among new teaching hospitals. This means that the prior restriction related to existing hospitals is still in place.

In addition, CMS announced two additional rounds of Section 5506 FTE cap redistributions (Rounds 11 and 12):

Applications for these additional FTE slots are due to CMS by July 23, 2018.

For additional information, please contact Tom Hubner at tom.hubner@toyonassociates.com

 

Low Volume Hospitals

As required by the Bipartisan Budget Act of 2018, CMS is proposing to implement changes to the payment adjustments for low volume hospitals. Effective for FFY2019 through FFY2022, a hospital must be more than 15 road miles (i.e., by use of a web-based mapping tool) from another subsection (d) hospital and have less than 3,800 total discharges. The payment adjustment is an additional 25% for hospitals with fewer than 500 discharges, and a sliding scale is then applied for hospitals over that level down to 0% for 3,800+ discharges.

LVA Adj = 0.25 – ((0.25/3300) x (Number of Total Discharges – 500))

Applications to receive the low volume adjustment must be received by September 1, 2018.

Click here for a table of hospitals that may be eligible for the Low Volume adjustment.

For additional information, please contact Ron Knapp at ron.knapp@toyonassociates.com.

 

Changes to Quality Reporting

Many measures between the various quality reporting systems have been determined by CMS to be duplicative, excessively burdensome, or “topped out,” meaning that most providers consistently perform well in a measure. As a result, CMS is proposing to make the following changes to these programs.

Hospital Inpatient Quality Reporting (IQR)

CMS is proposing to stratify measure rates by dual-eligible Medicare/Medicaid patients. CMS is also proposing to remove 19 measures and de-duplicate another 20 measures, for a reduction of 39 measures to be reported under the IQR program. CMS is also proposing to adopt 1 claims-based readmission measure.

Click here for a table of the 39 IQR measures proposed to be removed.

 

Hospital Value Based Purchasing (HVBP)

CMS has decided to remove or de-duplicate 10 measures, with the only safety measure being removed. In addition, CMS has proposed to change the names of the domains to more accurately reflect the new measures. Finally, the weighting of each domain will change.

Click here for a table of the 10 HVBP measures proposed to be removed.

Hospital Readmission Reduction (HRR)

The only notable proposed change from CMS was to clarify the definitions of “dual-eligible” and “applicable period.” No new measures have been proposed.

Hospital Acquired Conditions (HAC)

CMS is proposing to start measuring hospital performance against peers with similar proportions of dual-eligible patients. In addition, CMS is proposing to update measure weighting to address concerns raised about disproportionate weighting at the measure level for the subset of hospitals with relatively few NHSN HAI measures.

EHR Incentive Program Changes 

CMS is proposing to rename the “EHR Incentive Program” to “Promoting Interoperability Program” to align with their plan to overhaul the incentive program by moving away from meaningful use measures to more of a focus on the patients and healthcare data exchange through interoperability.

CMS is seeking feedback on positive solutions to better achieve interoperability or sharing of data between providers and with patients:

  • Reducing overall number of required measures from 16 to 6
  • New scoring methodology

Click here for a table of the proposed new scoring methodology.

Eligible hospitals would need to earn a score of 50 points or more out of a possible 100.

 

Additional Cost Reporting Requirements

CMS has proposed to update existing requirements related to supporting documentation that must be submitted with cost reports. Some of the changes are simply verbiage changes in the instructions to remove the reference to the Form CMS-339, which is no longer applicable as it has been incorporated into most cost reporting forms, and to change the reference to IRIS data, as opposed to a separate IRIS diskette, which is no longer used by most providers.

However, effective with cost reports submitted on or after October 1, 2018, the following documentation must be submitted with the Medicare cost report and agree to the amounts reported in the cost report:

  • IRIS total counts for DGME FTEs (weighted and unweighted) and IME FTEs
  • Medicare bad debt listings
  • For DSH-eligible hospitals, Medicaid-eligible days listings and detailed listings of charity care and uninsured discounts provided
  • For hospitals that are part of a healthcare system, a completed Home Office cost statement

Failure to submit this data will result in the cost report being rejected for lack of supporting documentation.

For additional information, please contact Daniel Pelayo at daniel.pelayo@toyonassociates.com.

IPPS-Excluded Hospital Changes

CMS is proposing to allow IPPS-excluded hospitals to operate IPPS-excluded units.

In another CMS proposal, an IPPS-excluded satellite of an IPPS-excluded unit of an IPPS-excluded hospital would not have to comply with the separateness and control requirements.

Pricing Transparency

CMS has expressed concerns from patients about hospital pricing, including surprise out-of-network billing from healthcare professionals (e.g., radiologists) and unexpected facility and physician fees after ER visits. In addition, CMS intends to enforce existing requirements of Section 2718(e) of the Public Health Services Act by drafting specific guidelines to address pricing transparency and by implementing a process to make non-compliant hospitals publically known.

CMS is proposing to take the following actions:

  • Posting of hospital and physician charge data on the CMS website
  • Effective January 1, 2019, hospitals make available a list of their standard charges via the internet in a machine-readable format and require that these lists be updated at least annually
  • As an alternative, hospitals may publish policies on the internet to allow the public to view a list of charges in response to an inquiry

CMS is also seeking feedback on barriers to publishing these charges and how to better inform patients of their obligations:

  • How should “standard charges” be defined? Average discount off charges or gross charges from the chargemaster?
  • What type of information would be most beneficial to patients?
  • Should healthcare providers be required to inform patients how much their out-of-pocket costs for a service will be before those patients are furnished that service?
  • Should CMS require healthcare providers to provide patients with information on what Medicare pays for a particular service?
  • What is the appropriate mechanism for CMS to enforce pricing transparency?

How does Medigap coverage affect patients’ understanding of their out-of-pocket costs?

Changes to Inpatient Admission Order Documentation

CMS is proposing to remove the requirement that inpatient admission orders be written. If other available documentation, such as a physician certification statement when required, progress notes, or the medical record as a whole, supports that all the coverage criteria are met, and the hospital is operating in accordance with the hospital conditions of participation (CoPs), then written orders to admit are not required to be present in the medical record.

 

Other Proposed Rules Recently Published

Inpatient Psych Facility PPS Proposed Rule [CMS-1690-P]

(Display Copy available here 4/27/2018; FR Publish Date 5/8/2018)

Fact Sheet Link

Federal Register Link

– Per diem base rate increase from $771.35 to $782.01

 

Inpatient Rehab Facility PPS Proposed Rule [CMS-1688-P]

(Display Copy available here 4/27/2018; FR Publish Date 5/8/2018)

Fact Sheet Link

Federal Register Link

– IRF-PAI v. 3.0 is effective October 1, 2019 (FFY2020)

 

Long-Term Care Hospital PPS Proposed Rule [CMS-1694-P]

(Display Copy available here 4/24/2018; FR Publish Date 5/7/2018) – Published as part of the IPPS Acute Care Hospital Proposed Rule

Fact Sheet Link

Federal Register Link

– Elimination of the 25% threshold policy and payment adjustment for

LTCHs that was originally established in FY2005

– Estimated overall decrease of $5M in Medicare payments for FFY2019

 

Skilled Nursing Facility PPS Proposed Rule [CMS-1696-P]

(Display Copy available here 4/27/2018; FR Publish Date 5/8/2018)

Fact Sheet Link

Federal Register Link

 

– Revised case-mix methodology called the Patient-Driven Payment Model

(PDPM) will bring significant changes to the SNF PPS

 

Hospice Wage Index and Payment Rate Update [CMS-1692-P]

(Display Copy available here 4/27/2018; FR Publish Date 5/8/2018)

Fact Sheet Link

Federal Register Link

– FFY2019 payment rate update of 1.8%

 

Extension of Payment for Low-Volume Adjustments and Medicare-Dependent Hospital (MDH) Program

(FR Publish Date 4/26/2018)

 

Click here for a copy of the published rule for the LVA and MDH extension.

 

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CMS Hospital Value-Based Purchasing Program Results – FFY2017

From: CMS News Room – 11/1/16

Press Release Excerpt:

Hospital Value-Based Purchasing Program Overview

The Hospital Value-Based Purchasing (VBP) Program adjusts what Medicare pays hospitals under the Inpatient Prospective Payment System (IPPS) based on the quality of care they provide to patients. For fiscal year (FY) 2017, the law requires that the applicable percent reduction, the portion of Medicare payments available to fund the program’s value-based incentive payments, increase from 1.75 to 2 percent of the base operating Medicare Severity Diagnosis-Related Group (MS-DRG) payment amounts for all participating hospitals. We estimate that the total amount available for value-based incentive payments for FY 2017 discharges will be approximately $1.8 billion.

The Hospital VBP Program is one of many Affordable Care Act programs Medicare has established to pay for the quality of care rather than the quantity of services provided to patients. The Hospital VBP Program is part of our long-standing effort to structure Medicare payments to improve care across the entire healthcare delivery system, including hospital inpatient care. In FY 2017, more hospitals will receive positive payment adjustments, indicating improved quality of care and a strong example of better care, smarter spending, and healthier people in action.

Fiscal Year 2017 Hospital VBP Program Results

The domains for the FY 2017 Hospital VBP Program and the weighting for these domains were:

  • Clinical Care
  • Outcomes (25 percent)
  • Process (5 percent)
  • Patient and Caregiver Centered Experience of Care/Care Coordination (25 percent)
  • Safety (20 percent)
  • Efficiency and Cost Reduction (25 percent)

We have posted the Hospital VBP incentive payment adjustment factors for FY 2017 in Table 16B, available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page-Items/FY2017-IPPS-Final-Rule-Tables.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending.

This is the fifth year of the Hospital VBP Program, affecting payment for inpatient stays in approximately 3,000 hospitals across the country. Hospitals’ payments will depend on:

  • How well they performed – compared to their peers – on important healthcare quality and resource use measures during a performance period.
  • How much they have improved the quality of care provided to patients over time.

For FY 2017, more hospitals will have an increase in their base operating MS-DRG payments than will have a decrease. In total, over 1,600 hospitals will have a positive payment adjustment.

For FY 2017, about half of hospitals will see a small change in their base operating MS-DRG payments (between -0.5 and 0.5 percent). After taking into account the statutorily mandated 2 percent withhold, the highest performing hospital in FY 2017 will receive a net increase in payments of slightly more than 4 percent, and the lowest performing hospital will incur a net reduction of 1.83 percent.

Read more…

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