2012 Brings New Inpatient Reimbursement Policies & Rates

Total Medicare operating payments to acute care hospitals for inpatient services occurring in fiscal year (FY)  2012 will increase by $1.13 billion, or 1.1 percent, under the Inpatient Prospective Payment Systems (IPPS) which is an increase from the 0.55 percent increase proposed earlier in the year, according to a Final rule put on display by CMS on August 1, 2011.  Medicare payments to long-term care hospitals (LTCHs) in FY 2012 are projected to increase by $126 million or 2.5 percent in FY 2012 which is also in an increase from the earlier proposed increase of 1.9 percent, according to the same Final rule.

Hospital Readmissions Reduction Program

The Final rule implements the  Hospital Readmissions Reduction Program authorized by the Patient Protection and Affordable Care Act (PPACA).  This program  will reduce payments beginning in FY 2013 – for discharges on or after Oct. 1, 2012 ‑ to certain hospitals that have excess readmissions for certain selected conditions.  The Final rule finalizes readmissions measures for three conditions — acute myocardial infarction (or heart attack), heart failure, and pneumonia – as well as the methodology that will be used to calculate excess readmission rates for these conditions.  The program is designed to provide hospitals with an incentive to reduce preventable hospital readmissions and improve care coordination.

Medicare Spending per Beneficiary

The IPPS Final rule adopts an additional measure ‑ Medicare spending per beneficiary ‑ that will be used both in the hospital Inpatient Quality Reporting (IQR) Program and the Hospital value based purchasing program.  This new measure, which will affect payment determinations for FY 2014, will assess Part A and Part B beneficiary spending during a “Medicare spending per beneficiary episode,” that spans from three days prior to a Medicare beneficiary’s admission to a hospital through 30 days after the patient is discharged.

For each hospital, CMS will add up nearly all of the Medicare Part A and Part B payments made for services rendered during Medicare spending per beneficiary episodes and then divide this sum by the number of Medicare spending per beneficiary episodes for the hospital.   CMS will then calculate each hospital’s Medicare spending per beneficiary ratio by dividing this amount by the median Medicare spending per beneficiary amount across all hospitals.  The goal of this measure is to encourage hospitals to provide high quality care to Medicare beneficiaries at a lower cost and to promote greater efficiencies across care settings.  CMS originally proposed to measure spending through 90 days after discharge.  In response to comments, CMS adopted a Medicare spending per beneficiary episode that assesses spending through 30 days after discharge.

Quality Reporting 

The IQR measure set has grown from a starter set of 10 quality measures in 2004 to the current set of 76 measures for the FY 2015 payment determination.  The 76 measures include: (1) chart-abstracted measures for heart attack, heart failure, stroke, venous thromboembolism, pneumonia, surgical care improvement,  emergency department throughput, and global immunization; (2) healthcare-associated infection measures collected through the Center for Disease Control and Prevention’s National Healthcare Safety Network for central line-associated bloodstream infection (CLABSI), surgical site infection (SSI), catheter-associated urinary tract infection (CAUTI), MRSA bacteremia, C. Difficile, and influenza vaccination coverage among healthcare personnel; (3) claims-based measures for mortality and readmissions for heart attack, heart failure, and pneumonia; (4) claims-based measures of Hospital Acquired Conditions (HACs); (5) AHRQ Patient Safety Indicators and Inpatient Quality Indicators; (6) nursing sensitive care measure; (7) an efficiency measure for Medicare spending per beneficiary; (8) a survey-based measure of patient satisfaction; and  (9) structural measures for participation in a cardiac surgery, stroke care, nursing sensitive care, and general surgery database registries.

 These changes apply to services provided at approximately 3,400 acute care hospitals and 420 LTCHs.