Proposed Quality Reporting Changes for Hospitals per IPPS Proposed Rule

Holding true to the theme of many provisions of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), the fiscal year (FY) 2014 Inpatient Prospective Payment System (IPPS) Proposed rule focuses largely on improving the quality of care provided to Medicare beneficiaries. The aim of PPACA is to improve access to high-quality and affordable care for all Americans, while bringing down costs for the health care system in general. The FY 2014 IPPS Proposed rule takes great strides in improving care, by creating a new program meant to reduce the number of hospital-acquired conditions (HACs), expanding the value-based purchasing (VBP) and hospital readmissions reduction programs, and furthering quality reporting requirements for various facilities and expanding them into additional facilities. Changes would be effective for discharges occurring on or after October 1, 2013.

Hospital-Acquired Condition (HAC) Reduction Program. The FY 2014 Proposed rule presents the new HAC Reduction Program, required under §3008 of PPACA. Under this program, hospitals would be penalized for having a high incidence of HACs, andthe 25 percent worst performing hospitals with respect to HACs would only be paid 99 percent of what they would otherwise receive from Medicare. Starting in FY 2015, hospitals would have to report on two domains of measures related to HACs. Domain 1 includes six patient safety indicator (PSI) measures: pressure ulcer rate, volume of foreign object left in the body, iatrogenic pneumothorax rate, postoperative physiologic and metabolic derangement rate, postoperative pulmonary embolism or deep vein thrombosis rate, and accidental puncture and laceration rate.  Domain 2 has two healthcare-associated infection measures: Central Line-Associated Blood Stream Infection and Catheter-Associated Urinary Tract Infection. To score hospitals to determine their quartile, they would be scored on each measure in each domain, and from that, a score would be determined for each domain.  The two domain scores would then be weighed equally to determine a total score (taking in to account patient’s age, gender and comorbidities to avoid hospitals treating more sicker patients from being unfairly penalized). Payments may be affected starting in FY 2015.

Value-Based Purchasing (VBP) Program. Created under §3001 of PPACA, the VBP program provides Medicare-participating hospitals with incentive payments for meeting performance standards selected by the Secretary of HHS. The standards relate to common conditions such as heart failure and pneumonia. The FY 2014 rule proposes to raise the amount available to fund incentives (up to about $1.1 billion) and increase the reduction to base operating diagnosis-related group (DRG) payment amounts (to 1.25 percent). Further, three new measures are posed which would be applicable for FY 2016: (1) influenza immunization; (2) Catheter-Associated Urinary Tract Infection (CAUTI); and (3) Surgical Site Infection (SSI).

Hospital Readmissions Reduction Program (HRRP). Section 3025 of PPACA mandates the creation of the HRRP, and requires that IPPS hospitals receive reduced payments when their readmissions for certain conditions are “excessive.”  The conditions that are the subject of this program are pneumonia, heart failure, and acute myocardial infarction. The Proposed rule presents two possible additional measures, readmissions for hip/knee arthroplasty and chronic obstructive pulmonary disease, and proposes changes to take into account readmissions that are planned.

Quality Reporting. The Hospital Inpatient Quality Reporting (IQR) program began in 2004 with a list of 10 measures, on which hospitals must report to avoid a two percent reduction in Medicare payments. Under the Proposed rule, a total of 57 measures would be required. New measures are proposed for the quality reporting program for (1) long-term care hospitals which would go into effect for FYs 2017 and 2018, (2) PPS-exempt cancer hospitals, effective in FY 2015, (3) the new inpatient psychiatric hospital program, which will affect FY 2016 payments.

As is the procedure for the release of Proposed rules, comments are requested from stakeholders until June 25, 2013. The Final rule, which will be published no later than August 1, 2013, will respond to the comments received by the deadline.