On April 14, 2017, the Centers for Medicare & Medicaid Services  issued a proposed rule that would update 2018 Medicare payment and polices when patients are admitted into hospitals. The proposed rule aims to relieve regulatory burdens for providers; supports the patient-doctor relationship in health care; and promotes transparency, flexibility, and innovation in the delivery of care.

Proposed Changes to Payment Rates under IPPS
The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 1.6 percent. This reflects the projected hospital market basket update of 2.9 percent adjusted by a -0.4 percentage point required for productivity. This also reflects a -0.6 percent adjustment to remove the one-time adjustment of 0.6 percent made in FY 2017 for the FYs 2014–2016 effect of the adjustment to offset the estimated costs of the two midnight policy, a proposed +0.4588 percentage point adjustment required by the statute, as recently amended by the 21^st Century Cures Act, and the    -0.75 percentage point adjustment to the update required by the Affordable Care Act.

Medicare Uncompensated Care Payments

For FY 2018, CMS proposes to begin incorporating uncompensated care cost data from Worksheet S-10 of the Medicare cost report in the methodology for distributing these funds. Specifically, for FY 2018, CMS proposes to use Worksheet S-10 data from FY 2014 cost reports in combination with insured low income days data from the two preceding cost reporting periods to determine the distribution of uncompensated care payments.

Hospital-Acquired Conditions (HAC) Reduction Program
The HAC Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make payment adjustments to applicable hospitals that rank in the worst-performing quartile. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to make five changes to existing HAC Reduction Program policies:

Specify the dates of the time period used to calculate hospital performance for the FY 2020 HAC Reduction Program;

1. Request comments on additional measures for potential future adoption;
2. Request comments on accounting for social risk factors;
3. Request comments on accounting for disability and medical complexity in the CDC NHSN measures in Domain 2; and
4. Update the Extraordinary Circumstance Exception policy.

Hospital Readmissions Reduction Program (HRRP)
The HRRP requires a reduction to a hospital’s base operating DRG payment to account for excess readmissions associated with selected applicable conditions. For the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to implement changes to the payment adjustment factor in accordance with the 21st Century Cures Act. CMS will propose to assess penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid. Specifically, CMS is proposing the following:

1. A methodology for calculating the proportion of dual-eligible patients;
2. A methodology for assigning hospitals to peer groups; and
3. A payment adjustment formula calculation methodology.

In addition, CMS is proposing to specify the applicable time period and the methodology for the calculation of aggregate payments for excess readmissions for FY 2018 and to update the program’s Extraordinary Circumstance Exception policy.

Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs for Eligible Hospitals, Critical Access Hospitals (CAHs), and Eligible Professionals (EPs)
In 2011, the Medicare and Medicaid EHR Incentive Programs were established to encourage eligible professionals, eligible hospitals, and critical access hospitals (CAHs) to adopt, implement, upgrade (AIU), and demonstrate meaningful use of certified EHR technology (CEHRT).

Proposed Changes to Clinical Quality Measures (CQMs)

In the FY 2018 IPPS/LTCH PPS proposed rule, for eligible hospitals and CAHs participating in the EHR Incentive Program, CMS is proposing changes for Calendar Year 2017 and for Fiscal Year 2018. See the links below for additional information on the specific changes proposed.

Proposed Changes for the Medicare and Medicaid EHR Incentive Programs

For 2018, CMS is proposing to modify the EHR reporting periods for new and returning participants attesting to CMS or their state Medicaid agency from the full year to a minimum of any continuous 90-day period during the calendar year.

Additionally, CMS proposes to use Place of Service (POS) code 24 to identify services furnished in an ASC and requesting public comment on whether other POS codes or mechanisms should be used to identify sites of service in addition to or in lieu of POS code 24.

Hospital Inpatient Quality Reporting (IQR) Program
The Hospital IQR Program is a quality reporting program established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to refine two previously adopted measures as follows:

1. Re-wording the current pain management questions in the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey to focus on the hospital’s communications with patients about the patients’ pain during the hospital stay beginning with surveys in January 2018; and

2. Changing the risk adjustment methodology used in the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate following Acute Ischemic Stroke Hospitalization (Stroke 30-Day Mortality Rate) measure to include stroke severity codes (based on the NIH Stroke Scale), beginning with the FY 2023 payment determination.

CMS is also proposing voluntary reporting of one new measure, the Hybrid Hospital-Wide Readmission Measure with Claims and Electronic Health Record Data, for the CY 2018 reporting period.

In addition, CMS is proposing a number of changes in relation to the reporting of electronic clinical quality measures (eCQMs). (See the link below for additional information on this item.)

Hospital Value-Based Purchasing (VBP) Program
The Hospital VBP Program adjusts payments to hospitals for inpatient services based on their performance on an announced set of measures. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to implement updates to the Hospital VBP Program, including the removal of one measure and adoption of two measures. Specifically, the rule proposes to:

1. Remove the current 8-indicator Patient Safety for Selected Indicators (PSI 90) measure from the Safety domain beginning with the FY 2019 program year;

2. Adopt the 10-indicator modified Patient Safety and Adverse Events Composite PSI 90 measure beginning in the FY 2023 program year;

3. Adopt the Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode of Care for Pneumonia measure for the Efficiency and Cost Reduction domain beginning with the FY 2022 program year; and

4. Revise the Efficiency and Cost Reduction domain weighting beginning with the FY 2021 program year to reflect the implementation of condition-specific payment measures in the Hospital VBP Program.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The PCHQR Program collects and publishes data on an announced set of quality measures. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to collect four new measures, remove three previously-adopted measures, and implement revisions to the PCHQR Extraordinary Circumstances Exceptions (ECE) Policy. Specifically, CMS is proposing to add four measures that assess end-of-life care:

1. Proportion of Patients Who Died from Cancer Receiving Chemotherapy in the Last 14 Days of Life (NQF #0210);
2. Proportion of Patients Who Died from Cancer Admitted to the ICU in the Last 30 Days of Life (NQF #0213);
3. Proportion of Patients Who Died from Cancer Not Admitted to Hospice (NQF #0215); and
4. Proportion of Patients Who Died from Cancer Admitted to Hospice for Less than Three Days (NQF #0216).

CMS is also proposing to remove three cancer-specific, chart-abstracted process measures:

1. Adjuvant Chemotherapy is Considered or Administered Within four Months (120 Days) of Diagnosis to Patients Under the Age of 80 with AJCC III (Lymph Node Positive) Colon Cancer (NQF #0223);
2. Combination Chemotherapy is Considered or Administered Within four Months (120 Days) of Diagnosis for Women Under 70 with AJCC T1c, or Stage II or III Hormone Receptor Negative Breast Cancer (NQF #0559); and
3. Adjuvant Hormonal Therapy (NQF #0220).

Inpatient Psychiatric Facility Quality Reporting Quality Reporting (IPFQR) Program
The IPFQR Program is a quality reporting program established by the Affordable Care Act. In the proposed rule, CMS is proposing one additional measure for the program. Specifically, beginning with FY 2020 payment determination, and continuing for subsequent years, CMS is proposing to add one measure, Medication Continuation following Inpatient Psychiatric Discharge, which is calculated from claims data. Second, CMS is proposing to update the IPFQR Program’s extraordinary circumstances exception (ECE) policy to align with other programs’ ECE provisions. Third, CMS is proposing to change how the annual data submission period is specified in order to align the end of this period with the deadline for submitting a Notice of Participation (NOP) or withdrawing from the program. Finally, CMS is proposing factors by which it would evaluate measures to be removed from or retained in the IPFQR Program.

Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Changes
Nationwide, most inpatients are treated in acute care hospitals, but some are admitted to LTCHs. In this proposed rule, CMS is proposing to update the LTCH PPS standard Federal payment rate by 1 percent, consistent with the provisions of the Medicare Access and CHIP Reauthorization Act of 2015. This is the payment rate applicable to LTCH patients that meet certain clinical criteria under the dual rate LTCH PPS payment system required by the Pathway for SGR Reform Act of 2013. Overall, based on the changes included in this proposed rule, CMS projects that LTCH PPS payments would decrease by approximately 3.75 percent, or $173 million in FY 2018, which is due in large part to the continued phase in of the dual payment rate system.

Long Term Care Hospital Quality Reporting Program (LTCH QRP)

Under the LTCH QRP, the applicable annual update to the LTCH PPS standard Federal payment rate for discharges applicable to an LTCH is reduced by two percentage points if the LTCH does not submit to CMS data on specified quality measures. Beginning with the FY 2020 program year, LTCHs must also report standardized patient assessment data related to five specified patient assessment categories.

In this FY 2018 proposed rule, CMS is proposing to replace the current pressure ulcer measure with an updated version of that measure, as well as adopt two new companion measures (one process and one outcome) related to ventilator weaning, beginning with the FY 2020 LTCH QRP. These proposed measures are:

1. Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
2. Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay
3. Ventilator Liberation Rate

Further, CMS is proposing to remove two currently adopted measures Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) and All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from LTCHs. CMS is also proposing to begin publicly reporting since new measures to display on the LTCH Compare website by fall 2018 and two new measures to display on the LTCH Compare website by fall 2020.

In addition to our proposals related to quality measures and public reporting, CMS is also proposing that, beginning with the FY 2020 program year, LTCHs begin reporting standardized patient assessment data, and that beginning with the FY 2020 program year, LTCHs begin reporting additional standardized patient assessment data with respect to five specified patient assessment categories required by law, including:

1. functional status;
2. cognitive function;
3. special services, treatments and interventions;
4. medical conditions and co-morbidities; and
5. impairments.

Lastly, CMS is making proposals with respect to the applicability of current procedural requirements, such as the reporting schedule, to the reporting of standardized patient assessment data.

Notice Regarding Changes to Instructions for the Review of the Critical Access Hospital (CAH) 96-Hour Certification Requirement
For inpatient CAH services to be payable under Medicare Part A, the statute requires that a physician certify that the individual may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the CAH. Based on feedback from stakeholders CMS has reviewed the CAH 96-hour certification requirement to determine if there are ways to reduce its burden on providers. In this proposed rule, CMS is providing notice that it will direct Quality Improvement Organizations (QIOs), Medicare Administrative Contractors (MACs), the Supplemental Medical Review Contractor (SMRC), and Recovery Audit Contractors (RACs) to make the CAH 96-hour certification requirement a low priority for medical record reviews conducted on or after October 1, 2017. This means that absent concerns of probable fraud, waste or abuse of the coverage requirement, these contractors will not conduct medical record reviews.

Proposed Changes for Indian Health Service (IHS) or Tribal Facilities and Hospital-within-Hospitals (HwHs)
As part of its effort to reduce regulatory burden, CMS is proposing changes to the provider-based regulations as they relate to IHS or Tribal facilities, and separately is also proposing to revise certain HwH requirements, which are regulations governing payment where hospitals are co-located.

Other proposed changes involve: Revisions to the Application and Re-Application Procedures for National Accrediting Organizations (AOs) and Changes to Termination Notices.

Finally, regarding the Rural Community Hospital Demonstration, CMS is proposing to align the periods of performance for both previously participating hospitals and newly selected hospitals during the second 5-year extension period such that the performance periods for any of the hospitals would start with a hospital’s first cost reporting period beginning on or after October 1, 2017 following upon the announcement of the selection of the additional hospitals. In addition, CMS is proposing to apply a budget neutrality methodology similar to that of previous years by proposing to adjust the national IPPS rates to account for the added costs of the demonstration program.

Additional information is available by viewing this document in the Federal Register for April 28, 2017.