Fact Sheets

FY 2008 INPATIENT PROSPECTIVE PAYMENT SYSTEM PROPOSED RULE IMPROVING THE QUALITY OF HOSPITAL CARE

FY 2008 INPATIENT PROSPECTIVE PAYMENT SYSTEM PROPOSED RULE IMPROVING THE QUALITY OF HOSPITAL CARE

On April 13, 2007, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update the hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2008.  The proposed reforms in this rule continue the Agency’s commitment to health care quality and to making health care more affordable and accessible for Medicare beneficiaries. 

The Reporting Hospital Quality Data for Annual Payment Update Program

Background

Section 5001(a) of the Deficit Reduction Act of 2005 (DRA) set out new requirements for the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program.  The DRA provides that, beginning with the payment update for FY 2007 and each subsequent fiscal year, the annual percentage increase amount will be reduced by 2.0 percentage points for any “subsection (d) hospital” that does not submit certain quality data in a form and manner, and at a time, specified by the Secretary.  In addition, the DRA requires that CMS begin to expand the “starter set” of 10 quality measures that have been used since 2003.  (See chart below.)

Quality Measure Set for FY 2008

In the FY 2007 IPPS and hospital outpatient prospective payment system (OPPS) final rules, CMS proposed to add new measures to the RHQDAPU program to bring the total to 27 measures for FY 2008. 

To receive the full hospital update for FY 2008, hospitals will be required to report the following 27 measures:

* Measure included in 10 measure starter set

** Measure included in 21 measure expanded set for FY 2007

*** Measure included in 27 measure expanded set for FY 2008

Expansion of Measure Set for FY 2009

Continued expansion of the quality measure set is consistent with the letter and spirit of the DRA.  The Secretary is required to expand the set of measures determined to be appropriate for the measurement of the quality of care furnished by hospitals in inpatient settings, beginning with FY 2007.  In the FY 2008 IPPS proposed rule, CMS is proposing to move quickly to add new measures for the FY 2009 annual payment update determination.  For FY 2009, the set of measures for the RHQDAPU program will consist of the 27 measures identified for FY 2008 and the following additional measures:

• Pneumonia 30-day Mortality (Medicare patients)
• SCIP Infection 4: Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glucose
• SCIP Infection 6: Surgery Patients with Appropriate Hair Removal 
• SCIP Infection 7: Colorectal Patients with Immediate Postoperative Normothermia
• SCIP Cardiovascular 2: Surgical Patients on Beta Blocker Therapy Prior to Admission Who Received a Beta Blocker During the Perioperative Period

These measures have been put forth by the Hospital Quality Alliance (HQA) for inclusion in its public reporting set, contingent upon endorsement by the National Quality Forum (NQF).  The measures are also fully specified and included in the CMS-Joint Commission Specifications Manual for National Hospital Quality Measures.  The measures offer important additions to our understanding of patient outcomes (mortality) and patient safety efforts, and could help encourage additional systems change in hospitals in the areas of pneumonia care and surgical services.  These five measures are all currently under endorsement review by the NQF and will be added to the measure set, contingent on their receiving NQF endorsement by publication of the final rule.  Data collection for these measures for purposes of RHQDAPU will begin in CY 2008.

CMS is also soliciting comments on whether and how to add other measures to the RHQDAPU measure set for payments beginning in FY 2009 and future years.  Based on the measures identified in the proposed rule, CMS is soliciting input from a broad set of stakeholders concerning: (1) priority for implementation of measures or topics in FY 2009 and beyond, (2) challenges/potential benefits posed by identified measures or topics, and (3) identification of gaps in topics or conditions (including process and outcomes).  Based on comments received, additional measures and topics might be identified and included in the final measure set for FY 2009. 

Data Submission

For purposes of the FY 2008 payment determination, CMS is proposing to require hospitals to submit aggregate population and sample size counts for Medicare and non-Medicare discharges for the four topic areas (AMI, HF, PNE, and SCIP) on a quarterly basis.  Improved data quality will allow CMS to assess the completeness of hospital submitted data for all payers. 

Public Display Identifying Hospitals that Share a Common Medicare Provider Number

In response to concerns raised by providers, CMS is proposing to increase transparency in public reporting and improve the usefulness of the Hospital Compare website by identifying IPPS hospitals that share a common Medicare Provider Number (MPN) and noting on the Hospital Compare website where publicly reported measures combine the experience of two or more hospitals.  Currently, hospitals that share the same MPN must combine data collection and submission (for both clinical measures and for HCAHPS).  These measures are then publicly reported as if they represented a single hospital.  CMS estimates that approximately 5 to 10 percent of the hospitals reported on Hospital Compare share their MPN with other hospitals. 

CMS is currently revising the Annual Payment Update (APU) pledge for hospital participation in the RHQDAPU program.  To identify shared MPNs, the APU pledge would be amended to require the name and address of each hospital that shares the same MPN.  This will produce a full enumeration of individual APU hospitals and will only be used for public reporting purposes; billing, claims and other processes would not be affected.   

Hospital-Acquired Conditions

Section 5001(c) of the DRA requires hospitals to begin reporting on October 1, 2007 the secondary diagnoses that are present on the admission (POA) of patients.  By October 1, 2007, the Secretary must select at least two conditions that are: (1) high cost or high volume or both; (2) assigned to a higher paying DRG when present as a secondary diagnosis; and (3) reasonably preventable through application of evidence-based guidelines.  Beginning October 1, 2008, cases with these conditions would not be assigned to a higher paying DRG unless they were present on admission.

CMS has been working with CDC and others to implement this provision.  CMS formed a workgroup, consisting of physicians and staff from CMS and CDC, to review a list of potential conditions for selection.  CMS also held listening sessions with hospital associations and other organizations in order to gain input on potential selections.  CMS prioritized a list of 13 potential conditions using the following criteria:

(1) high cost or high volume or both;

(2) assigned to a higher paying DRG when present as a secondary diagnosis; and,

(3) reasonably preventable through application of evidence-based guidelines.

In the proposed rule, CMS is proposing to select the first six conditions on the list that meet the criteria for being subject to the statutory provision.  These include catheter associated urinary tract infections, pressure ulcers, staphylococcus aureus septicemia, as well as three serious preventable events (sometimes called “never events”), which are objects left in surgery, air embolisms, and blood incompatibility.  CMS is soliciting comments on all of the conditions on the list, including whether they are reasonably preventable, currently have unique codes, and would be good candidates for the future if unique codes are developed. 

Value-Based Purchasing

Section 5001(b) of the DRA requires CMS to develop a plan to implement a Value-Based Purchasing (VBP) Program for payments under the Medicare program for subsection (d) hospitals beginning with FY 2009.  Congress specified that the plan include consideration of the following issues:

• The ongoing development, selection, and modification process for measures of quality and efficiency in hospital inpatient settings.
• The reporting, collection, and validation of quality data.
• The structure of value-based payment adjustments, including the determination of thresholds or improvements in quality that would substantiate a payment adjustment, the size of such payments, and the sources of funding for the value-based payments.
• The disclosure of information on hospital performance.

CMS has created an internal Hospital Pay-for-Performance Workgroup that is charged with developing the VBP Plan for Medicare hospital services.  The workgroup is organized into four subgroups to address each of the required planning issues: (1) measures; (2) data collection and validation; (3) incentive structure; and (4) public reporting.  The workgroup has been charged with preparing a set of design options, narrowing the options to prepare a draft plan, and preparing the final plan for implementing VBP for Medicare hospital services that will be provided to Congress.  The final Medicare Hospital Value-Based Purchasing Plan is expected to be completed by June 2007. 

Recalled/No Cost/Partial Credit Devices

In the calendar year 2007 OPPS final rule, a policy was adopted to pay a hospital less when a device is provided to them at no cost.  In the FY 2008 IPPS proposed rule, CMS is proposing to expand this policy to the IPPS.

When a medical device is recalled or replaced under warranty, hospitals will often receive a replacement at low or no cost.  Currently, there is no differential in payment to the hospital under the IPPS based on whether the hospital received a full or partial credit.  In the FY 2007 IPPS final rule, CMS indicated a need to develop a methodology to determine the amount of the reduction to the otherwise payable IPPS payment amount when a device is replaced without cost to the provider or beneficiary or when the provider receives full credit for the cost of a replaced device.

Since a manufacturer will often provide a credit or partial credit for the recalled device rather than a free replacement, CMS is proposing to apply the policy when the hospital received a credit equal to 20 percent or more of the cost of the device.  Under the proposal, hospitals will be required to identify when they receive a replacement device and CMS will reduce the DRG payment to reflect the hospital’s lower cost.  CMS believes that the routine identification of Medicare claims for certain device implantation procedures in situations where a payment adjustment is appropriate may enhance the medical community’s recognition of device‑related problems, potentially leading to more timely improvements in medical device technologies.