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CMS Issues 2018 IPPS Proposed Rule with Eye on Regulatory Simplification

April 17, 2017
by Rajiv Leventhal
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The rule signals the first noteworthy move from CMS Administrator Seema Verma as it relates to payment regulation

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would update 2018 Medicare payment and polices when patients are admitted into hospitals. The rule also has several other components to it related to health IT and value-based purchasing, including a stipulation that would allow eligible professionals (EPs) to report to a 90-day reporting period for the meaningful use program in 2018.

Late in the afternoon on April 14, CMS posted the “Fiscal Year (FY) 2018 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule, and Request for Information” to the Federal Register. In all, the more than 1,800-page rule covers a variety of Medicare program updates for 2018 as well as a request for information to solicit ideas for regulatory, policy, practice and procedural changes that would ease the burden that prior policies have put on clinicians. Indeed, according to a CMS announcement, “The proposed rule aims to relieve regulatory burdens for providers; supports the patient-doctor relationship in healthcare; and promotes transparency, flexibility, and innovation in the delivery of care.” The fact sheet for the rule can be read here.

Overall, in its attempt to relieve providers of administrative burdens and encouraging patient choice, CMS is proposing a one year regulatory moratorium on the payment policy threshold for patient admissions in long-term care hospitals while the agency continues to evaluate long-term care hospital policies. CMS is also proposing to reduce clinical quality measure (CQM) reporting requirements for hospitals that have implemented electronic health records (EHRs). Some of the rule’s most noteworthy components include:

  • For 2017, eligible hospitals and critical access hospitals (CAHs) demonstrating meaningful use for the first time in 2017 or that have demonstrated meaningful use in any year prior to 2017, the reporting period would be two self‑selected quarters of CQM data, rather than a full calendar year.
  • Also for 2017, if an eligible hospital or CAH is only participating in the EHR Incentive Program, or is participating in both the EHR Incentive Program and the Hospital Inpatient Quality Reporting (IQR) program, the eligible hospital or CAH would report on at least six self-selected of the available CQMs, rather than eight, as previously constructed.
  • For 2018, CMS is also 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.
  • What’s more, as mandated by the 21st Century Cures Act, CMS is proposing to add a new exception from the Medicare payment adjustments for EPs, eligible hospitals, and CAHs that demonstrate through an application process that compliance with the requirement for being a meaningful EHR user is not possible because their certified EHR technology has been decertified under ONC’s Health IT Certification Program.
  • Furthermore, CMS is inviting public comment on potential new quality measures for future inclusion in the Hospital IQR Program, accounting for social risk factors, and providing confidential feedback reports to hospitals with measure rates for certain measures stratified by patients’ dual eligibility status.

Related to payment increases, CMS noted that it currently pays acute care hospitals (with a few exceptions specified in the law) for inpatient stays under the IPPS and long-term care hospitals under the LTCH PPS. Under these two payment systems, CMS sets base payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness.

But the new proposed changes, which would apply to approximately 3,330 acute care hospitals and approximately 420 LTCHs, would affect discharges occurring on or after October 1, 2017.

Specifically, 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 Program and are meaningful EHR users is approximately 1.6 percent.

CMS projects that the rate increase, together with other proposed changes to IPPS payment policies, will increase IPPS operating payments by approximately 1.7 percent, and that proposed changes in uncompensated care payments will increase IPPS operating payments by an additional 1.2 percent for a total increase in IPPS operating payments of 2.9 percent. Other additional payment adjustments will include continued penalties for excess readmissions, a continued 1 percent penalty for hospitals in the worst performing quartile under the Hospital Acquired Condition Reduction Program, and continued upward and downward adjustments under the Hospital Value-Based Purchasing Program. In sum, CMS projects that total Medicare spending on inpatient hospital services, including capital, will increase by about $3.1 billion in FY 2018.

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