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August 2, 2007

Medicare Quality Updates: Inpatient Final Rules and Outpatient Proposed Rules

Medicare released rules late yesterday on the payment and regulatory changes for the Medicare program for federal fiscal year 2008 (starting October 1, 2007) and expected changes for federal fiscal year 2009 and beyond. Additionally, last week the Centers for Medicare and Medicaid Services (CMS) proposed the addition of 10 outpatient measurements for hospital outpatient services under the Outpatient Prospective Payment System effective January 1, 2008.

While the important details on the more than 3,000 pages of inpatient and outpatient rules will be shared over the next few weeks, I wanted to briefly respond to many inquiries received over the past few days on changes that will impact hospitals financially as it pertains to their quality performance and assessment. IHA’s Quality area and COMPdata will host a couple of conference calls to review the regulations in greater detail and assess potential impact on providers. These calls will take place in mid-August and hospitals will be notified in advance of the call in numbers and dates.

Medicare Inpatient Changes Per Medicare Final Rules
MS-DRG going into effect October 1, 2007. Will expand number of DRGs from 538 DRGs to 745 MS-DRGs. Another major change is that instead of identifying cases with or without complications or comorbidities, the diagnostic tiering will occur at three levels: Major complication or comorbidity; a complication or comorbidity; or no complication or comorbidity. IHA’s COMPdata will be receiving the MS-DRG software under the final rules and will re-group a year of historical data so that hospitals may better understand the impact of the MS-DRG on their hospital. COMPdata will notify hospitals of its availability.

Present on Admission (POA) coding required to be reported starting October 1, 2007 and will be used to reduce payment for targeted conditions. As you may recall, IHA notified hospitals of CMS change request 5499 that was issued in October 2006 which called for the inclusion of the POA codes on all inpatient PPS claims. While CMS announced a start up date of October 1, 2007 under Change Request 5499; there was a three month transition ending December 31, 2007. Under Change Request 5499, inpatient PPS claims would need to have the POA on claims or face being rejected by Medicare. IHA will keep hospitals informed of whether or not Medicare intends to reject claims for POA not being present; and if they do, what is the time frame for that change to occur.

Reductions in payment starting October 1, 2008 --- reductions will occur for one of the following not present on admission conditions (occurred within hospital stay) at a MS-DRG rate as if the condition did not exist on the record.  That is, if there are 6 conditions and one is decubitis ulcer that occurred during hospital stay, it would ignore decubitis ulcer and read in the other 5 conditions for payment.

While the proposed rules indicated that 2 or more areas could be targeted for payment reductions, there are 8 areas targeted for federal fiscal year 2008 and with another 3 under consideration, and yet another 3 under development. Please keep in mind, the POA code will be the factor in determining any payment reductions for the following conditions.

"These conditions will be made subject to the provision beginning on October 1, 2008: (FY 2009):

We will also propose the following conditions for consideration in the FY 2009 IPPS proposed rule. We will work diligently to address issues surrounding these conditions and propose to select these conditions in the FY 2009 IPPS final rule.

Finally, we list below the set of conditions that signal further analysis for future implementation:

Value Based Purchasing Plan still under development.  While the proposed plan was to be available by now for implementation in federal fiscal year 2009, it is still undergoing changes. Remember, this is the initiative that is to provide financial incentive (or disincentive) for HQA reporting and performance starting in federal fiscal year 2009.

HQA Inpatient - Required reporting of now 28 measurements (more possible) for 3.3% market basket increase (1.3% if not reporting measurements). The only approved measurement is the Pneumonia mortality measurement which hospitals are reviewing their data right now and providing feedback to the QIO on results or issues.

However, CMS indicated that additional inpatient measurements might be required under the Outpatient PPS regulations that will be final by November as they had anticipated adding more measurements, but they had not yet been approved by National Quality Forum (NQF). The inpatient measurements under review by NQF that could be required in the outpatient rules are:

While SCIP 7 – Patients with immediate postoperative normothermia is under consideration, it is not expected to be approved by NQF in time for inclusion in the outpatient regulations. Keep in mind, hospitals will be reporting 28 measurements and HCAHPS starting October 1, 2007.

Validation appears to remain the same with expansion from 3 quarters to 4 quarters along with a bundling of scores during a time period and with a formalized appeal process. Changes for future years are expected but will not occur during this upcoming fiscal year.

EHR and EMR and HQA Data - One of the major challenges and it was acknowledged in the regulations is that the present EHRs and EMRs cannot report process measurements to HQA - they can report results and have built in system interventions for processes, but they cannot output process info for HQA.  While Medicare and other federal and public-private organizations are meeting to address this concern, there will be little relief in the upcoming federal fiscal year. Therefore, Medicare will not make any exceptions and providers will need to abstract the information directly from the EHRs and EMRs and then enter into different systems to report to HQA.  

Medicare Outpatient Quality Measurement Changes Per Medicare Proposed Rules
Medicare proposed the following outpatient measurements for hospital outpatient PPS services starting January 1, 2008. Hospitals that participate in the initiative would receive their full market basket increase; hospitals that do not would have a 2% decrease in their annual market update. Some of the measurements are similar to some of the inpatient HQA measurements and others are similar to that reported by physicians under the voluntary reporting initiative started July 1, 2007 known as the Physician Quality Reporting Initiative (PQRI).

Five of the AMI or heart attack measurements are targeted to assess and measure performance of hospitals in the care delivered prior to the transfer of a heart attack patient. While the rules refer to patients in the emergency department, we are seeking clarification on whether or not that would include observation care patients that bypassed emergency department and were placed directly into observation care.

Please keep in mind that the following measurements are still under review by National Quality Forum and could be changed by the time the final rule is issued. CMS has noted they will be flexible in switching in and out some measurements pending NQF outcomes. Also, as many of you have inquired, there are no specifications available at this point and no detailed information on the measurements for hospitals or their vendors to begin information technology changes or adjustments.

The following are the proposed measurements:

IHA will continue to keep you updated on the inpatient and outpatient quality measurements under the Medicare rules and the anticipated implementation requirements and schedules.

Staff Contact: Pat Merryweather: (630) 276-5590