Final Rule (develop title)

Summary of Major Provisions
Effective October 1, 2013
Developed by: Annie Lee Sallee
HTH Revenue Cycle Education Specialist
[email protected]
Learning Outcomes
• At the end of this course, each participant should
be able to:
1. Recall the major provisions of the final rule for
FY 2014.
2. Recognize how each may impact your hospital.
3. Identify the necessary steps in order to
respond or take action to comply with or
prepare for the major provisions.
IPPS Payment Adjustments
• The final rule increases payments to hospitals by
0.7%, accounting for market basket adjustment of
1.7% and a 0.8% documentation and coding “case
mix” adjustment, and a 0.2% reduction in the
standardized amount (and hospital-specific rates) to
offset additional IPPS expenditures for the new
inpatient admission criteria.
What affects the IPPS payment
• Documentation & Coding Adjustment - Between
FY 2014 and FY 2017 Medicare plans to recoup funds
due to past overpayments the government made to
hospitals as the country transitioned to MS-DRGs
(required by the American Taxpayer Relief Act of 2012 ).
• Refinement of Relative Value Weight Calculation
- This impact models payments to various hospital types
using relative weights developed from 19 CCRs (Cost-toCharge Ratio) which now include implantable devices,
MRIs, CT scans and cardiac catheterization.
• Revision of Hospital Market Baskets – fixed weight
index to measure price changes; annual updates are
required by Medicare law.
Changes to Programs and New or
Revised Policies
Readmission Reduction Program
Hospital Value-Based Purchasing
Hospital Acquired-Condition Reduction Program
Direct GME Payments
DSH Payment Adjustments
Payment for Part B Inpatient Services
New Inpatient Admission Rule
Hospital Inpatient Quality Reporting Program
Changes to LTCH PPS
Inpatient Psych Facility Quality Reporting Program
CoP Changes
Readmission Reduction Program
• CMS defines readmission as an admission to a
subsection(d) hospital within 30 days of a discharge
from the same or another subsection(d) hospital.
• Requires a reduction (of no more than 2%) to an
eligible hospital’s base operating DRG payment to
account for excess readmissions of the selected
applicable conditions: acute myocardial infarction,
heart failure, and pneumonia.
• Established additional exclusions to 3 measures to
account for planned readmissions.
▫ There are new discharge status codes to identify
planned readmissions. For a list of the discharge
status code updates please refer to pages 198-199 of
the final rule.
Hospital Value-Based Purchasing
• Value-based incentive payments are made to
hospitals who meet certain performance
standards within that fiscal year.
• Ensure payment is made for quality and not
• The 1.25% reduction to the base operating DRG
payment amount is going to fund the valuebased incentive payments.
Hospital Value-Based Purchasing
• 17 measures for FY 2014,
including the 12 clinical
process of care measures
and the HCAPS measure
from FY 2013. FY 2014
adds 1 new clinical process
of care measure and 3
mortality outcome
• For a complete list of the FY
2014 measures, please refer
to page 721 of the final
Hospital-Acquired Condition (HAC)
Reduction Program
• No payment impact for FY 2014.
• Sets forth the requirements by which payments to “applicable
hospitals” will be adjusted to account for HACs with respect to
discharges occurring during FY 2015 or later (beginning Oct 1,
• The amount of payment will be equal to 99% of the amount of
payment that would otherwise apply to such discharges.
• The payment adjustment would apply to an applicable
hospital that ranks in the top quartile (25 percent) for medical
errors or serious infections contracted while in the hospital.
• Does not include hospitals and hospital units excluded from
the IPPS, such as LTCHs, cancer hospitals, children’s
hospitals, IRFs, IPFs, and CAHs.
Direct GME Payments
Labor & Delivery
• In FY 2014, Medicare utilization calculation is to now
include labor & delivery days as inpatient days.
• A hospital may not claim full-time equivalent residents
training at a CAH for Indirect Medical Education (IME)
and/or direct GME purposes. However, if a CAH itself
incurs the costs of training the full-time equivalent
residents when these residents rotate to the CAH, the
CAH may receive payment based on 101% of its
Medicare reasonable costs.
DSH Payment Adjustment and Payment
for Uncompensated Care
• In FY 2014, DSHs will receive 25% of the amount they
previously would have received under the current
statutory formula for Medicare DSH payments. The
remaining amount, equal to 75% of what otherwise would
have been paid as Medicare DSH payments, will be paid as
additional payments after the amount is reduced for
changes in the percentage of individuals that are
uninsured. Each Medicare DSH hospital will receive its
additional amount based on its share of the total amount
of uncompensated care for all Medicare DSH hospitals for
a given time period.
Payment of
Inpatient Services
• Medicare will issue payment for all Part B services that
would have been payable had the beneficiary originally
been treated as an outpatient.
• The new rule greatly expands what was previously a very
limited set of inpatient services that could be billed
under Part B.
• The Ruling only applies to denials of claims for inpatient
admissions that were not reasonable and necessary; it
does not apply to any other circumstances in which there
is no payment under Part A.
• Includes CAHs.
• For admissions after Oct 1, 2013, there will be a 12
month timely filing requirement based on date of
Inpatient Admissions
• Should improve clarity and consensus among providers,
Medicare, and other stakeholders regarding the relationship
between admissions decisions and appropriate Medicare
• Includes CAHs (Final Rule pg. 1645).
• A physician certifies or recertifies “the need for continued
hospitalization of the patient for medical treatment or
medically required inpatient diagnostic study.”
• CMS’ policy requires a physician order in order to justify
inpatient hospitalization.
• Documentation in the medical record must support a
reasonable expectation of the need for the beneficiary to
require a medically necessary stay lasting at least two
midnights. If the inpatient admission lasts fewer than two
midnights due to an unforeseen circumstance this also must
be clearly documented in the medical record.
Inpatient Admissions –
• Inpatient admission is now based on the physician’s expectation
that the patient will be in the hospital for at least 2 midnights.
• CMS is going to provide further guidance related to medical
necessity, but the standard is now based on time when deciding
if a patient should be placed on observation or admitted as an
• If a beneficiary is expected to stay in the hospital to receive
medical care then inpatient stay is warranted. CMS to publish
more information on how clinical factors come into play;
however, it is now based on expected LOS.
• Admissions should now be approached differently than how a
hospital handles admissions for commercial payers using
Interqual or other criteria. BUT- remember this criteria only
applies to admissions on or after Oct 1, 2013.
More on
• Under the final rule CMS would expect the physician
to document inpatient order ASAP, 1 day stays will
be designated outpatient, but at the point of order,
the patient is an inpatient.
• Two midnight rule can include the first midnight
that they were on observation status. If there is an
expectation that the patient is going to stay an
additional midnight, the physician needs to write
the order as soon as they have this expectation
before the 2nd night. (1st night will be outpatient,
and 2nd night will be inpatient).
• Date of admission HAS to be the date the order is
written. Patient is not inpatient until there is an
order. It is NOT retroactive.
More on
• 2 midnights is a benchmark based on physician
expectation, but if there is an unforeseen
circumstance, then they shouldn’t have to use
condition code 44 (IP admission changed to OP).
Through internal audit, if UR believes 2 midnights
wasn’t warranted, then you can’t bill as observation
because the inpatient stay was already a fact. You
could bill as Part B inpatient based on medical
• CMS has not issued guidance as to whether “admit”
or “admit to inpatient” is required. They are working
on guidance to identify order as intended inpatient.
Hospital Inpatient Quality Reporting
(IQR) Program
• CMS is making several changes to: (1) the measure
set, including the removal of some measures, the
suspension of one measure, the refinement of some
measures, and the adoption of several new measures; (2)
the administrative processes; and (3) the validation
• Option to electronically submit CY 2014 measures
and records for validation for the FY 2016 payment
• For resources related to the Hospital IQR program
including important dates & deadlines refer to
Changes to LTCH PPS
• Result in an increase in estimated
payments from FY 2013 of
approximately $72 million (or 1.3
• No major changes to the way the
MS‐LTC‐DRG payment weights are
calculated for FFY 2014.
• In addition, under the LTCH Quality
Reporting (LTCHQR) Program, the
annual update to the standard
Federal rate will be reduced by 2
percentage points for LTCHs that
fail to submit data for FY 2014 on
specific measures under section
3004 of the Affordable Care Act.
LTCHQR Includes 3 Measures
NQF #013
Urinary CatheterAssociated Urinary
Tract Infection
(CAUTI) rate per 1,
000 urinary catheter
days, for Intensive
Care Unit Patients
NQF #0139
Central Line CatheterAssociated Blood
Stream Infection
(CLABSI) Rate for
ICU and High-Risk
Nursery Patients
NQF #0678
Percent of Residents
with Pressure Ulcers
That are New or
Changes to LTCH PPS
• Moratoria on the full implementation of the “25-percent
threshold” payment adjustment policy will expire for certain
LTCHs for cost reporting periods beginning on or after
October 1, 2013. Under the 25-percent patient threshold
payment adjustment policy, if an LTCH admits more than 25
percent of its patients from a single acute care hospital,
Medicare will pay at a rate comparable to IPPS hospitals for
those patients above the 25-percent threshold.
▫ CMS believes that certain LTCH are acting as step-down units for
referring acute care hospitals, and therefore should be treated as
one episode of care.
Inpatient Psych Facility Quality
Reporting (IPFQR) Program
• An annual reduction of 2.0 percentage points will
be made on discharges for any inpatient psychiatric
hospital or psychiatric unit that does not comply
with quality data submission requirements with
respect to an applicable rate year.
• Applies to those paid under Medicare’s IPF PPS.
• Same measures are used for FY14 that were used in
FY13 related to Patient Safety, Clinical Quality of
Care, & Care Coordination (refer to pg 1573 of the
Final Rule).
▫ One more year to ramp up recordkeeping and
improve quality of care on existing measures.
CAHs changes to CoP
• Provided clarification that a CAH must provide inpatient acute care
services on site.
• Require a CAH to furnish health care services in accordance with
appropriate written policies. Among other items, the CAH must
describe its procedures for emergency medical services and its
procedures for inpatient services. CMS explained that they would
expect CAHs to be appropriately prepared to provide the services
described in their policies and procedures.
Medicare CoP – change with
administration of pneumococcal
vaccines (Minor clarification)
• Change would allow for the inclusion of all
pneumococcal vaccines approved for use now and in the
• Delete the term “polysaccharide”.
Critical Take-Aways
1. Review new discharge status codes for planned
2. View HTHU’s course on Value-Based Purchasing to
understand what you can do to improve your hospital’s
VBP score.
3. View HTHU’s course on DSH payments and how the
revised payment plan will affect your hospital.
4. Review/revise how you admit Medicare inpatients.
Ensure physicians understand new Two-Midnight rule
starting 10/1/2013. Ensure UR is fully aware of the
new rule and how your hospital is going to efficiently
obtain the physician order.
5. LTCH & IP Psych Facilities must comply with quality
data submissions.
Learning Outcomes
• Now that you have viewed this presentation, you
should be able to:
1. Recall the major provisions of the final rule for
FY 2014.
2. Recognize how each may impact your hospital.
3. Identify the necessary steps in order to
respond or take action to comply with or
prepare for the major provisions.
• Fact Sheet:
• Press Release:
• Final Rule:
Summary of Major Provisions
Effective October 1, 2013
Developed by: Annie Lee Sallee
HTH Revenue Cycle Education Specialist
[email protected]

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