On April 17 the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would implement payment and policy changes affecting hospitals.

The proposed rule would update for fiscal year (FY) 2016 Medicare payment rates for acute care hospitals under the inpatient prospective payment system (IPPS) and long-term care hospitals under the long-term care hospital prospective payment system (LTCH PPS).  IPPS payments would increase 1.1 percent for acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and are meaningful users of electronic health records.  Hospitals that do not successfully participate in the Hospital Inpatient Quality Reporting Program and do not submit the required quality data would be subject to a one-fourth reduction of the market basket update.

The update for any hospital that is not a meaningful electronic health record user would be reduced by one-half of the market basket update.  LTCH PPS payments would decrease 4.6 percent. The rule proposes policies that continue a commitment by CMS to increasingly shift Medicare payments from volume to value.  The proposed rule includes the requirements for eligible hospitals and critical access hospitals that participate in electronic reporting of clinical quality measures for the Electronic Health Record Incentive Programs and the Inpatient Quality Reporting Program.  CMS proposes to update the measures used in the Hospital Inpatient Quality Reporting Program.

In the proposed rule, CMS also proposes to continue updates to the Hospital Value-Based Purchasing Program and to expand the number of measures.  CMS is also proposing certain refinements in the Hospital Acquired Conditions Reduction Program, the Hospital Readmissions Reduction Program, and the Long-Term Care Hospital Quality Reporting Program.  Last week President Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015, which extends the prohibition against Recovery Audit Contractors reviewing the patient status on hospital admissions through September 30, 2015. The legislation was not enacted in time for its provisions to be included in the proposed rule.  CMS indicates in the proposed rule that it is considering feedback concerning the Two-Midnight Rule, as well as recommendations of the Medicare Payment Advisory Commission, and expects to include in the FY 2016 IPPS and LTCH PPS final rule a further discussion of the issues related to short inpatient stays and long outpatient stays with observation services.

The proposed rule will be published in the Federal Register on April 30 and public comments are due by June 16.

Review the CMS Fact Sheet.

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