Hospitals give mixed reaction to IPPS proposed rule despite $3.1B boost

The proposed payment policies for acute care long-term care hospitals in 2018 would offer many changes for those facilities—and not all ones they support.

CMS released the 2018 Medicare Inpatient Prospective Payment System (IPPS) proposed rule on April 14, promising “transparency, flexibility, program simplification and innovation to transform the Medicare program” in the first IPPS rule under a new CMS and HHS administration.

“Through this proposed rule we want to reduce burdens for hospitals so they can focus on providing high quality care for patients,” said CMS Administrator Seema Verma.

Here are five key takeaways from the policy changes and the reaction from hospital groups:

1. More money for inpatient, less for long-term care

According to CMS, the sum of the rule would be a $3.1 billion increase for Medicare spending on inpatient hospital services in fiscal year 2018.  Inpatient operating prospective payments would be projected to increase by 2.9 percent under the proposed rule.

For long-term care, however, payments would decrease by 3.75 percent, or $173 million, which CMS said is “due in large part to the continued phase in of the dual payment rate system.” Those facilities would receive some relief, as the proposed rule would place a one-year moratorium on the 25 percent patient admissions threshold.

2. Uncompensated care payment bump

The proposed rule would increase Medicare disproportionate share hospital (DSH) payments by $1 billion. The change would reflect new data CMS would use to estimate the uninsured rate, which determines the amount of uncompensated care funds available.

Those payments have been a big source of concern as the Affordable Care Act’s fate is debated. Without a replacement, it was estimated uncompensated care costs would rise by $1.1 trillion if the ACA was eliminated.

3. Requesting deregulation ideas

The proposed IPPS rule asked hospitals to submit deregulation proposals for “how Medicare can contribute to making the delivery system less bureaucratic and complex,” including reducing the administrative burden on clinicians.

“Ideas could include recommendations regarding payment system re-design; elimination or streamlining of reporting; monitoring and documentation requirements; operational flexibility; and feedback mechanisms and data sharing that would enhance patient care, support the doctor-patient relationship in care delivery, and facilitate patient-centered care within inpatient stays at general acute care and long-term care hospitals,” CMS said.

Submissions won’t get a response from CMS in the final rule, but will be taken as input for future regulatory actions.

4. A 90-day meaningful use period and other reporting changes

The proposed rule would make several quality reporting modifications, with the net effect being a reduction in reporting electronic clinical quality measures (eCQMs) for hospitals which have demonstrated meaningful use.  

Reporting periods for hospitals attesting to meaningful use for the first time in 2018, and hospitals that have attested in the past from the full year, would be modified to any continuous 90-day period.

Other changes include a new voluntary reporting measure, the Hybrid Hospital-Wide Readmission Measure with Claims and Electronic Health Record Data, under the Hospital Inpatient Quality Reporting Program.

5. What hospitals are saying

American Hospital Association Executive Vice President Tom Nickels liked some provisions, like the 90-day meaningful use reporting period. What he didn’t like was the rule wouldn’t restore cuts from 2017 along with some of the estimating uncompensated care calculation changes.

“We are concerned that CMS has proposed to use the ‘Worksheet S-10’ data to determine the cost of treating uninsured patients without taking sufficient action to ensure the accuracy, consistency and completeness of these data prior to their use,” Nickels said.

Bruce Seigel, MD, MPH, president and CEO of America’ Essential Hospitals, welcomed the boost to DSH payments and changes to the Hospital Readmissions Reduction Program (HRRP).

“But the rule is only the first step toward true risk adjustment for our patients’ social and economic challenges,” he said in a statement. “We must go beyond adjusting only payments to adjusting measures so quality comparisons are fair. We also hope (CMS) extends this approach to other quality programs, when the evidence for risk adjustment is compelling."