Regulatory Update: August 2016

August 2016

Comments on Medicare Outpatient Observation Notice and Instructions -- Due September 1

As part of the Hospital Inpatient Prospective Payment System (IPPS) final rule for fiscal year 2017, the Centers for Medicare & Medicaid Services (CMS) will be requiring hospitals and critical access hospitals (CAHs) to furnish a standardized notice, the Medicare Outpatient Observation Notice (MOON), to a Medicare beneficiary who has been receiving observation services as an outpatient for more than 24 hours. This notice is currently going through the Paperwork Reduction Act process.  

The Office of Management and Budget (OMB) will accept comments on the updated MOON and instructions through September 1, according to information now posted (https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10611.html). The MOON is the standard written notice that hospitals and CAHs must provide to a Medicare beneficiary or enrollee no later than 36 hours after observation services are initiated, or sooner if the individual is transferred, discharged or admitted as an inpatient. Under the final rule, the notification requirements will take effect no later than 90 calendar days after the updated MOON is approved by OMB.

Proposed Rule on Bundled Payments for Cardiac Care and Hip Fractures

On August 2, CMS published a proposed rule for bundled payment models for high-quality, coordinated cardiac and hip fracture care similar to the Comprehensive Care for Joint Replacement (CJR) model which began in April 2016. Under the proposed episode payment models (EPM), a hospital in which a patient is admitted for care for a heart attack, bypass surgery or surgical hip/femur fracture treatment would be accountable for the cost and quality of care provided to Medicare fee-for-service beneficiaries during the inpatient stay and for 90 days after discharge. For the new cardiac bundles, hospitals in 98 randomly-selected metropolitan statistical areas would be required to participate in the bundled care model.  

Although rural counties are excluded from the models, providers and suppliers such as physicians, non-physician practitioners, skilled nursing facilities, CAHs and accountable care organizations (ACOs) can be EPM collaborators in providing post discharge care. CMS proposes that the first performance period would run from July 1, 2017 to December 31, 2017.  

Through this proposed rule, rural providers also have the opportunity to propose future condition-specific EPMs and event-based EPMs for procedures and medical conditions that may be more applicable to rural areas. For more information on the proposed rule visit: https://innovation.cms.gov/initiatives/epm/. Comments are due by October 3, 2016. 

FY 2017 Hospice Payment Rate Update

On August 5, CMS published its final rule updating hospice payment and policy for fiscal year (FY) 2017. Total payments to hospices will increase by 2.1%, or $350 million, compared to FY 2016, with similar payment increases for both rural and urban hospices: 2.0% vs. 2.1%, respectively. The rule also updates the hospice quality reporting program (HQRP) to add two new measures to begin FY 2019, including one measure set assessing hospice visits in the last week of life and one composite measure of comprehensive patient care at admission. 

Of note, CMS announced plans to consider a new hospice patient assessment instrument to expand upon and replace the current hospice item set chart abstraction tool. These regulations are effective October 1, 2016. For more information, please see the CMS fact sheet.

In response to more than 50 public comments, CMS has finalized an update to hospice payment and policy, which

 

  • Plans comprehensive, provider-level monitoring to track general hospice trends and assess the impact of recent hospice payment reforms to help inform future policy efforts and program integrity measures, including several avenues for specific rural-urban comparisons
  • Increases payment to hospices by 2.1%, or $350 million, compared to FY 2016, with rural hospices gaining 2.0% while urban hospices gain 2.1%
  • Applies a wage index standardization factor to hospice payment rates to ensure overall budget neutrality and mitigate fluctuations in the wage index
  • Adds two new quality measures for the FY 2019 program year and thereafter, including one measure set assessing hospice visits in the last week of life and one composite measure of comprehensive patient care at admission
  • Previous CMS research indicates that states with the lowest rates of no visits in the last days of life were some of the more rural states (ND, WI, TN, KS, VT), while states with the highest rates of no visits in the last days of life were more urban (NJ, MA, OR, WA, MN)
  • Establishes increasing timeliness threshold requirements for the submission of hospice item set (HIS) data, such that for CY 2016, hospices must submit at least 70% of all required HIS records within the 30-day submission timeframe for the year, or be subject to a 2-percentage-point reduction to the FY 2018 market basket update
  • CMS analysis shows that the vast majority of hospices would meet the increasing timeliness threshold requirements for HIS data submission for CY 2016 (92% meet the 70% threshold), CY 2017 (88% meet the 80% threshold), and CY 2018 (78% meet the 90% threshold), though those not meeting the thresholds are likely to be small and rural hospices who have reported some trouble electronically submitting data to CMS given limited internet connectivity in their communities
  • Solicits public comment on plans to develop a hospice patient assessment instrument to collect quality, clinical, and other data that could be used to inform future payment reform efforts and quality measure development
  • Exempts hospices with fewer than 50 survey-eligible decedents (or caregivers) in CYs 2016 and 2017 from hospice CAHPS survey data collection and reporting requirements for payment determinations in FYs 2019 and 2020, respectively
  • Announces plan to publicly report all seven current HQRP measures on a CMS Compare website under development (i.e., Hospice Compare), beginning sometime in the spring or summer of CY 2017
  • CMS reports that between 71% and 90% of all hospices would be able to participate in public reporting of HQRP measures, depending on the measure, though the proportion of hospices not able to participate in public reporting are likely to be small and rural hospices with limited volume necessary to meet minimum case thresholds for measure reliability and validity

These regulations are effective on October 1, 2016.  

FY 2017 Inpatient Rehabilitation Facility (IRF) PPS Update

On August 5, CMS published its final rule updating payment and policy for inpatient rehabilitation facilities (IRFs) for fiscal year (FY) 2017. Total payments for IRFs will increase by 1.9%, or $145 million, compared to FY 2016, including annual payment increases and an increase to high-cost outlier cases. CMS estimates that rural IRFs will experience payment increases well below that of urban IRFs: 1.2% vs. 2.0%. The rule also updates quality measures and administrative procedures for the IRF quality reporting program (QRP), including four new measures required by the IMPACT Act. Of note, CMS indicates that the IRF QRP applies to both freestanding IRFs and IRF units affiliated with either acute care hospitals or critical access hospitals, which constitute more than 90% of rural IRFs. These regulations are effective October 1, 2016. For more information, please see the CMS fact sheet.

In response to more than 60 public comments, CMS finalized the following changes:

  • Increases payments to IRFs by 1.9%, or $145 million, compared to FY 2016, with rural IRFs gaining 1.2% while urban IRFs gain 2.0%
  • The difference is highest for freestanding IRFs (rural: 0.0%, urban: 1.8%), though there are only 11 such facilities in rural communities
  • For the more common IRF units, the difference is 0.7 percentage point (rural: 1.5%, urban: 2.2%)
  • Revises case-mix group (CMG) relative weights (budget neutral) and average length of stay (ALOS) values
  • Continues to hold facility-level adjustment factors at FY 2014 levels as CMS evaluates changes in IRF claims data to inform future rule making
  • Continues the three-year, budget-neutral phase out of the 14.9% rural adjustment for IRFs no longer designated as rural according to new geographic delineations, such that formerly rural IRFs receive one-third of the applicable rural adjustment
  • For FY 2017: IRFs receive the full FY 2017 wage index plus 1/3 of the 14.9% 2015 rural adjustment
  • For FY 2018: IRFs receive the full FY 2018 wage index with no rural adjustment
  • Decreases the unadjusted threshold for high-cost outlier cases to $7,984 (down from $8,658 in FY 2016) to maintain total outlier payments at approximately 3% of aggregate IRF payments for FY 2017, thereby increasing payments by 0.3%, or $20 million, compared to FY 2016
  • CMS finds that the largest increase in payments due to the decrease in the outlier threshold amounts to 1.4% for rural IRFs in the Pacific region, likely because rural communities care for older, sicker patients and may receive more high-cost outlier payments in FY 2017
  • Adopts five new measures for the IRF QRP, including four to meet IMPACT Act requirements, which assess patient drug regimen review, patient discharge to community, potentially preventable  readmissions both during IRF stays and within 30 days of discharge, and Medicare spending per beneficiary
  • CMS indicates that the IRF QRP applies to both freestanding IRFs and IRF units affiliated with either acute care hospitals or critical access hospitals (CAHs), which constitute approx. 93% of rural IRFs
  • Establishes procedures for IRFs to review confidential reports on assessment- and claims-based data that will be publicly reported for the IRF QRP

These regulations are effective on October 1, 2016.

FY 2017 Skilled Nursing Facility (SNF) PPS Update

On August 5, CMS published its final rule updating payment and policy for skilled nursing facilities (SNFs) for fiscal year (FY) 2017. Total payment for SNFs will increase by 2.4%, or $920 million, compared to FY 2016, with rural SNFs experiencing slightly larger payment increases than urban SNFs: 2.6% vs. 2.4%. In addition to annual payment revisions, the rule contains changes to the quality measures and administrative procedures under the SNF value-based purchasing (VBP) program, which begins FY 2019, and SNF quality reporting program (QRP), including four new measures required by the IMPACT Act. Of note, CMS has clarified that both the SNFVBP and SNF QRP apply to swing beds at rural PPS hospitals, but not swing beds at critical access hospitals. These regulations are effective October 1, 2016. For more information, please see the CMS fact sheet.

In response to more than 90 public comments, CMS has finalized the following regulatory changes: 

  • Increases payment to SNFs by 2.4%, or $920 million, compared to FY 2016, with rural SNFs gaining 2.6% while urban SNFs gain 2.4%
  • Clarifies that SNF VBP and SNF QRP applies to freestanding SNFs, SNFs affiliated with acute care facilities, and all non-CAH swing-bed rural hospitals
  • Specifies the SNF 30-day potentially preventable readmission (SNFPPR) measure, which assesses all-condition, risk-adjusted, unplanned potentially preventable hospital readmissions for SNF patients within 30 days of discharge from a prior hospitalization, to replace the current readmissions measure in SNF VBP
  • Defines the SNF VBP benchmark as the mean of the top decile of performance (similar to hospital VBP) and the achievement threshold as the 25th percentile of national SNF performance
  • Adopts a SNF VBP scoring methodology similar to hospital VBP, but using broader point scoring ranges for more granular performance scores, under which the payments will be reduced for the lowest 40% of SNFs according to performance score
  • Publishes SNF VBP performance scores ordered from low to high on both the Nursing Home Compare and QualityNet websites, with rankings for the FY 2019 program year published after August 1, 2018
  • Adopts four new measures for the SNF QRP to meet the requirements of the IMPACT Act, including measures assessing drug regimen review, Medicare spending per beneficiary, discharge to community, and potentially preventable readmissions, and establishes new procedures for data collection, reporting and public display
  • CMS proposes 20 episodes as the minimum threshold for inclusion and data reporting of a SNF’s MSPB-PAC SNF data in the SNF QRP, which may exclude some rural providers with relatively lower volumes

These regulations are effective on October 1, 2016.