Fact Sheets


For Immediate Release: Friday, April 26, 2013
Contact: CMS Media Relations


OVERVIEW:  On Apr. 26, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospitals Prospective Payment System (LTCH PPS) in Fiscal Year (FY) 2014. 

The proposed rule, which would apply to approximately 3,400 acute care hospitals and approximately 440 LTCHs, would affect discharges occurring on or after October 1, 2013. 

In addition to setting the standards for payment for Medicare-covered inpatient services, the FY 2014 hospital payment proposed rule lays out a proposed framework for implementation of the new Hospital-Acquired Conditions Reduction Program, which would begin in 2015.  The proposed rule would also update the measures and financial incentives in the Hospital Value-Based Purchasing (VBP) and Readmissions Reduction programs.  It would also revise measures for the Hospital Inpatient Quality Reporting (IQR) program, Inpatient Psychiatric Facility Quality Reporting and Long-Term Care Hospital (LTCH) Quality Reporting programs, and PPS-Exempt Cancer Hospital Quality Reporting Program.

This fact sheet discusses major quality-related provisions of the proposed rule.  A separate fact sheet on proposed payment changes is available on the CMS Web page at: www.cms.gov/apps/media/fact_sheets.asp.


Section 3008 of the Affordable Care Act required CMS to establish a financial incentive for IPPS hospitals to improve patient safety by imposing financial penalties on hospitals that perform poorly with regard to hospital-acquired conditions (HACs).  HACs are conditions that patients did not have when they were admitted to the hospital, but that developed during the hospital stay.  This proposed rule outlines a general framework for the HAC Reduction Program for the FY 2015 implementation. 

Under this program, hospitals that rank in the lowest-performing quartile of hospital acquired conditions would be paid 99 percent of what they would otherwise be paid under the IPPS beginning in FY 2015.  To determine this quartile, CMS is proposing quality measures and a scoring methodology as well as a process for hospitals to review and correct their data. 

For FY 2015, the first year of the program, CMS is proposing to measure HACs using measures that are either calculated using claims or are part of the Inpatient Quality Reporting program and would consist of two domains of measure sets. 

The proposed Domain 1 measures would include six patient safety indicator (PSI) measures developed by the Agency for Health Care Research and Quality (AHRQ).  These measures are: pressure ulcer rate; volume of foreign object left in the body; iatrogenic pneumothorax rate; postoperative physiologic and metabolic derangement rate; postoperative pulmonary embolism or deep vein thrombosis rate, and accidental puncture and laceration rate.  An alternative to Domain 1 is also being proposed, which would consist of a composite PSI measure set.

The proposed Domain 2 measures would include two healthcare-associated infection measures developed by the Centers for Disease Control and Prevention’s (CDC) National Health Safety Network:  Central Line-Associated Blood Stream Infection and Catheter-Associated Urinary Tract Infection.

Under the scoring methodology proposed, hospitals would be given a score for each measure within the two domains.  A domain score would be calculated and the two domains would be weighted equally to determine a total score under the program.  Risk factors such as the patient’s age, gender, and comorbidities would be considered in the calculation of the measure rates so that hospitals serving a large proportion of sicker patients would not be unfairly penalized.  In accordance with the statute, we propose a process for hospitals to review and correct their information.  We welcome comment on this proposal.


The Hospital Readmissions Reduction program began on October 1, 2012. The maximum reduction under this program, which was one percent of payment amounts in FY 2013, will increase to two percent of payment amounts in FY 2014, as specified under the Affordable Care Act. 

CMS currently assesses hospitals’ readmission penalties using three readmissions measures endorsed by the National Qualify Forum (NQF): heart attack, heart failure, and pneumonia. For FY 2014, CMS proposes a revised methodology to take into account planned readmissions for these three existing readmissions measures.  CMS also proposes to add two new readmission measures, which would be used to calculate readmission penalties beginning for FY 2015: readmissions for hip/knee arthroplasty and chronic obstructive pulmonary disease. 


The Hospital IQR Program grew out of the Hospital Quality Initiative developed by CMS in consultation with hospital groups.  By statute, hospitals that do not participate successfully in the Hospital IQR program have their annual payment updates reduced by 2.0 percentage points.  Since the implementation of this financial penalty, hospital participation has increased to well over 99 percent of Medicare-participating hospitals that are reimbursed under the IPPS.

Measures reported under the IQR Program are published on the Hospital Compare Web site (http://www.hospitalcompare.hhs.gov/), and may later be adopted for use in the Hospital VBP Program, mandated by the Affordable Care Act, which affects payment rates to hospitals beginning in FY 2013. 

The Hospital IQR Program measure set has grown from a starter set of 10 quality measures in 2004 to the set of 57 quality measures listed in this proposed rule.  These measures include chart-abstracted measures, such as heart attack, heart failure, pneumonia, and surgical care improvement measures; claims-based measures such as mortality and readmissions; healthcare-associated infections measures; a surgical complications measure; survey-based measures, such as patient experience of care; immunization measures, and structural measures that assess features of hospitals—such as hospital volume, how the hospital deploys staff, or provider qualifications—to assess their capacity to improve quality of care.

For the FY 2016 payment determination and subsequent years, we are proposing to remove four chart abstracted measures and one structural measure as well as adopt five new claims based measures. 

We are proposing to validate two new chart abstracted HAI measures: hospital-onset methicillin-resistant staphylococcus aureas (MRSA) bacteremia, and clostridium difficile.  We also are proposing to reduce the number of records used for HAI validation from 48 to 36 patient charts for individual hospitals annually for the FY 2015 payment determination and subsequent years.   We also propose to provide hospitals with the option to securely transmit electronic versions of medical information to meet validation requirements. 

CMS also proposes to reduce providers’ reporting burden by expanding several Medicare Electronic Health Record (EHR) Incentive Program policies with the Hospital IQR Program policies. This would include expanding the submission period for electronic clinical quality measures to begin January 2, 2014; allowing eligible hospitals and critical access hospitals that would like to submit aggregate data for Meaningful Use the option of attesting, and streamlining the submission of aggregate population data in order to invoke the case number threshold exemption for an electronic clinical quality measure.


CMS is proposing that hospitals participating in the IQR program have the option to electronically submit one quarter’s data for 16 quality measures from four measure sets.  Hospitals that do not submit electronically would have to submit a full year’s worth of data via chart-abstraction.   CMS also proposes collection and reporting of this measure data through Certified Electronic Health Record Technologies (CEHRTs).   


CMS believes the use of CEHRTs will greatly simplify and streamline reporting for many hospital quality-reporting programs.  We also anticipate that through electronic reporting, hospitals will be able to leverage electronic health records for Hospital IQR Program quality data that is now manually abstracted from charts. Our intent is to harmonize measures across hospital quality reporting programs, improve care, and minimize the reporting burden on hospitals. If hospitals choose to electronically report these four measure sets, this will satisfy the reporting requirement for both the CQM component of the Medicare EHR Incentive program and the requirement to report these measures under the Hospital IQR program. 


The rule also proposes new quality reporting measures for LTCHs, PPS-Exempt Cancer Hospitals, and Inpatient Psychiatric Facilities in 2015 and beyond. 

LTCH Quality Reporting.    CMS is continuing to expand the LTCH Quality Reporting Program and is proposing five new LTCH quality measures that would affect the FY 2017 and FY 2018 payment updates.  For the FY 2017 payment determination, the proposal includes:  an all-cause unplanned readmission measure for 30 days post- discharge from long-term care hospitals, the CDC's National Healthcare Safety Network (NHSN) facility-wide inpatient hospital-onset MRSA bacteremia outcome measure, and the NHSN facility-wide inpatient hospital-onset clostridium difficile infection (CDI) outcome measure.  CMS is also proposing to apply the NQF measure of the percent of residents experiencing one or more falls with major injury (long stay) for the FY 2018 payment determination. 

PPS-Exempt Cancer Hospital Quality-Reporting Program. The NPRM proposes new quality measures for the PPS-Exempt Cancer Hospital Quality-Reporting Program, an Affordable Care Act program.  A total of 11 PPS-Exempt Cancer Hospitals would be covered in this program.  In this rule, CMS proposes to add one new measure of surgical site infection for the FY 2015 program, and 13 new measures covering surgical processes of care, patient experience of care, and oncology for the FY 2016 program.

Inpatient Psychiatric Facility Quality Reporting Program.  The Affordable Care Act also authorized the Secretary of the Health and Human Services to establish an Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program.  Under the IPFQR Program, inpatient psychiatric facilities (IPFs) are required to submit quality data to CMS on selected quality measures.  For the FY 2016 payment determination and subsequent years, CMS is proposing three new measures: alcohol use screening; alcohol and drug use status after discharge; and follow-up after hospitalization for mental illness.  These measures would be added to the six measures adopted in FY 2013.

CMS also proposes to request voluntary information on IPFs’ efforts to assess the patient experience of care for the FY 2016 payment determination. Submission of this information would be completely voluntary and would not in any way affect a facility’s FY 2016 payment determination. 


Proposed Program Requirements for FY 2014.   The proposed rule outlines operational details for FY 2014, including an increase in the applicable percent reduction to base operating DRG payment amounts (1.25 percent) and the total estimated amount available for value-based incentive payments (approximately $1.1 billion). 

Proposed Program Requirements for FY 2016.  The proposed rule would readopt all finalized FY 2015 Clinical Process of Care measures for the FY 2016 measure set, except primary percutaneous coronary intervention received within 90 minutes of hospital arrival; blood cultures performed in the emergency department prior to initial antibiotic received in hospital, and discharge instructions for heart failure patients. 

CMS also proposes to adopt new measures for FY 2016, including one new clinical process measure, influenza immunization, and two new healthcare-associated infection measures, Catheter-Associated Urinary Tract Infection (CAUTI) and Surgical Site Infection (SSI), the latter of which is stratified into two separate surgery sites. 

The proposed rule outlines the proposed performance and baseline periods for the FY 2016 program, and proposes re-classification of the Hospital VBP program domains to more closely align with the National Quality Strategy in FY 2017.  It proposes weighting for the proposed aligned domains for 2017, as well as proposed domain weighting under the current domain structure for FY 2016.

The proposed rule proposes performance standards, including achievement thresholds and benchmarks for the FY 2016 program, including the “floors” for all eight Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) dimensions.

The proposed rule proposes to use the same scoring methodology and performance standards previously adopted for the three 30-day mortality and Agency for Healthcare Research and Quality (AHRQ) patient safety composite measures for FYs 2017-2019.  CMS has also proposed performance and baseline periods, as well as performance standards, for the three 30-day mortality and Agency for Healthcare Research and Quality (AHRQ) patient safety composite measures for FYs 2017-2019.

Additional Proposed Policies.  CMS has also proposed a disaster/extraordinary circumstance waiver process under the Hospital VBP program, for a hospital struck by a natural disaster or experiencing extraordinary circumstances.

CMS proposes to allow a hospital to request a Hospital VBP program waiver at the same time that it makes a similar request under the Hospital Inpatient Quality Reporting (IQR) program.  Based on prior experience with the Hospital IQR program, CMS anticipates providing such waivers only to a small number of hospitals. 

More information about the Hospital VBP program is available online at: http://www.cms.gov/hospital-value-based-purchasing.

CMS will accept comments on the proposed rule until June 25, 2013, and will respond to all comments in a final rule to be issued by August 1, 2013.  The proposed rule, which includes tables for the proposed and previously adopted measures referenced in this fact sheet, can be downloaded from the Federal Register at: http://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1.

The proposed rule will appear in the May 10, 2013 Federal Register.


Page Last Modified: 5/14/07 12:00 PM
Help with File Formats and Plug-Ins

Submit Feedback