Fact sheet

Fiscal Year (FY) 2019 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Prospective Payment System Final Rule (CMS-1694-F)

On August 2, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to help empower patients through better access to hospital price information, improve the use of electronic health records, and make it easier for providers to spend time with their patients. The final rule issued today updates Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS).

The policies in the IPPS/LTCH PPS final rule further advance the agency’s priority of creating a patient-centered healthcare system by achieving greater price transparency, interoperability, and significant burden reduction so that hospitals can operate with better flexibility and patients have what they need to be active healthcare consumers.

This fact sheet discusses major provisions of the final rule (CMS-1694-F), which can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/

Background on the IPPS and LTCH PPS

CMS pays acute care hospitals (with a few exceptions specified in the law) for inpatient stays under the IPPS and long-term care hospitals under the LTCH PPS. Under these two payment systems, CMS sets base payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness. Subject to certain adjustments, a hospital receives a single payment for the case based on the payment classification – Medicare Severity Diagnosis-Related Groups (MS-DRGs) under the IPPS and Medicare Severity Long-Term Care Diagnosis-Related Groups (MS-LTC-DRGs) under the LTCH PPS – which are assigned at discharge. 

By law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in the prices of goods and services used by these hospitals in treating Medicare patients, as well as for other factors. This is known as the hospital “market basket.” The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospitals’ costs, including the patient’s condition and the cost of hospital labor in the hospital’s geographic area. Payment rates to LTCHs are typically updated annually according to a separate market basket based on LTCH-specific goods and services.

The changes, which will affect approximately 3,330 acute care hospitals and approximately 420 LTCHs, apply to discharges occurring on or after October 1, 2018. 

Request for Information on Interoperability
In addition to payment and policy proposals, CMS released a Request for Information in the IPPS/LTCH PPS proposed rule issued on April 24, 2018, to obtain feedback on positive solutions to better achieve interoperability, or the sharing of healthcare data between providers, which will inform next steps in advancing this critical initiative. In this final rule, CMS makes changes to the Promoting Interoperability Programs (formerly known as the EHR Incentive Programs) to increase interoperability and flexibility while reducing burden and placing a strong emphasis on measures that require the exchange of health information between providers and patients.

Interoperability
Medicare and Medicaid Promoting Interoperability Programs (formerly known as the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs for Eligible Hospitals, Critical Access Hospitals (CAHs), and Eligible Professionals (EPs))
In 2011, the Medicare and Medicaid Promoting Interoperability Programs (known then as the Medicare and Medicaid EHR Incentive Programs) were established to encourage eligible professionals, eligible hospitals, and critical access hospitals (CAHs) to adopt, implement, upgrade (AIU), and demonstrate meaningful use of certified EHR technology (CEHRT). In this final rule, CMS overhauls the Medicare and Medicaid Promoting Interoperability Programs in order to better achieve program goals. Key provisions of this overhaul include the following:

  • The rule finalizes an EHR reporting period of a minimum of any continuous 90-day period in each of calendar years (CYs) 2019 and 2020 for new and returning participants attesting to CMS or their State Medicaid agency.
  • For the Medicare Promoting Interoperability Program, the rule finalizes a new performance-based scoring methodology consisting of a smaller set of objectives that will provide a more flexible, less-burdensome structure, allowing eligible hospitals and CAHs to place their focus back on patients.
  • CMS finalizes two new e-Prescribing measures related to e-prescribing of opioids (Schedule II controlled substances). The Query of PDMP measure will be optional in CY 2019 and will be required beginning in CY 2020. This will allow additional time to develop, test, and refine certification criteria and standards and workflows, while taking an aggressive stance to combat the opioid epidemic. The Verify Opioid Treatment Agreement will be optional for both CYs 2019 and 2020. We believe that extending the optional reporting status will allow health care providers additional time to research and implement methods for verifying the existence of an opioid treatment agreement, expansion of the use of such agreements in practice, and development of system changes and clinical workflows.
  • We also finalize changes to measures, including removing certain measures that do not emphasize interoperability and the electronic exchange of health information.
  • CMS also reiterates that beginning with an EHR reporting period in CY 2019, all eligible hospitals and CAHs under the Medicare and Medicaid Promoting Interoperability Programs are required to use the 2015 Edition of CEHRT.

Electronic Clinical Quality Measures (eCQMs) for Eligible Hospitals and CAHs
For eligible hospitals and CAHs that report eCQMs electronically, the reporting period for the Medicare and Medicaid Promoting Interoperability Programs is finalized as one, self‑selected calendar quarter of CY 2019 data, reporting on at least four self-selected eCQMs from a set of 16. In this rule, CMS finalizes the submission period for the Medicare Promoting Interoperability Program as the two months following the close of the calendar year 2019, ending February 29, 2020. In addition, beginning with the reporting period in 2020, we will remove 8 of the 16 eCQMs, consistent with CMS’ commitment to producing a smaller set of more meaningful measures that are also in alignment with the Hospital Inpatient Quality Reporting (IQR) Program.

Puerto Rico Hospitals in the Medicare Promoting Interoperability Program
We finalize codification of the program instructions we issued to subsection (d) Puerto Rico hospitals and amend our regulations under Parts 412 and 495 such that the provisions that apply to eligible hospitals include subsection (d) Puerto Rico hospitals unless otherwise indicated.

Transparency
Online posting of standard charges
Under current law, hospitals are required to establish and make public a list of their standard charges. In an effort to encourage price transparency by improving public accessibility of charge information, effective CY 2019 CMS updated its guidelines to specifically require hospitals to make public a list of their standard charges via the Internet in a machine readable format, and to update this information at least annually, or more often as appropriate. 

Request for Information
Additionally, CMS is concerned that challenges continue to exist for patients due to insufficient price transparency, including patients being surprised by out-of-network bills for physicians, such as anesthesiologists and radiologists, who provide services at in-network hospitals, and by facility fees and physician fees for emergency room visits. We therefore sought information from the public in the proposed rule regarding barriers preventing providers from informing patients of their out of pocket costs: what changes are needed to support greater transparency around patient obligations for their out-of-pocket costs; what can be done to better inform patients of these obligations; and what role providers should play in this initiative. We appreciate the comments received and will consider the information and suggestions for future rulemaking. 

Meaningful Measures
The FY 2019 IPPS/LTCH PPS final rule provides a balanced approach to quality measurement in which CMS maintains patient safety measures, which stakeholders expressed a desire to retain in the Hospital Value-Based Purchasing program, while removing measures that add limited value. The final rule reduces the total number of measures acute care hospitals are required to report across the four quality and value-based purchasing programs (Inpatient Quality Reporting, Value-Based Purchasing, Hospital-Acquired Conditions (HAC) Reduction, and Readmissions Reduction Programs). CMS updated the number of measures required for each of these programs after engaging in a careful and holistic review of all the quality measures and seeking input from various stakeholders through the public comment process. Measures were proposed for removal if they met the criteria for removal under one of the measure removal factors that CMS had either adopted previously or was proposing to adopt in the proposed rule. Examples of criteria that CMS considered when selecting measures for removal were that the measures were duplicative, showed no meaningful distinction in performance (meaning that the overwhelming majority of providers are performing highly on them), or were overly costly to maintain and report when compared with the benefit of retaining them in a program. The final rule aims to enable providers to focus on tracking and reporting the measures that are most impactful on patient care. Overall, the final rule will eliminate a significant number of measures hospitals are required to report and “de-duplicate” measures across hospital quality programs while maintaining measures that stakeholders feel are important. Specifically, this final rule will remove a total of 18 measures from CMS quality programs and will de-duplicate another 25 measures. Measures that are removed or de-duplicated are provided in the table below.

CMS considered input from commenters who conveyed the multifaceted benefits of retaining the patient safety measures in more than one value-based purchasing program as a critical component of quality improvement efforts and to strongly incentivize hospitals to continually strive for both improvement and high performance on these measures. Therefore, we are not finalizing our proposal to remove these measures from the Hospital Value-Based Purchasing Program. However, we are finalizing their removal from the Hospital IQR Program (with a delayed removal by one year) in order to reduce some cost and burden for hospitals in having to track these measures in multiple programs. 

Hospital Inpatient Quality Reporting (IQR) Program
The Hospital IQR Program is a pay-for-reporting quality program that collects and publishes data on quality measures for the inpatient hospital setting. In the FY 2019 IPPS/LTCH PPS final rule, CMS finalizes its proposals, some with modification, to update the Hospital IQR Program’s measure set and measure removal factors. Specifically, we finalize our proposals to remove certain measures from the Hospital IQR Program, while retaining the same measures in one of the value-based purchasing programs (Hospital Value-Based Purchasing, Hospital Readmissions Reduction, and Hospital-Acquired Condition Reduction Programs). Removing these measures is consistent with CMS’ commitment to prioritizing patients and using a smaller set of more meaningful measures. CMS is focusing on measures that provide opportunities to reduce both paperwork and reporting burden on providers and on patient-centered outcome measures, rather than process measures. To accomplish these goals, CMS finalizes its proposals to adopt a new measure removal factor and to update the Hospital IQR Program’s measure set as follows:

1. Adopt one additional factor to consider when evaluating measures for removal from the Hospital IQR Program measure set: “The costs associated with a measure outweigh the benefit of its continued use in the program.”
2. Remove 18 previously adopted measures that are “topped out,” do not result in better patient outcomes, or have associated costs that outweigh the benefit of its continued use in the program.
3. De-duplicate 21 measures to simplify and streamline measures across programs. These measures will remain in one of the other four hospital quality programs.
4. The six healthcare-associated infection (HAI) patient safety measures that are being de-duplicated will be removed for CY 2020, which is one year later than originally proposed. CMS will use the additional time to ensure consistency in collection and reporting of these data while working to HAI data collection policies for the Hospital Value-Based Purchasing Program. Additionally, this will help create a seamless transition of our quarterly public reporting on the Hospital Compare website to the Hospital-Acquired Condition Reduction Program and the Hospital Value-Based Purchasing Program. 

Measure Name

Removal Rationale

Healthcare-Associated Infection Measures
Collected via Federal Data Registry

Catheter-Associated Urinary Tract Infection Outcome Measure1

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HACRP.

Facility-wide Inpatient Hospital-onset Clostridium difficile Infection Outcome Measure1

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HACRP.

Central Line-Associated Bloodstream Infection Outcome Measure1

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HACRP.

Harmonized Procedure Specific Surgical Site Infection SSI Outcome Measure1

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HACRP.

Facility-wide Inpatient Hospital-onset MRSA Bacteremia Outcome Measure1

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HACRP.

Patient Safety Measures
Collected via Claims

Patient Safety and Adverse Events Composite1

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HACRP.

Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Structural Measures
Collected via Web-Based Tool

Hospital Survey on Patient Safety Culture

Measure does not result in better patient outcomes.

Safe Surgery Checklist Use

The costs associated with this measure outweigh the benefit of its continued use.

Mortality Outcome Measures
Collected via Claims

Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction (AMI) Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft (CABG) Surgery

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Hospital 30-Day, All-Cause, Risk-Standardization Mortality Rate Following Heart Failure Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Coordination of Care Measures
Collected via Claims

Hospital 30-Day All-Cause Risk-Standardized Readmission Rate Following Acute Myocardial Infarction (AMI) Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HRRP.

Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized Readmission Rate Following Coronary Artery Bypass Graft (CABG) Surgery

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HRRP.

Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Chronic Obstructive Pulmonary Disease (COPD) Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HRRP.

Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Heart Failure Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HRRP.

Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Pneumonia Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HRRP.

Hospital-Level 30-Day, All-Cause Risk-Standardized Readmission Rate Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA)

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HRRP.

Hospital 30-Day Risk-Standardized Readmission Rate Following Stroke Hospitalization

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Resource Use/Payment Measures
Collected via Claims

Payment-Standardized Medicare Spending Per Beneficiary (MSPB)

The costs associated with this measure outweigh the benefit of its continued use; measure is duplicative of measure in HVBP.

Cellulitis Clinical Episode-Based Payment Measure

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Gastrointestinal Hemorrhage Clinical Episode-Based Payment Measure

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Kidney/Urinary Tract Infection Clinical Episode-Based Payment Measure

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Cholecystectomy and Common Duct Exploration Clinical Episode-Based Payment Measure

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Spinal Fusion Clinical Episode-Based Payment Measure

The costs associated with this measure outweigh the benefit of its continued use; measure data also captured under more broadly applicable measure.

Clinical Process of Care Measures
Collected via Chart Abstraction

Median Time from ED Arrival to ED Departure for Admitted ED Patients

The costs associated with this measure outweigh the benefit of its continued use.

Admit Decision Time to ED Departure Time for Admitted Patients

The costs associated with this measure outweigh the benefit of its continued use; eCQM version of the measure will remain in the Hospital Inpatient Quality Reporting Program.

Influenza Immunization

The costs associated with this measure outweigh the benefit of its continued use; measure performance is “topped-out.”

Incidence of Potentially Preventable Venous Thromboembolism Prophylaxis

The costs associated with this measure outweigh the benefit of its continued use.

Electronic Clinical Quality Measures
Collected via Electronic Health Record

Primary PCI Received Within 90 Minutes of Hospital Arrival

The costs associated with this measure outweigh the benefit of its continued use.

Home Management Plan of Care Document Given to Patient/Caregiver

The costs associated with this measure outweigh the benefit of its continued use.

Median Time from ED Arrival to ED Departure for Admitted ED Patients

The costs associated with this measure outweigh the benefit of its continued use.

Hearing Screening Prior to Hospital Discharge

The costs associated with this measure outweigh the benefit of its continued use.

Elective Delivery

The costs associated with this measure outweigh the benefit of its continued use.

Stroke Education

The costs associated with this measure outweigh the benefit of its continued use.

Assessed for Rehabilitation

The costs associated with this measure outweigh the benefit of its continued use.

1Finalized for removal from the Hospital IQR Program beginning with the CY 2020 reporting period/FY2022 payment determination. 

In addition, in alignment with the Promoting Interoperability Program, CMS finalizes two proposals in relation to the reporting of electronic clinical quality measures (eCQMs) in the Hospital IQR Program beginning with the CY 2019 reporting period/FY 2021 payment determination:

1. Require that hospitals submit one, self-selected calendar quarter of discharge data for 4 eCQMs in the Hospital IQR Program measure set, which is a continuation of the same reporting requirements previously adopted for the CY 2018 reporting period/FY 2020 payment determination; and
2. Require the use of the 2015 Edition of Certified Electronic Health Record Technology for eCQMs.

Hospital Value-Based Purchasing (VBP) Program
The Hospital VBP Program adjusts payments to IPPS hospitals for inpatient services based on their performance on an announced set of measures. In the FY 2019 IPPS/LTCH PPS final rule, CMS is finalizing updates to the Hospital VBP Program, including the removal of four duplicative measures, all of which are also included in the Hospital IQR Program measure set. As stated above, CMS is not finalizing its proposals to remove six patient safety measures that are also in the Hospital-Acquired Condition Reduction Program measure set due to their critical importance to quality improvement and patient safety in the hospital setting and to strongly incentivize hospitals to continually strive for both improvement and high performance on these measures. CMS is also not finalizing removal of the safety domain or revised weighting of the Hospital VBP Program domains. These policies are consistent with CMS’ commitment to patient safety as well as producing a smaller set of more meaningful measures and focusing on patient-centered outcomes. Specifically, in this final rule, CMS finalizes proposals to:

1. De-duplicate four measures:
    a. De-duplicate one measure from the Safety domain that is also in the Hospital IQR Program; and
    b. De-duplicate three condition-specific payment measures from the Efficiency and Cost Reduction domain that are also in the Hospital IQR Program.

Measure Name

Removal Rationale

Patient Safety Measure
Collected via Chart Abstraction

Elective Delivery

Cost of the measure outweighs the benefit of its continued use and duplicative of measure in the Hospital Inpatient Quality Reporting Program.

Resource Use/Payment Measures Collected via Claims

Hospital-Level, Risk-Standardized Payment

Associated With a 30-Day Episode-of-Care for

Acute Myocardial Infarction

Measure is duplicative of measure in the Hospital Inpatient Quality Reporting Program and measure data are also captured under a more broadly applicable measure (Medicare Spending Per Beneficiary).

Hospital-Level, Risk-Standardized Payment

Associated With a 30-Day Episode-of-Care for Heart Failure

Measure is duplicative of measure in the Hospital Inpatient Quality Reporting Program and measure data are also captured under a more broadly applicable measure (Medicare Spending Per Beneficiary).

Hospital-Level, Risk-Standardized Payment

Associated With a 30-Day Episode-of-Care for Pneumonia

Measure is duplicative of measure in the Hospital Inpatient Quality Reporting Program and measure data are also captured under a more broadly applicable measure (Medicare Spending Per Beneficiary).

Hospital-Acquired Conditions (HAC) Reduction Program
The HAC Reduction Program establishes an incentive for hospitals to reduce hospital-acquired conditions by requiring the Secretary to reduce applicable IPPS payment by 1 percent to all subsection (d) hospitals that rank in the worst-performing 25 percent of all eligible hospitals. In the FY 2019 IPPS/LTCH PPS final rule, CMS finalizes three changes to existing HAC Reduction Program policies. CMS finalizes the following policies to:

1. Specify the dates of the time period used to calculate hospital performance for the FY 2021 HAC Reduction Program;
2. Adopt administrative processes to receive and validate National Healthcare Safety Network (NHSN) Healthcare-associated Infection (HAI) data that is submitted by hospitals to the Centers for Disease Control and Prevention (CDC) beginning CY 2020; and
3. Adopt a new scoring methodology, which will equally weight all measures used in a hospital’s program score.

Measures under the HAC Reduction Program will stay the same. In addition, retaining these measures in both the HAC Reduction and Hospital Value-Based Purchasing Programs will ensure that hospitals are incentivized to continually strive for both improvement and high performance. It will also continue to promote transparency through public reporting of additional information about hospital performance on these measures, as stakeholders will continue to be able to see both hospitals’ performance compared to all other hospitals and their performance improvement over time even after these measures are removed from the Hospital IQR Program.

Hospital Readmissions Reduction Program (HRRP)
The HRRP provides an incentive for hospitals to provide high-quality patient care by reducing applicable IPPS hospital payments by up to 3 percent for excess readmissions within hospital peer groups in six clinical areas. In the FY 2019 IPPS/LTCH PPS final rule, CMS finalizes proposals to:

1. Establish the applicable period for the FY 2019, FY 2020, and FY 2021 program years; and
2. Codify our previously finalized definitions of dual-eligible patients, proportion of dual-eligibles, and applicable period for dual-eligibility at 42 CFR 412.152.

In addition, CMS specifies the methodology for calculating aggregate payments for excess readmissions for FY 2019.

Measures under the HRRP will stay the same.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The PCHQR Program collects and publishes data from 11 PPS-exempt cancer hospitals on an announced set of quality measures. In the FY 2019 IPPS/LTCH PPS final rule, CMS finalizes the adoption of a new measure, the removal of four previously adopted measures, and the adoption of a new measure removal factor. These policies are consistent with CMS’ commitment to using a smaller set of more meaningful measures, focusing on patient-centered outcome measures, and taking into account opportunities to reduce paperwork and reporting burden on providers. Specifically, in this final rule, CMS is finalizing the following proposals:

1. Adoption of one new claims-based outcome measure beginning with the CY 2019 reporting period, Proportion of 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188);
2. Removal of four measures based on measure performance, beginning with the CY 2019 reporting period:

  • Oncology: Radiation Dose Limits to Normal Tissues;
  • Oncology: Medical and Radiation – Pain Intensity Quantified;
  • Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Prostate Cancer Patients; and
  • Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer Patients; and

3. Adoption of one additional factor to consider when evaluating potential measures for removal from the PCHQR Program measure set, “The cost associated with the measure outweighs the benefit of its continued use in the program.”

Measure Name

Removal Rationale

Structural Measures Collected via Web-Based Tool

Oncology: Radiation Dose Limits to Normal Tissues

Measure performance is “topped-out”.

Oncology: Medical and Radiation – Pain Intensity Quantified

Measure performance is “topped-out”.

Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients

Measure performance is “topped-out”.

Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients

Measure performance is “topped-out”.

CMS is electing to defer a final decision on the proposed removal of two healthcare associated infection measures, Central Line Associated Blood Stream Infection and Catheter Associated Urinary Tract Infection, until a future final rule released later in 2018, most likely the CY 2019 Outpatient Prospective Payment System final rule.

Long Term Care Hospital Quality Reporting Program (LTCH QRP)
Under the LTCH QRP, the applicable annual update to the LTCH PPS standard Federal rate for discharges for an LTCH is reduced by two percentage points if the LTCH does not submit to CMS data in accordance with the requirements of the LTCH QRP.

In the FY 2019 IPPS/LTCH PPS final rule, CMS is finalizing the following proposals to address the Meaningful Measures initiative goal of a parsimonious measure set that focuses on the most critical quality issues with the least burden for clinicians and providers. The final rule removes measures that either have significant operational challenges with reporting or are duplicative of other measures in the program.

  • National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) (beginning with the FY 2020 LTCH QRP)
  • National Healthcare Safety Network (NHSN) Ventilator-Associated Event (VAE) Outcome Measure (beginning with the FY 2020 LTCH QRP
  • Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) (beginning with the FY 2021 LTCH QRP)

Further, CMS finalizes the following: 

    • An update to the methods by which LTCHs are notified of non-compliance with the requirements of the LTCH QRP.
    • An additional measure removal factor—the costs associated with a measure outweigh the benefit of its continued use in the program.

    Burden Reduction

    This rule incorporates a variety of changes in response to suggestions from stakeholders on ways to reduce burden for hospitals. Overall, the rule will reduce the number of hours hospitals spend on paperwork by about 2 million hours. In addition to provisions that reduce the number of measures that acute care hospitals are required to report across the four quality and value-based purchasing programs, CMS is reducing burden by easing documentation requirements and providing flexibility in several areas, while maintaining important patient and program integrity protections. Specifically, CMS is:

    • Removing the requirement that certification statements detail where in the medical record the required information can be found.
    • Reducing the number of denied claims for clerical errors in documenting physician admission orders by removing the requirement that a written inpatient admission order be present in the medical record as a specific condition of Medicare Part A payment.
    • Providing more flexibility for new urban teaching hospitals to enter into Medicare Graduate Medical Education (GME) affiliation agreements, which allow hospitals to share full‑time equivalent cap slots to accommodate the cross training of residents.
    • Reducing documentation requirements by allowing hospitals to use average hourly wage data from the current year’s IPPS final rule that is available on the CMS website to demonstrate they are the only hospital in their labor market area for the purpose of meeting an exemption from certain wage index geographic reclassification requirements beginning with applications for reclassification for FY 2021.
    • Revising regulations to allow certain hospitals that are excluded from the IPPS (for example, LTCHs) to operate IPPS-excluded units (so long as such an arrangement would be allowed under the applicable hospital conditions of participation).
    • Revising regulations to allow that an IPPS-excluded satellite of an IPPS‑excluded unit of an IPPS-excluded hospital will not have to comply with the separateness and control requirements so long as the satellite of the unit is not co-located with an IPPS hospital.

     

    Innovation
    After consideration of public comments on the proposed rule, CMS has approved a new technology add‑on payment for FY 2019 for 10 of the 11 applications discussed in the proposed rule in which the technology received FDA approval by July 1, 2018. Included among the 10 approved applications for new technology add-on payment for FY 2019 are applications for Chimeric Antigen Receptor (CAR) T‑cell therapy. Separately, for FY 2019, CMS finalizes its proposal to assign CAR T-cell therapy to a MS-DRG and rename this MS-DRG “Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy.”

    Changes to Payment Rates under IPPS
    The increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 1.85 percent. This reflects the projected hospital market basket update of 2.9 percent reduced by a 0.8 percentage point productivity adjustment. This also reflects a +0.5 percentage point adjustment required by legislation, and the -0.75 percentage point adjustment to the update required by the Affordable Care Act.

    CMS projects that the rate increase, together with other changes to IPPS payment policies, will increase Medicare spending on inpatient hospital services in FY 2019 by approximately $4.8 billion, including an increase in new technology add-on payments of $0.2 billion. Other additional payment adjustments will include continued penalties for excess readmissions, a continued 1 percent penalty for hospitals in the worst performing quartile under the Hospital Acquired Condition Reduction Program, and continued upward and downward adjustments under the Hospital Value-Based Purchasing Program.

    Wage Index
    Consistent with the law, the final rule also updates geographic payment adjustments for IPPS hospitals. CMS looks forward to continuing to work on geographic payment disparities, particularly for rural hospitals, to the extent permitted under current law and appreciates responses to our request for public input on this issue. By allowing the imputed wage index floor to expire for all-urban states, CMS has begun the process of making geographic payments more equitable.

    Medicare Uncompensated Care Payments
    CMS distributes a prospectively determined amount to Medicare disproportionate share hospitals based on their relative share of uncompensated care nationally. As required under law, this amount is equal to an estimate of 75 percent of what otherwise would have been paid as Medicare disproportionate share hospital payments, adjusted for the change in the rate of uninsured individuals and other factors. In this rule, CMS distributes roughly $8.3 billion in uncompensated care payments for FY 2019, an increase of approximately $1.5 billion from the FY 2018 amount due to both an increase in the CMS Office of the Actuary’s estimate of payments that would otherwise be made for Medicare DSH and an updated estimate of the change in the percentage of uninsured individuals since 2014 based on the latest available data.

    For FY 2019, as proposed, CMS will continue incorporating uncompensated care cost data from Worksheet S-10 of the Medicare cost report into the methodology for distributing these funds. Specifically, for FY 2019, CMS proposes to use Worksheet S-10 data from FY 2014 and FY 2015 cost reports in combination with insured low-income days data from FY 2013 cost reports to determine the distribution of uncompensated care payments.

    In addition, due to the overwhelming feedback from the public emphasizing the importance of audits in ensuring the accuracy and consistency of Worksheet S-10, we expect audits to begin the fall of 2018. We also will continue to work with stakeholders to address their concerns regarding the accuracy and consistency of data reported on the Worksheet S-10 through provider education and further refinement of the instructions for the Worksheet S-10 as appropriate.

    LTCH PPS Changes
    Nationwide, most inpatients are treated in acute care hospitals, but some are admitted to LTCHs. In this final rule, CMS updates the LTCH PPS standard Federal payment rate by 1.35 percent. This is the payment rate applicable to LTCH patients that meet certain clinical criteria under the dual rate LTCH PPS payment system required by the Pathway for SGR Reform Act of 2013. Overall, under the changes included in this final rule, CMS projects that LTCH PPS payments will increase by approximately 0.9 percent, or $39 million in FY 2019, which reflects the continued phase-in of the dual payment rate system, which was recently extended through FY 2019 by the Bipartisan Budget Act of 2018.

    In addition, CMS finalizes its proposal to eliminate the 25 percent threshold policy in a budget neutral manner. To do so, we adopt a budget neutrality adjustment. The exact amount of the adjustment will be different until FY 2021 to account for the end of transitional payments for site-neutral payment rate discharges; however the adjustment in each year will be approximately -0.9 percent.

    Rural Community Hospital Demonstration
    The Rural Community Hospital Demonstration was originally authorized for a 5‑year period by section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, and extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act. Section 15003 of the Cures Act extended the demonstration for another 5-year period.

    The demonstration is required to be budget neutral. Each year since 2004, CMS has included a segment specific to the demonstration program in the IPPS/LTCH PPS proposed and final rules. On an annual basis, this segment has detailed the status of the demonstration, as well as the methodology for ensuring budget neutrality. Each of the past 13 years, CMS has adjusted the IPPS rates by an amount sufficient to account for the added costs of the demonstration program, thus applying budget neutrality across the payment system as a whole rather than merely across the participants in the demonstration program.

    In the FY 2019 IPPS/LTCH PPS final rule, we provide a summary of the previous legislative provisions and their implementation, as well as our final policies for implementation of the extension period authorized by the Cures Act. We also describe the budget neutrality methodology finalized in accordance with these policies, and identify the amount of the adjustment to the IPPS rates for FY 2019. 

    Frontier Community Health Integration Project (FCHIP) Demonstration
    Section 123 of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110–275), as amended by section 3126 of the Affordable Care Act, authorizes a demonstration project to allow eligible entities to develop and test new models for the delivery of health care services in eligible counties in order to improve access to and better integrate the delivery of acute care, extended care and other health care services to Medicare beneficiaries. The demonstration is titled “Demonstration Project on Community Health Integration Models in Certain Rural Counties,” and is commonly known as the Frontier Community Health Integration Project (FCHIP) demonstration.

    Ten Critical Access Hospitals are participating in the FCHIP Demonstration, which aims to test new models of health care delivery in the most sparsely populated rural counties with the goal of improving health outcomes and reducing Medicare expenditures. This Demonstration is for three years and it began on August 1, 2016.  

    In the FY 2019 IPPS/LTCH PPS final rule, we reiterate our previously announced policy to address the budget neutrality requirement for the demonstration in the event the demonstration is found not to have been budget neutral.