Fact sheet



OVERVIEW: On May 1, 2009, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would revise policies and payment rates for general acute care hospitals that are paid for inpatient services under the Inpatient Prospective Payment System (IPPS), effective October 1, 2009. In addition to promoting accurate payment for inpatient services to Medicare beneficiaries, the proposed rule would strengthen the relationship between payment and quality of service, by expanding the quality measures that hospitals must report in order to receive the full market basket update in fiscal year 2011. Under the Medicare law, hospitals that choose not to participate in the voluntary reporting program or do not participate successfully will receive an inflation update equal to the hospital market basket less two percentage points.

CMS is not proposing to change the list of hospital-acquired conditions (HACs) in FY 2010.

BACKGROUND: The Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) and HACs initiatives represent significant steps toward implementing value-based purchasing (VBP) in Medicare. VBP is intended to transform Medicare from a passive payer for services to a prudent purchaser of services, paying not just for quantity of services but for quality as well.

The RHQDAPU initiative grew out of the Hospital Quality Initiative developed by CMS in consultation with hospital groups. Participation in the program is voluntary, but after initial levels of participation proved disappointing, Congress added a financial incentive to the program in the Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003. Under the MMA, hospitals that chose not to participate or failed to meet the criteria for successful reporting in a given year received the annual payment update reduced by 0.4 percentage points. The Deficit Reduction Act of 2005 increased this reduction to 2.0 percentage points. Since the implementation of the financial incentive, hospital participation has increased to 99 percent and, of participating hospitals, 97 percent receive the full annual payment update.

In the meantime, the RHQDAPU measure set has grown from a starter set of 10 quality measures in 2004 to the current set of 43 quality measures. The 43 measures include 25 chart-abstracted measures (heart attack, heart failure, pneumonia, surgical care improvement), 16 claims-based measures (mortality and readmissions measures for heart attack, heart failure, pneumonia; AHRQ Patient Safety Indicators and Inpatient Quality Indicators; nursing sensitive care), 1 survey-based measure (patient satisfaction), and 1 structural measure (participation in a cardiac surgery registry).


Proposed Additions: The IPPS FY 2010 proposed rule would add four new measures and program requirements to the current measures for which hospitals must submit data under the RHQDAPU program to receive the full market basket update in FY 2011. This includes two new chart-abstracted measures for surgical care improvement and two structural measures. The proposed Surgical Care Improvement Project (SCIP) measures are additions to the existing SCIP measure set for which data elements are already being collected and submitted to CMS. Therefore, the additional chart abstraction burden for hospitals will be minimal. CMS believes that the two structural measures will promote hospital participation in nursing-sensitive care and stroke care registries which collect quality data.


The proposed additions to the quality measures are summarized in the following table:

Surgical Care Improvement Project (SCIP) Measures

SCIP Infection (INF) 9

Urinary Catheter Removed on Postoperative Day 1 (POD1) or Postoperative Day 2 (POD2)


Surgery Patients with Perioperative Temperature Management

Structural Measures

Participation in a Systematic Clinical Database Registry: Nursing Sensitive Care

Participation in a Systematic Clinical Database Registry: Stroke Care

Retirement of Measure: The proposed rule notes that CMS retired the Acute Myocardial Infarction (AMI)-6 measure – Beta-blocker at arrival. CMS took this action based on the

evolving evidence for care of AMI patients and changes in the American College of Cardiology/American Heart Association (ACC/AHA) practice guidelines. The new guidelines recommend that early beta-blockers should be avoided in certain patient populations due to increased mortality risk. Retirement of this measure is based on evidence that revision of the measure would be impractical and might cause unintended consequences, including harm to certain AMI patients.


Proposed Program Requirements: CMS currently gives hospitals that will not be receiving the full market basket update an opportunity to submit a RHQDAPU reconsideration request to CMS. The proposed rule would require hospitals that were denied the full market basket update for FY 2010 because they failed to meet the RHQDAPU validation requirements to submit a copy of all the paper medical records that they submitted to the CMS contractor each quarter for purposes of the validation, along with a copy of the reconsideration request form. CMS believes this proposal would streamline the reconsideration process and reduce the number of subsequent hospital appeals to the Provider Reimbursement Review Board (PRRB).

CMS is also proposing a deadline by which hospitals that receive a new CMS Certification Number (CCN) must submit a RHQDAPU participation form. Currently, hospitals begin reporting RHQDAPU data starting with discharges in the calendar quarter following the date they submit their RHQDAPU participation form. The proposed rule would allow hospitals that receive a new CCN 180 calendar days from their CCN open date to submit a RHQDAPU participation form. This would allow CMS to accurately verify whether the hospitals intend to participate in the RHQDAPU program, while ensuring that the hospitals have a sufficient amount of time to get their operations up and running. Hospitals would still be required to report data starting with the calendar quarter following the date that they submit their RHQDAPU participation form.

Finally, CMS is proposing to modify the validation requirement starting with FY 2012 to improve the reliability and quality of the process. CMS is proposing to randomly select 800 hospitals on an annual basis, and to validate 12 medical records on a quarterly basis throughout the year from each selected hospital. CMS is proposing to increase the quarterly sample size from the current 5 records to 12 records to achieve a more reliable validation estimate of the RHQDAPU data reported by the hospital.

HOSPITAL-ACQUIRED CONDITIONS UPDATE: CMS is not proposing to change the list of hospital-acquired conditions (HACs) in FY 2010. Under the HAC payment provision, Medicare has selected ten categories of conditions that are reasonably preventable through adherence to evidence-based guidelines, and that, when present as a secondary diagnosis at discharge, result in the case being assigned to a higher paying MS-DRG. Beginning for discharges on or after October 1, 2008, CMS no longer pays at the higher MS-DRG if the only secondary diagnoses on a claim are on the HAC list and were not reported as present at admission.

The HAC payment provision was mandated by the Deficit Reduction Act of 2005 to give hospitals a payment incentive to encourage the prevention of these conditions. CMS has been aggressive in selecting HACs during the IPPS rulemaking for FY 2008 and FY 2009. Although CMS has not yet evaluated the impact of this policy, CMS has received anecdotal reports that hospitals across the country are stepping up their efforts to prevent HACs from occurring.

CMS is planning to conduct a joint evaluation of the program’s impact, working with sister agencies within the Department of Health and Human Services - the Centers for Disease Control and Prevention (CDC), the Agency for Healthcare Research and Quality (AHRQ), and the Office of Public Health and Science (OPHS). The evaluation will provide valuable information about preventing HACs.

The proposed rule was placed on display at the Federal Register today, and can be found under Special Filings at:

CMS will accept comments on the proposed rule until June 30, and will respond to comments in a final rule to be made publicly available no later August 1, 2009.

For more information, please see:

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