Summary
Starting in FY15, applies a 1% payment reduction to hospitals with hospital-acquired condition (HAC) rates in the top quartile nationwide.
Implementation Status
For background regarding CMS’s implementation steps taken through 2012, please see the CMS Hospital-Acquired Conditions (HAC) website.
2012
In December 2012, CMS submitted a Report to Congress regarding the feasibility of extending this policy to non-inpatient hospital settings. As an element of the Partnership for Patients at CMMI, the agency has launched a Hospital Engagement Network focused on reducing HACs.
2013
On April 26, 2013, CMS issued a proposed rule updating FY 2014 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs). Both the Medicare Inpatient Prospective Payment System (IPPS) and LTCH proposals, following CMS’ consideration of public comments and upon finalization, take effect October 1, 2013. Under the proposed rules, CMS estimates that gross hospital payments will be $27 million higher in FY14 than they were in FY15 (which reflects the ACA Medicare DSH cuts, which are expected to result in a -0.9% cut to hospital payments). Gross LTCH payments under the proposed rule will increase by 1.1% or $62 million, with the proposed implementation of the 25% Rule costing the sector $190 million. CMS fact sheets on the rule are available here and here. Comments on the proposal are due by June 25, 2013.
On August 2, 2013, CMS issued its FY 2014 Medicare Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) PPS final rule under which gross hospital payments will be $1.2 billion higher in FY 2014 than they were in FY 2013 – much higher than the $27 million increase initially proposed. The final rule addresses a number of IPPS and LTCH payment and quality-related provisions authorized or amended by the ACA.
On November 27, 2013, CMS released the CY14 Medicare Hospital Outpatient Department (HOPD) and Ambulatory Surgical Center (ASC) final rule. Most elements of the final rule were in line with what was proposed, except for CMS’s decision to delay by one year the creation of 29 new comprehensive APCs to replace 29 existing device-dependent APCs. Comments on the rule are due by January 27.
2014
On May 1, CMS issued a proposed rule updating FY 2015 Medicare payment policies and rates for inpatient stays at general acute care and LTCHs. Under the proposed rule, hospitals that participate in the Hospital Inpatient Quality Reporting (IQR) Program and are ‘meaningful users’ of EHRs would receive a 1.3% payment update. However, the 1.3% rate increase, when coupled with the payment policy reductions – including those under the Hospital Readmissions Reduction Program, the Hospital Acquired Condition (HAC) Reduction Program, Medicare DSH changes as well as “the expiration of certain statutory provisions that provided special temporary increases in payments to hospitals and other proposed changes” – would ultimately decrease IPPS operating payments by approximately 0.8% or $241 million over FY 2015 payment levels. Also of note, gross LTCH payments under the proposed rule would increase by 0.8% or $44 million over FY 2014 payments, with a delay (pursuant to the statutory mandate) in the full application of the 25% Rule patient threshold, among other key LTCH policy changes denoted further below. Comments are due by June 30, 2014. CMS fact sheets are available here and here. A CMS press release is available here.
On May 7, HHS issued a report, delineating a number of Department-led quality improvement initiatives aimed at reducing hospital readmissions, adverse drug events (ADEs), and other forms of patient harm – including falls and hospital acquired conditions (HACs). HHS estimates that these efforts have prevented an estimated 15,000 deaths and saved roughly $4.1 billion in costs over the 2011-12 period. In particular, the report touts these achievements in the broader context of the ongoing Partnership for Patients initiative (Partnership), as well as measures under the ACA that seek to improve patient safety.
On Dec. 18, CMS announced FY 2015 results for the Hospital-Acquired Condition (HAC) Reduction Program and the Hospital Value-based Purchasing (VBP) program, as well as enhancements to the respective Hospital and Physician Compare sites encompassing new quality data.
2015
On Apr. 17, 2015 as part of a proposed rule updating FY 2016 Medicare payment policies and rates for inpatient stays at general acute care and LTCHs, CMS proposed changes to its HAC program policies including a population expansion, a change in how the Total HAC score is weighted, and policy to align the extraordinary circumstances exceptions to other IPPS quality reporting programs.
On July 31, CMS released the FY 16 inpatient prospective payment system (IPPS) and long-term care hospital PPS final rule affecting discharges beginning on Oct. 1, 2015. The rule also includes an embedded interim final rule with comment period effectuating the statutory extension of the Medicare-dependent, small rural hospital Program and changes to the low-volume payment adjustment.
2016
On Aug. 2, CMS released the FY 2017 inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) PPS and policy final rule. The final rule governs FY 2017 payments to approximately 3,330 acute care hospitals and 430 LTCHs through the IPPS and LTCH PPS, respectively, and effectuates key policy changes. Under the rule, net payments to inpatient hospitals will increase by 0.95 percent on average compared with FY 2016. For the IPPS, the rule finalizes the 1.5 percent documentation and coding recoupment cut, as proposed, and delays the proposed incorporation of S-10 data into uncompensated care calculations. LTCH PPS payments will decrease by 7.1 percent under the LTCH PPS amid the ongoing implementation of site neutrality and will increase by 0.7 percent for cases qualifying for the higher standard rate. The aforementioned provisions are addressed in this regulation.
On Sept. 7, the House Ways and Means Subcommittee on Health convened a hearing to examine the status of various quality programs in place in Medicare Part A.
2017
On April 27, CMS released its proposal to revise the FY 2018 Medicare IPPS/LTCH PPS. This provision of the ACA is addressed in the rule.
On Aug. 3, CMS finalized a rule to revise the Medicare hospital inpatient prospective payment system (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System for FY 2018. This provision of the ACA is addressed in the rule.
Statutory Text
SEC. 3008. PAYMENT ADJUSTMENT FOR CONDITIONS ACQUIRED IN HOSPITALS. (a) IN GENERAL.—Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as amended by section 3001, is amended by adding at the end the following new subsection: ‘‘(p) ADJUSTMENT TO HOSPITAL PAYMENTS FOR HOSPITAL AC- QUIRED CONDITIONS.— ‘‘(1) IN GENERAL.—In order to provide an incentive for applicable hospitals to reduce hospital acquired conditions under this title, with respect to discharges from an applicable hospital occurring during fiscal year 2015 or a subsequent fiscal year, the amount of payment under this section or section 1814(b)(3), as applicable, for such discharges during the fiscal year shall be equal to 99 percent of the amount of payment that would otherwise apply to such discharges under this section or section 1814(b)(3) (determined after the application of subsections (o) and (q) and section 1814(l)(4) but without regard to this subsection). ‘‘(2) APPLICABLE HOSPITALS.— ‘‘(A) IN GENERAL.—For purposes of this subsection, the term ‘applicable hospital’ means a subsection (d) hospital that meets the criteria described in subparagraph (B). ‘‘(B) CRITERIA DESCRIBED.— ‘‘(i) IN GENERAL.—The criteria described in this subparagraph, with respect to a subsection (d) hospital, is that the subsection (d) hospital is in the top quartile of all subsection (d) hospitals, relative to the national average, of hospital acquired conditions during the applicable period, as determined by the Secretary. ‘‘(ii) RISK ADJUSTMENT.—In carrying out clause (i), the Secretary shall establish and apply an appropriate risk adjustment methodology. ‘‘(C) EXEMPTION.—In the case of a hospital that is paid under section 1814(b)(3), the Secretary may exempt such hospital from the application of this subsection if the State which is paid under such section submits an annual report to the Secretary describing how a similar program in the State for a participating hospital or hospitals achieves or surpasses the measured results in terms of patient health outcomes and cost savings established under this subsection. ‘‘(3) HOSPITAL ACQUIRED CONDITIONS.—For purposes of this subsection, the term ‘hospital acquired condition’ means a condition identified for purposes of subsection (d)(4)(D)(iv) and any other condition determined appropriate by the Secretary that an individual acquires during a stay in an applicable hospital, as determined by the Secretary. ‘‘(4) APPLICABLE PERIOD.—In this subsection, the term ‘applicable period’ means, with respect to a fiscal year, a period specified by the Secretary. ‘‘(5) REPORTING TO HOSPITALS.—Prior to fiscal year 2015 and each subsequent fiscal year, the Secretary shall provide confidential reports to applicable hospitals with respect to hospital acquired conditions of the applicable hospital during the applicable period. ‘‘(6) REPORTING HOSPITAL SPECIFIC INFORMATION.— ‘‘(A) IN GENERAL.—The Secretary shall make information available to the public regarding hospital acquired conditions of each applicable hospital. ‘‘(B) OPPORTUNITY TO REVIEW AND SUBMIT CORREC- TIONS.—The Secretary shall ensure that an applicable hospital has the opportunity to review, and submit corrections for, the information to be made public with respect to the hospital under subparagraph (A) prior to such information being made public. ‘‘(C) WEBSITE.—Such information shall be posted on the Hospital Compare Internet website in an easily understandable format. ‘‘(7) LIMITATIONS ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following: ‘‘(A) The criteria described in paragraph (2)(A). ‘‘(B) The specification of hospital acquired conditions under paragraph (3). ‘‘(C) The specification of the applicable period under paragraph (4). ‘‘(D) The provision of reports to applicable hospitals under paragraph (5) and the information made available to the public under paragraph (6).’’. (b) STUDY AND REPORT ON EXPANSION OF HEALTHCARE ACQUIRED CONDITIONS POLICY TO OTHER PROVIDERS.— (1) STUDY.—The Secretary of Health and Human Services shall conduct a study on expanding the healthcare acquired conditions policy under subsection (d)(4)(D) of section 1886 of the Social Security Act (42 U.S.C. 1395ww) to payments made to other facilities under the Medicare program under title XVIII of the Social Security Act, including such payments made to inpatient rehabilitation facilities, long-term care hospitals (as described in subsection(d)(1)(B)(iv) of such section), hospital outpatient departments, and other hospitals excluded from the inpatient prospective payment system under such section, skilled nursing facilities, ambulatory surgical centers, and health clinics. Such study shall include an analysis of how such policies could impact quality of patient care, patient safety, and spending under the Medicare program.