Final Rule (develop title)

FY 2014 Medicare Final RuleSummary of Major ProvisionsEffective October 1, 2013Developed by: Annie Lee SalleeHTH Revenue Cycle Education Specialistannielee.sallee.hth@gmail.com

Welcome to HTHUs course on Medicares final rule for federal FY 2014, which begins October 1, 2013. 1Learning OutcomesAt the end of this course, each participant should be able to:Recall the major provisions of the final rule for FY 2014.Recognize how each may impact your hospital.Identify the necessary steps in order to respond or take action to comply with or prepare for the major provisions.At the end of this course, the participant should be able to:Become familiar with major provisions of the final rule for FY 2014.Understand how each may impact your hospital, andEnable you to make the necessary steps in order to respond or take action to comply with or prepare for the major provisions.

2IPPS Payment AdjustmentsThe final rule increases payments to hospitals by 0.7%, accounting for market basket adjustment of 1.7% and a 0.8% documentation and coding case mix adjustment, and a 0.2% reduction in the standardized amount (and hospital-specific rates) to offset additional IPPS expenditures for the new inpatient admission criteria.

The final rule increases payments to hospitals by 0.7%.In a brief summary, this increase accounts for a 1.7% market basket adjustment, a temporary reduction of 0.8% to implement the American Taxpayer Relief Act's requirement to recoup overpayments from prior years as a result of a new patient classification system, or MS-DRGs, that better recognizes patient severity of illness. CMS is also making an additional 0.2% reduction to offset projected spending increases associated with changes to admission and medical review criteria for inpatient services. 3What affects the IPPS payment adjustment?Documentation & Coding Adjustment - Between FY 2014 and FY 2017 Medicare plans to recoup funds due to past overpayments the government made to hospitals as the country transitioned to MS-DRGs (required by the American Taxpayer Relief Act of 2012 ).Refinement of Relative Value Weight Calculation - This impact models payments to various hospital types using relative weights developed from 19 CCRs (Cost-to-Charge Ratio) which now include implantable devices, MRIs, CT scans and cardiac catheterization. Revision of Hospital Market Baskets fixed weight index to measure price changes; annual updates are required by Medicare law.What affects the IPPS payment adjustment?Documentation & Coding Adjustment - Hospitals and other providers will reportedly lose $11 billion in Medicare payments between FY 2014 and FY 2017 due to past overpayments the government made to hospitals as the country transitioned to MS-DRGs (which, again, is required by the American Taxpayer Relief Act of 2012 ).Refinement of Relative Value Weight Calculation - This impact models payments to various hospital types using relative weights developed from 19 CCRs (Cost-to-Charge Ratio) which now include implantable devices, MRIs, CT scans and cardiac catheterization. Revision of Hospital Market Baskets This is a fixed weight index to measure price changes; annual updates are required by Medicare law.

4Changes to Programs and New or Revised PoliciesReadmission Reduction ProgramHospital Value-Based PurchasingHospital Acquired-Condition Reduction ProgramDirect GME PaymentsDSH Payment AdjustmentsPayment for Part B Inpatient ServicesNew Inpatient Admission RuleHospital Inpatient Quality Reporting ProgramChanges to LTCH PPSInpatient Psych Facility Quality Reporting ProgramCoP Changes

Next, we will be reviewing the changes to the following programs and new or revised policies under the final rule for FY 2014:Readmission Reduction ProgramHospital Value-Based PurchasingHospital Acquired-Condition Reduction ProgramDirect GME PaymentsDSH Payment AdjustmentsPayment for Part B Inpatient ServicesNew Inpatient Admission RuleHospital Inpatient Quality Reporting ProgramChanges to LTCH PPSInpatient Psych Facility Quality Reporting ProgramAnd, a few Conditions of Participation Changes

5Readmission Reduction ProgramCMS defines readmission as an admission to a subsection(d) hospital within 30 days of a discharge from the same or another subsection(d) hospital.Requires a reduction (of no more than 2%) to an eligible hospitals base operating DRG payment to account for excess readmissions of the selected applicable conditions: acute myocardial infarction, heart failure, and pneumonia.Established additional exclusions to 3 measures to account for planned readmissions. There are new discharge status codes to identify planned readmissions. For a list of the discharge status code updates please refer to pages 198-199 of the final rule.Readmission Reduction ProgramCMS defines readmission as an admission to a subsection(d) hospital within 30 days of a discharge from the same or another subsection(d) hospital.This program requires a reduction (of no more than 2%) to an eligible hospitals (or one that is paid under the IPPS) base operating DRG payment to account for excess readmissions of the selected applicable conditions: acute myocardial infarction, heart failure, and pneumonia.In order to ensure there arent any wrongful penalties; CMS has developed new discharge status codes to identify planned readmissions. For a list of the discharge status code updates please refer to pages 198-199 of the final rule.

6Hospital Value-Based PurchasingValue-based incentive payments are made to hospitals who meet certain performance standards within that fiscal year.Ensure payment is made for quality and not quantity.The 1.25% reduction to the base operating DRG payment amount is going to fund the value-based incentive payments.

Hospital Value-Based PurchasingValue-based incentive payments are made to hospitals who meet certain performance standards within that fiscal year.In total, CMS will not have any net financial impact for FY2014. The 1.25% reduction to the base operating DRG payment amount is going to fund the value-based incentive payments. This will award higher performing hospitals, while reducing payment to hospitals that do not perform as well.

7Hospital Value-Based Purchasing17 measures for FY 2014, including the 12 clinical process of care measures and the HCAPS measure from FY 2013. FY 2014 adds 1 new clinical process of care measure and 3 mortality outcome measures.For a complete list of the FY 2014 measures, please refer to page 721 of the final rule.

There are 17 measures for FY 2014, including the 12 clinical process of care measures and the HCAPS measure from FY 2013 (which was the first year of the program). FY 2014 adds 1 new clinical process of care measure and 3 mortality outcome measures.For a complete list of the FY 2014 measures, please refer to page 721 of the final rule.Please note- HTHU has a course designed that outlines the details of the Value-Based Purchasing program, what it means, and what you can do to improve your hospitals VBP scores.

8Hospital-Acquired Condition (HAC) Reduction ProgramNo payment impact for FY 2014.Sets forth the requirements by which payments to applicable hospitals will be adjusted to account for HACs with respect to discharges occurring during FY 2015 or later (beginning Oct 1, 2014).The amount of payment will be equal to 99% of the amount of payment that would otherwise apply to such discharges.

The payment adjustment would apply to an applicable hospital that ranks in the top quartile (25 percent) for medical errors or serious infections contracted while in the hospital.Does not include hospitals and hospital units excluded from the IPPS, such as LTCHs, cancer hospitals, childrens hospitals, IRFs, IPFs, and CAHs.Top 25%, not a good thingHospital-Acquired Condition (HAC) Reduction ProgramThere will be no payment impact to hospitals for FY 2014.The FY 2014 final rule sets forth the requirements by which payments to applicable hospitals will be adjusted to account for HACs with respect to discharges occurring during FY 2015 or later (beginning Oct 1, 2014).The amount of payment will be equal to 99% of the amount of payment that would otherwise apply to such discharges.The payment adjustment would apply to an applicable hospital that ranks in the top quartile (25 percent) for medical errors or serious infections contracted while in the hospital. In this case, being in the top 25% is definitely not a good thing.This program does not include hospitals and hospital units excluded from the IPPS, such as LTCHs, cancer hospitals, childrens hospitals, IRFs, IPFs, and CAHs are not included.

9Direct GME PaymentsIn FY 2014, Medicare utilization calculation is to now include labor & delivery days as inpatient days.A hospital may not claim full-time equivalent residents training at a CAH for Indirect Medical Education (IME) and/or direct GME purposes. However, if a CAH itself incurs the costs of training the full-time equivalent residents when these residents rotate to the CAH, the CAH may receive payment based on 101% of its Medicare reasonable costs. Labor & DeliveryDirect GME PaymentsIn FY 2014, hospitals must count labor and delivery days as inpatient days in the Medicare utilization calculation.A hospital may not claim full-time equivalent residents training at a CAH for Indirect Medical Education (IME) and/or direct GME purposes. However, if a CAH itself incurs the costs of training the full-time equivalent residents when these residents rotate to the CAH, the CAH may receive payment based on 101 percent of its Medicare reasonable costs.

10DSH Payment Adjustment and Paymentfor Uncompensated CareIn FY 2014, DSHs will receive 25% of the amount they previously would have received under the current statutory formula for Medicare DSH payments. The remaining amount, equal to 75% of what otherwise would have been paid as Medicare DSH payments, will be paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH hospital will receive its additional amount based on its share of the total amount of uncompensated care for all Medicare DSH hospitals for a given time period.25% of What you would have received75% Dispersed based on Care providedDSH Payment Adjustment and Payment for Uncompensated CareIn FY 2014, Disproportionate Share Hospitals will receive 25% of the amount they previously would have received under the current statutory formula for Medicare DSH payments. The remaining amount, equal to 75% of what otherwise would have been paid as Medicare DSH payments, will be paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH hospital will receive its additional amount based on its share of the total amount of uncompensated care for all Medicare DSH hospitals for a given time period.*The 25% will be paid as usual, but the 75% payment pool will be dispersed only periodically. This impact hospitals regardless if their DSH payment goes up or down. The delay in funds will need to be planned for.Please note- HTHU has a course designed that outlines the details of the revised DSH program, how Medicare is defining uncompensated care, and how your hospital may be affected.

11Payment of Part B Inpatient ServicesMedicare will issue payment for all Part B services that would have been payable had the beneficiary originally been treated as an outpatient.The new rule greatly expands what was previously a very limited set of inpatient services that could be billed under Part B.The Ruling only applies to denials of claims for inpatient admissions that were not reasonable and necessary; it does not apply to any other circumstances in which there is no payment under Part A.Includes CAHs.For admissions after Oct 1, 2013, there will be a 12 month timely filing requirement based on date of service.Payment of Part B Inpatient ServicesMedicare will issue payment for all Part B services that would have been payable had the beneficiary originally been treated as an outpatient.The new rule greatly expands what was previously a very limited set of inpatient services that could be billed under Part B.The Ruling only applies to denials of claims for inpatient admissions that were not reasonable and necessary; it does not apply to any other circumstances in which there is no payment under Part A.This change does includes Critical Access Hospitals.For admissions after Oct 1, 2013, there will be a 12 month timely filing requirement based on date of service.

12Inpatient AdmissionsA New Way of AdmittingShould improve clarity and consensus among providers, Medicare, and other stakeholders regarding the relationship between admissions decisions and appropriate Medicare payment.Includes CAHs (Final Rule pg. 1645).A physician certifies or recertifies the need for continued hospitalization of the patient for medical treatment or medically required inpatient diagnostic study.CMS policy requires a physician order in order to justify inpatient hospitalization.Documentation in the medical record must support a reasonable expectation of the need for the beneficiary to require a medically necessary stay lasting at least two midnights. If the inpatient admission lasts fewer than two midnights due to an unforeseen circumstance this also must be clearly documented in the medical record.Inpatient AdmissionsCMS is redefining the requirements for inpatient admissionsCMS intends to improve clarity and consensus among providers, Medicare, and other stakeholders regarding the relationship between admissions decisions and appropriate Medicare payment.The new definition does includes Critical Access Hospitals.A physician certifies or recertifies the need for continued hospitalization of the patient for medical treatment or medically required inpatient diagnostic study.CMS policy requires a physician order in order to justify inpatient hospitalization.Documentation in the medical record must support a reasonable expectation of the need for the beneficiary to require a medically necessary stay lasting at least two midnights. If the inpatient admission lasts fewer than two midnights due to an unforeseen circumstance this also must be clearly documented in the medical record.

13Inpatient Admissions Expectation of TimeInpatient admission is now based on the physicians expectation that the patient will be in the hospital for at least 2 midnights.CMS is going to provide further guidance related to medical necessity, but the standard is now based on time when deciding if a patient should be placed on observation or admitted as an inpatient.If a beneficiary is expected to stay in the hospital to receive medical care then inpatient stay is warranted. CMS to publish more information on how clinical factors come into play; however, it is now based on expected LOS.Admissions should now be approached differently than how a hospital handles admissions for commercial payers using Interqual or other criteria. BUT- remember this criteria only applies to admissions on or after Oct 1, 2013.

A new expectation of time:Inpatient admission is now based on the physicians expectation that the patient will be in the hospital for at least 2 midnights.CMS is going to provide further guidance related to medical necessity, but the standard is now based on time when deciding if a patient should be placed on observation or admitted as an inpatient.If a beneficiary is expected to stay in the hospital to receive medical care then inpatient stay is warranted. CMS is going to publish more information on how clinical factors come into play; however, it is now based on expected LOS.Admissions should now be approached differently than how a hospital handles admissions for commercial payers using Interqual or other criteria. Interqual or other criteria is just a tool, it is not Medicare policy. BUT- remember this criteria only applies to admissions on or after Oct 1, 2013.

14More on Two-Midnight RuleUnder the final rule CMS would expect the physician to document inpatient order ASAP, 1 day stays will be designated outpatient, but at the point of order, the patient is an inpatient. Two midnight rule can include the first midnight that they were on observation status. If there is an expectation that the patient is going to stay an additional midnight, the physician needs to write the order as soon as they have this expectation before the 2nd night. (1st night will be outpatient, and 2nd night will be inpatient). Date of admission HAS to be the date the order is written. Patient is not inpatient until there is an order. It is NOT retroactive.

Under the final rule CMS would expect the physician to document inpatient order as soon as possible. 1 day stays will be designated outpatient, but at the point of order, the patient is an inpatient. The Two midnight rule can include the first midnight that the patient was on observation status. If there is an expectation that the patient is going to stay an additional midnight, the physician needs to write the order as soon as they have this expectation before the 2nd night. (1st night will be outpatient, and 2nd night will be inpatient). The Date of admission HAS to be the date the order is written. The Patient is not inpatient until there is an order, and it cannot be retroactive.

15More on Two-Midnight Rule2 midnights is a benchmark based on physician expectation, but if there is an unforeseen circumstance, then they shouldnt have to use condition code 44 (IP admission changed to OP). Through internal audit, if UR believes 2 midnights wasnt warranted, then you cant bill as observation because the inpatient stay was already a fact. You could bill as Part B inpatient based on medical necessity. CMS has not issued guidance as to whether admit or admit to inpatient is required. They are working on guidance to identify order as intended inpatient.2 midnights is a benchmark based on physician expectation, but if there is an unforeseen circumstance, then they shouldnt have to use condition code 44 (IP admission changed to OP). Through internal audit, if UR believes 2 midnights wasnt warranted, then you cant bill as observation because the inpatient stay was already a fact. You could bill as Part B inpatient based on medical necessity. CMS has not issued guidance as to whether admit or admit to inpatient is required. They are working on guidance to identify order as intended inpatient.

16Hospital Inpatient Quality Reporting (IQR) ProgramCMS is making several changes to: (1) the measure set, including the removal of some measures, the suspension of one measure, the refinement of some measures, and the adoption of several new measures; (2) the administrative processes; and (3) the validation methodologies.Option to electronically submit CY 2014 measures and records for validation for the FY 2016 payment determination.For resources related to the Hospital IQR program including important dates & deadlines refer to https://www.qualitynet.org/dcs/ContentServer?cid=1138115987129&pagename=QnetPublic%2FPage%2FQnetTier2

Hospital Inpatient Quality Reporting (IQR) ProgramCMS is making several changes to: (1) the measure set, including the removal of some measures, the suspension of one measure, the refinement of some measures, and the adoption of several new measures; (2) the administrative processes; and (3) the validation methodologies.The option to electronically submit CY 2014 measures and records for validation for the FY 2016 payment determination.For resources related to the Hospital IQR program including important dates & deadlines, please refer to the link provided.Quality Net is a great tool online, and they also have a help desk for you to call in and ask your questions. Based on experience, the help desk is very useful and will do their best to provide you with answers to your questions.17Changes to LTCH PPS Result in an increase in estimated payments from FY 2013 of approximately $72 million (or 1.3 percent). No major changes to the way the MSLTCDRG payment weights are calculated for FFY 2014.In addition, under the LTCH Quality Reporting (LTCHQR) Program, the annual update to the standard Federal rate will be reduced by 2 percentage points for LTCHs that fail to submit data for FY 2014 on specific measures under section 3004 of the Affordable Care Act.LTCHQR Includes 3 MeasuresNQF #013Urinary Catheter-Associated Urinary Tract Infection (CAUTI) rate per 1, 000 urinary catheter days, for Intensive Care Unit Patients NQF #0139Central Line Catheter-Associated Blood Stream Infection (CLABSI) Rate for ICU and High-Risk Nursery Patients NQF #0678Percent of Residents with Pressure Ulcers That are New or Worsened Changes to LTCH PPS Result in an increase in estimated payments from FY 2013 of approximately $72 million (or 1.3 percent). Rural LTCHs should experience slightly lower increases than the national average due to decreases in their wage index for FY 2014 compared to FY 2013.No major changes to the way the MSLTCDRG payment weights are calculated for FFY 2014.In addition, under the LTCH Quality Reporting (LTCHQR) Program, the annual update to the standard Federal rate will be reduced by 2 percentage points for LTCHs that fail to submit data for FY 2014 on specific measures under section 3004 of the Affordable Care Act.

18Changes to LTCH PPS Attention to referrals

Moratoria on the full implementation of the 25-percent threshold payment adjustment policy will expire for certain LTCHs for cost reporting periods beginning on or after October 1, 2013. Under the 25-percent patient threshold payment adjustment policy, if an LTCH admits more than 25 percent of its patients from a single acute care hospital, Medicare will pay at a rate comparable to IPPS hospitals for those patients above the 25-percent threshold.CMS believes that certain LTCH are acting as step-down units for referring acute care hospitals, and therefore should be treated as one episode of care.Changes to LTCH PPS Attention to referralsMoratoria on the full implementation of the 25-percent threshold payment adjustment policy will expire for certain LTCHs for cost reporting periods beginning on or after October 1, 2013. Under the 25-percent patient threshold payment adjustment policy, if an LTCH admits more than 25 percent of its patients from a single acute care hospital, Medicare will pay at a rate comparable to IPPS hospitals for those patients above the 25-percent threshold. CMS believes that certain LTCH are acting as step-down units for referring acute care hospitals, and therefore should be treated as one episode of care.

19Inpatient Psych Facility Quality Reporting (IPFQR) ProgramAn annual reduction of 2.0 percentage points will be made on discharges for any inpatient psychiatric hospital or psychiatric unit that does not comply with quality data submission requirements with respect to an applicable rate year.Applies to those paid under Medicares IPF PPS.Same measures are used for FY14 that were used in FY13 related to Patient Safety, Clinical Quality of Care, & Care Coordination (refer to pg 1573 of the Final Rule).One more year to ramp up recordkeeping and improve quality of care on existing measures.

Inpatient Psych Facility Quality Reporting (IPFQR) ProgramFor rate year (or fiscal year) 2014 and each subsequent rate year, the Secretary shall reduce any annual update to a standard Federal rate for discharges occurring during such rate year by 2.0 percentage points for any inpatient psychiatric hospital or psychiatric unit that does not comply with quality data submission requirements with respect to an applicable rate year.Applies to those paid under Medicares IPF PPS.Same measures are used for FY14 that were used in FY13 related to Patient Safety, Clinical Quality of Care, & Care Coordination (refer to pg 1573 of the Final Rule).CMS believes that keeping the same measures for the FY 2015 payment determination will allow IPFs one additional year during which they could ramp up recordkeeping and improve quality of care on existing measures.

20CAHs changes to CoPProvided clarification that a CAH must provide inpatient acute care services on site.Require a CAH to furnish health care services in accordance with appropriate written policies. Among other items, the CAH must describe its procedures for emergency medical services and its procedures for inpatient services. CMS explained that they would expect CAHs to be appropriately prepared to provide the services described in their policies and procedures.

Critical Access Hospitals changes to Conditions of Participation:The final rule provided clarification that a CAH must provide inpatient acute care services on site.The clarification requires a CAH to furnish health care services in accordance with appropriate written policies. Among other items, the CAH must describe its procedures for emergency medical services and its procedures for inpatient services. CMS explained that they would expect CAHs to be appropriately prepared to provide the services described in their policies and procedures.

21Medicare CoP change with administration of pneumococcal vaccines (Minor clarification)Change would allow for the inclusion of all pneumococcal vaccines approved for use now and in the future.Delete the term polysaccharide.

A minor clarification to note:The final rule clarified that a Medicare Condition of Participation Change would allow for the inclusion of all pneumococcal vaccines approved for use now and in the future.Delete the term polysaccharide.

22Critical Take-AwaysReview new discharge status codes for planned readmissions.View HTHUs course on Value-Based Purchasing to understand what you can do to improve your hospitals VBP score.View HTHUs course on DSH payments and how the revised payment plan will affect your hospital.Review/revise how you admit Medicare inpatients. Ensure physicians understand new Two-Midnight rule starting 10/1/2013. Ensure UR is fully aware of the new rule and how your hospital is going to efficiently obtain the physician order.LTCH & IP Psych Facilities must comply with quality data submissions.

HTHU wants to further reiterate what we believe to be the critical take-aways from this final rule:Review new discharge status codes for planned readmissions.View HTHUs course on Value-Based Purchasing to understand what you can do to improve your hospitals VBP score.View HTHUs course on DSH payments and how the revised payment plan will affect your hospital.Review/revise how you admit Medicare inpatients. Ensure physicians understand the new Two-Midnight rule starting 10/1/2013. Ensure UR is fully aware of the new rule and how your hospital is going to efficiently obtain and distinguish the physician inpatient order.LTCH & IP Psych Facilities must comply with quality data submissions.

23Learning OutcomesNow that you have viewed this presentation, you should be able to:Recall the major provisions of the final rule for FY 2014.Recognize how each may impact your hospital.Identify the necessary steps in order to respond or take action to comply with or prepare for the major provisions.This concludes HTHUs presentation on the summary of the major provisions of the final rule for FY 2014. Please note that there are additional courses to view in order to obtain more in depth information on several of the provisions.Now that you have viewed this presentation, you should be able to:Be familiar with major provisions of the final rule for FY 2014.Understand how each may impact your hospital.Begin to make the necessary steps in order to respond or take action to comply with or prepare for the major provisions.24ResourcesFact Sheet: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-Sheets/2013-Fact-Sheets-Items/2013-08-02-2.htmlPress Release: http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-Releases/2013-Press-Releases-Items/2013-08-02.html?DLPage=1&DLSort=0&DLSortDir=descendingFinal Rule: http://www.ofr.gov/OFRUpload/OFRData/2013-18956_PI.pdf

The primary resource for this presentation was Medicares published final rule for FY 2014.25FY 2014 Medicare Final RuleSummary of Major ProvisionsEffective October 1, 2013Developed by: Annie Lee SalleeHTH Revenue Cycle Education Specialistannielee.sallee.hth@gmail.com

Welcome to HTHUs course on Medicares final rule for federal FY 2014, which begins October 1, 2013. 26