CMS-proposed quality measures, payment cuts for inpatient services raise concerns

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The American Hospital Association (AHA) has expressed concern over the Centers for Medicare & Medicaid Services’ (CMS) proposed rule for the fiscal year (FY) 2009 hospital inpatient prospective payment system (PPS).

“While we support a number of the proposed rule’s provisions, we have concerns about the implementation of many of the new hospital quality measures, as well as payment cuts related to the wage index, capital payments and the post-acute care transfer policy,” according to Rick Pollack, executive vice president, AHA, in a letter to Administrator Kerry Weems.

CMS has proposed to expand the list of conditions which are reasonably preventable through proper care and for which Medicare will no longer pay at a higher rate if the patient acquires them during a hospital stay.  In addition, CMS is adding 43 new quality measures for which hospitals will have to report data in order to receive the full annual payment update for their services.

The 43 new quality measures for payment determination in FY 2010 would more than double the number of measures hospitals are required to report. The AHA stated that “adding such a large number of disparate measures is an unfocused approach to quality reporting that provides no direction to hospitals on quality improvement priorities.”

Furthermore, this “chaotic approach will adversely impact quality improvement efforts,” Pollack wrote. “In drafting this proposal, CMS has not followed the Deficit Reduction Act of 2005 requirement that it choose measures that represent a ‘consensus among affected stakeholders,’ as it has proposed measures that are not endorsed by the National Quality Forum (NQF) and adopted by the Hospital Quality Alliance (HQA). It is important that any measures added to the pay-for reporting program first go through the rigorous, consensus-based assessment processes of both the NQF and the HQA.”

In the FY 2008 inpatient PPS final rule, CMS adopted eight conditions for which it would no longer pay a higher diagnosis-related group rate beginning in FY 2009 if the conditions were not present on admission. This year, CMS proposes to expand the list to include nine additional conditions when the payment policy takes effect on October 1.

According to the AHA, of the 17 total conditions, only four are ready for inclusion in FY 2009. “The remaining conditions should not be implemented for FY 2009 because either they are not reasonably preventable, it is difficult to determine whether they are present on admission, or the patient population included by CMS is too broad,” according to Pollack’s letter.

AHA also opposes the following direct payment cuts:

  • Raising the threshold for wage index geographic reclassification;
  • Applying budget neutrality for the rural floor, imputed rural floor and geographic
  • reclassifications on a statewide basis;
  • Phasing out the indirect medical education adjustment to capital payments, which cuts payments to teaching hospitals by $1.3 billion over five years; and
  • Expanding the post-acute care transfer policy to include patients receiving home healthcare services within seven days of discharge, which is estimated to reduce payments by $50 million in FY 2009 and $330 million over five years.