1

Understanding the Final FY 2015 Medicare Inpatient PPS

Larry GoldbergLarry Goldberg Consulting

August 21, 2014

2

IPPS Update for FY 2015

3

Comment

Display versus the Published Copies Display out several days/weeks sooner than published

Easier to read – double spaced, but many more pages Published copy is small print in column format Harder to read on line

Once display copy is superseded by published copy it is no longer available

4

Comment

Most difficult of all final FY PPS rules to read and follow: It’s too long – 2,442 pages Too much history, too much redundancy Lacks clear concise final actions/decisions Some sections and response to comments appear as a

discussion between CMS and a “vendor” – e.g. section on new technology

5

FY 2015 IPPS

Posted on 8/4/2014 Published in 8/22/14 Federal Register Tables on CMS website Display Copy at: http://www.ofr.gov/OFRUpload/OFRData/2014-

18545_PI.pdf Tables at: http://

www.cms.hhs.gov/Medicare/medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html

Effective 10/1/14

6

IPPS Update

MB is 2.9 percent Offsets:

(0.5%) for productivity [up from 0.5 percent] (0.2%) for ACA mandate (0.8%) for documentation & coding (per ATRA)

Decrease in total payments of $756 million Loss mainly due to revised lower DSH payments

CMS says there is an increase of 1.4 percent ???`

7

IPPS Update

Why is there a loss More offsets

• Readmissions (reductions increase to 3.0%)• DSH • Value-Based Purchasing (increases to 1.25%)

ACA law said updates could be less than current is now become “real”

Impact of sequester still in play

8

IPPS Update

“Large” Urban areas – those with wage index greater than 1.000 – at 69.6 percent

“Other” areas with wage index values equal to or less than 1.000 remain at 62.0 percent by law

9

IPPS Budget Neutrality

Plus budget neutrality adjustments for: DRG recalibration Wage index changes Geographic reclassification Rural community hospital demonstration program Removing the FY 2014 outlier offset Documentation and coding to date

10

National Adjusted Operating Standardized Amounts69.6 Percent Labor Share/30.4 Percent Nonlabor

Wage Index Is Greater Than 1.0000 

FY 2015 Full Update With Quality

Labor-related Non-labor-related

$3,780.13 $1,651.09

Full Update with Quality

Labor-related Non-labor-related

$3,737.71 $1,632.57

Rates Currently in Effect

11

National Adjusted Operating Standardized Amounts62 Percent Labor Share/38 Percent Nonlabor

Wage Index Equal to or Less Than 1.0000 

FY 2015 Full UpdateWith Quality

Labor-related Non-labor-related

$3,367.36 $2,063.86

Full Update

Labor-related Non-labor-related

$3,329.57 $2,040.71

Rates Currently in Effect

12

IPPS Rate Comparison (w/Quality)

FY 2014 FY 2015 Difference Large $3,737.71 $3,780.13 1,632.57 1,651.09

$5,370.28 $5,431.22 $60.94/ 1.13%

Other $3,329.57 $3,367.36

2,040.71 2,063.86$5,370.28 $5,431.22 $60.94/ 1.13%

13

Quality & EHR Reductions

Two major changes for FY 2015 regarding failures to report quality and be a meaningful EHR user No Quality –

• 2.0 reduction changed to ¼ of market basket No EHR

• For FY 2015• ¾ of market basket reduced by 33 1/3 percent• For FY 2016• ¾ of market basket reduced by 66 2/3 percent• For FY 2017• ¾ of market basket reduced by 100%

14

IPPS Rate Quality Changes 

FY 2015Hospital

Submitted Quality Data and is a Meaningful

EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful

EHR User

Market Basket Rate-of-Increase

 2.9

 2.9

 2.9

 2.9

Adjustment for Failure to Submit Quality Data

 0.0

 0.0

 -0.725

 -0.725

Adjustment for Failure to be a Meaningful EHR User

 0.0

 -0.725

 0.0

 -0.725

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IPPS Rate Quality Changes

 FY 2015

Hospital Submitted

Quality Data and is a Meaningful

EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful

EHR User

Multi Factor Productivity (MFP) Adj

 -0.5

 -0.5

 -0.5

 -0.5

Statutory ACA Adjustment

 -0.2

 -0.2

 -0.2

 -0.2

Applicable Percentage Increase Applied to Standardized Amount

 2.2

 1.475

 1.475

 0.75

16

Rate Factors

  Hospital Submitted

Quality Data and is a Meaningful

EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit

Quality Data and is a Meaningful

EHR User

Hospital Did NOT Submit

Quality Data and is NOT a

Meaningful EHR User

FY 2014 Base Rate after removing:

If Wage Index is Greater Than 1.0000: Labor (69.6%):$4,230.38 Non-labor(30.4%):$1,847.75 (Combined labor and non-labor = $6,078.13)

If Wage Index is Greater Than 1.000 Labor (69.6%):$4,230.38 Non-labor(30.4%):$1,847.75 (Combined labor and non-labor = $6,078.13)

If Wage Index is Greater Than 1.0000: Labor (69.6%):$4,230.38 Non-labor(30.4%):$1,847.75 (Combined labor and non-labor = $6,078.13)

If Wage Index is Greater Than 1.0000:  Labor (69.6%):$4,230.38 Non-labor(30.4%):$1,847.75 (Combined labor and non-labor = $6,078.13)

1. FY 2014 Geographic Reclassification Budget Neutrality (0.990718)

2. FY 2014 RuralCommunity HospitalDemonstrationProgram BudgetNeutrality (0.999415)

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Rate Factors

  Hospital Submitted

Quality Data and

is a Meaningful EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data

and is a Meaningful EHR

User

Hospital Did NOT Submit Quality Data and is NOT a

Meaningful EHR User

3. CumulativeFactor: FY 2008, FY 2009, FY 2012, FY 2013, and FY 2014 Documentation and Coding Adjustment and Documentation and Coding Recoupment Section 631 of the American TaxpayerRelief Act of 2012 (0.9403)

       If Wage Index is less Than or Equal to 1.0000: Labor (62%):$3,768.45 Non-labor(38%):$2,309.70  (Combined labor and non-labor = $6,078.13)

If Wage Index is less Than or Equal to 1.0000: Labor (62%):$3,768.45 Non-labor(38%):$2,309.70  (Combined labor and non-labor = $6,078.13)

If Wage Index is less Than or Equal to 1.0000: Labor (62%):$3,768.45 Non-labor(38%):$2,309.70  (Combined labor and non-labor = $6,078.13)

If Wage Index is less Than or Equal to 1.0000:  Labor (62%):$3,768.45 Non-labor(38%):$2,309.70  (Combined labor and non-labor = $6,078.13)

18

Rate Factors

  Hospital Submitted

Quality Data and is a Meaningful

EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit

Quality Data and is a Meaningful

EHR User

Hospital Did NOT Submit

Quality Data and is NOT a

Meaningful EHR User

4. FY 2014Operating OutlierOffset (0.948995)

       

FY 2015 Update Factor

 1.022

 1.01475

 1.01475

 1.0075

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Rate Factors

  Hospital Submitted

Quality Data and is a

Meaningful EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful EHR

User

FY 2015 MS-DRG Recalibration and Wage Index Budget Neutrality Factor

 0.998982

 0.998982

 0.998982

 0.998982

FY 2015 Reclassification Budget Neutrality Factor

 0.990406

 0.990406

 0.990406

 0.990406

20

Rate Factors

  Hospital Submitted

Quality Data and is a

Meaningful EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful EHR

User

FY 2015 Documentation& Coding

 0.9329

 0.9329

 0.9329

 0.9329

FY 2015 Wage Index Budget Neutral

 0.998859

 0.998859 0.998859 0.998859

21

Rate Factors

  Hospital Submitted

Quality Data and is a

Meaningful EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful EHR

User

FY 2015 Operating Outlier Factor

 0.948998

 0.948998

 0.948998

 0.948998

FY 2015 Documentation& Coding

 0.9329

 0.9329

 0.9329

 0.9329

FY 2015 Wage Index Budget Neutral

 0.998859

 0.998859 0.998859 0.998859

22

Rate Factors

  Hospital Submitted

Quality Data and is a

Meaningful EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful EHR

User

National StandardizedAmount for FY 2015 if Wage Index is Greater Than 1.0000; Labor/Non-Labor SharePercentage(69.6/30.4)

 Labor:

$3,780.13

 Labor:

$3,753.31

 Labor:

$3,753.31

 Labor:

$3,726.50

Non-labor:$1,651.09

Non-labor:$1,639.38

Non-labor:$1,639.38

Non-labor:$1,627.66

23

Rate Factors

  Hospital Submitted

Quality Data and is a

Meaningful EHR User

Hospital Submitted

Quality Data and is NOT a

Meaningful EHR User

Hospital Did NOT Submit Quality Data and is a

Meaningful EHR User

Hospital Did NOT Submit Quality

Data and is NOT a Meaningful EHR

User

National StandardizedAmount for FY 2015 if Wage Index is less Than or Equal to 1.0000; Labor/Non-Labor SharePercentage (62/38)

 Labor:

$3,367.36

 Labor:

$3,343.47

 Labor:

$3,343.47

 Labor:

$3,319.58

Non-labor:$2,063.86

Non-labor:$2,049.22

Non-labor:$2,049.22

Non-labor:$2,034.58

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Capital

Rate will increase from $429.31 to $434.26

FY 2014 FY 2015 Change

Percent

ChangeUpdate Factor 1.0090 1.0150 1.0150 1.50GAF/DRG Adjustment Factor 0.9987 0.9986 0.9957 -0.14

Outlier Adjustment Factor 0.9393 0.9374 0.9980 -0.21

Capital Federal Rate 429.31 434.26 1.0086 1.15

25

Excluded Hospitals

Rate will increase 2.9 percent – full market basket Affects

Children’s Hospital 11 Cancer Hospitals Hospitals outside 50 states & DC

26

Outliers

Outlier fixed-loss cost threshold for FY 2015 equal to the prospective payment rate for the DRG, plus any IME and DSH payments, and any add-on payments for new technology, plus $24,758

The current amount is $21,748

27

Outliers

CMS currently estimates that actual outlier payments for FY 2013 will be approximately 4.86 percent of actual total MS-DRG payments

CMS currently estimates that actual outlier payments for FY 2014 will be approximately 5.71 percent of actual total MS-DRG payments If so, it will be the first time in memory that the agency is

paying more CMS continues to fail to recognize the amount it

underestimates for outlier payments in prior years No one seems to object” Why???

28

Wage Index

Will use the revised OMB CBSAs released on 2/28/13 Counties losing urban status

37 counties 12 hospitals

Rural counties becoming urban 105 counties 81 hospitals

Urban counties moving to new urban county 19 counties

29

Wage Index

Counties that will change to another CBSA Transitions

Urban to Rural• Stay in urban for 3 years• Time to seek reclassification• Their wage index goes to rural• CMS says there are very few

Hospitals having decrease index values• 1-year blend of 2014 & 2015 values• Their data goes to new counties

30

Wage Index

No change to the statewide budget neutrality adjustment factor – federal versus state specific

Massachusetts continues to be “big” winner

31

Wage Index – Rural Floor

FY 2015 IPPS Estimated Payments Due to Rural Floor and Imputed Floor with National Budget Neutrality

State Number of Hospitals

Number of Hospitals Receiving

Rural Floor or Imputed Floor

Percent Change in Payments

Difference (in millions)

California 309 200 1.9 $188.8Massachusetts 61 51 4.9 $155.6Connecticut 31 8 -0.4 ($6.5)Kentucky 65 1 -0.5 ($7.9)New York 163 0 -0.6 ($47.4)Florida 169 25 -0.3 ($18.6)Illinois 127 0 -0.6 ($28.1)North Carolina 87 0 -0.5 ($15.8)Missouri 78 0 -0.5 ($11.2)Ohio 135 10 -0.4 ($16.9)

32

More on Floors

Frontier Floor Montana, North Dakota, South Dakota, and Wyoming,

covering 46 providers, will receive a frontier floor value of 1.0000

Imputed Floor Extended till September 30, 2015 Benefits

• 15 providers in New Jersey• 0 providers in Rhode Island• 0 providers in Delaware (new urban only state)

33

Occupational Mix

FY 2015 occupational mix adjusted national average hourly wage is $39.2591

Occupational Mix Nursing Subcategory Average Hourly Wage

National RN 37.420970136

National LPN and Surgical Technician 21.782291180

National Nurse Aide, Orderly, and Attendant 15.311077250

National Medical Assistant 17.251053917

National Nurse Category 31.769556957

34

Occupational Mix

Providers needed to report new Occupational mix survey info by July 1, 2014

35

Reclassifications

FY 2015 – 309 approved FY 2014 – 270 approved FY 2013 – 155 approved CMS says there are 734 hospitals reclassified for FY 2015

Applications to MGCRB due by September 2rd CMs says 23 hospitals terminated reclassification status

since proposed rule published

36

RRCs

For New FY 2015 National CMI 1.5723 for FY 2013 cost reporting

periods or regional, if lower New England (CT, ME, MA, NH, RI, VT) 1.3587 Middle Atlantic (PA, NJ, NY)

1.4318 South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) 1.4807 East North Central (IL, IN, MI, OH, WI) 1.4938 East South Central (AL, KY, MS, TN) 1.4107 West North Central (IA, KS, MN, MO, NE, ND, SD) 1.5459 West South Central (AR, LA, OK, TX) 1.6039 Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) 1.6586 Pacific (AK, CA, HI, OR, WA) 1.5658

5,000 Discharges

37

Redesignations

“Lugar” Hospitals – by statute List available on the CMS Web site and in rule Number increases from 98 to 127 from new OMB

delineations  Waiving Lugar for the Out-Migration Adjustment

Becomes rural for all purposes FY 2014 Wage Index Adjustment Based on Commuting

Patterns of Hospital Employees Refer table 4J

38

MDH/ Low-Volume

MDH and Low-Volume Hospital programs now expire April 1, 2015 unless Congress acts, again

Low-Volume reverts to 200 discharges Must tell MAC

39

CAH Hospitals

Have 3 year transition if made urban under new OMB delineations

Requires Physician certification 1 day before a claim is made

40

IME / GME

IME multiplier unchanged at 1.35 – by law Much info on rural GME programs effecting FTEs, caps and

rolling averages

41

DRGs

Creating 2 new MS-DRGs MS-DRG 266 (Endovascular Cardiac Valve Replacement with

MCC) MS-DRG 267 (Endovascular Cardiac Valve Replacement without

MCC)

Collapsing MS-DRGs 483 and 484 into a single MS-DRG by deleting MS-DRG 484 and revising the title of MS-DRG 483 to read “Major Joint/Limb Reattachment Procedure of Upper Extremities”

Creating MS-DRG 518 (Back & Neck Procedures Except Spinal Fusion with MCC or Disc Device/Neurostimulator); MS-DRG 519 (Back & Neck Procedures Except Spinal Fusion with CC); and MS-DRG 520 (Back & Neck Procedures Except Spinal Fusion without CC/MCC)

42

DRGs

Reassigning following seven diagnoses to the “only secondary diagnosis list” under MS–

DRG 795 so that the case would be assigned to MS–DRG 795

• V17.0 (Family history of psychiatric condition)• V17.2 (Family history of other neurological diseases)• V17.49 (Family history of other cardiovascular diseases)• V18.0 (Family history of diabetes mellitus)• V18.19 (Family history of other endocrine and metabolic diseases)• V18.8 (Family history of infectious and parasitic diseases)• V50.3 (Ear piercing)

43

DRGs

Sequence new MS-DRG 266 (Endovascular Cardiac Valve Replacement with

MCC) and new MS-DRG 267 (Endovascular Cardiac Valve Replacement without MCC) above MS-DRG 222 (Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock with MCC)

Refer to rule for more

44

LIST OF MEDICARE SEVERITY DIAGNOSIS-RELATED GROUPS (MS-DRGS), RELATIVE WEIGHTING FACTORS—FY 2015 Proposed Rule

MS-DRG MS-DRG Title Final FY 2015

Weights

FY 2014 Weights

PercentageChange

065 INTRACRANIAL HEMORRHAGE OR CEREBRAL INFARCTION W CC OR TPA IN 24 HRS

1.0643 1.0776 -1.23%

189 PULMONARY EDEMA & RESPIRATORY FAILURE

1.2136 1.2184 -0.39%

190 CHRONIC OBSTRUCTIVE PULMONARY DISEASE W MCC

1.1743 1.1708 0.30%

191 CHRONIC OBSTRUCTIVE PULMONARY DISEASE W CC

0.9370 0.9343 0.29%

193 SIMPLE PNEUMONIA & PLEURISY W MCC 1.4491 1.4550 -0.41%

194 SIMPLE PNEUMONIA & PLEURISY W CC 0.9688 0.9771 -0.85%

247 PERC CARDIOVASC PROC W DRUG-ELUTING STENT W/O MCC

2.0586 2.0408 0.87%

291 HEART FAILURE & SHOCK W MCC 1.5097 1.5031 0.44%

292 HEART FAILURE & SHOCK W CC 0.9824 0.9938 -1.15%

309 CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W CC

0.7865 0.7867 -0.03%

310 CARDIAC ARRHYTHMIA & CONDUCTION DISORDERS W/O CC/MCC

0.5493 0.5512 -0.34%

312 SYNCOPE & COLLAPSE 0.7423 0.7228 2.70%

45

LIST OF MEDICARE SEVERITY DIAGNOSIS-RELATED GROUPS (MS-DRGS), RELATIVE WEIGHTING FACTORS—FY 2015 Proposed Rule

MS-DRG MS-DRG Title Final FY 2015

Weights

FY 2014 Weights

PercentageChange

378 G.I. HEMORRHAGE W CC 1.0021 1.0029 -0.08%

392 ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS W/O MCC

0.7388 0.7395 -0.09%

470 MAJOR JOINT REPLACEMENT OR REATTACHMENT OF LOWER EXTREMITY W/O MCC

2.1137 2.1463 -1.52%

603 CELLULITIS W/O MCC 0.8447 0.8404 0.51%

641 MISC DISORDERS OF NUTRITION,METABOLISM,FLUIDS/ELECTROLYTES W/O MCC

0.7051 0.6992 0.84%

682 RENAL FAILURE W MCC 1.5194 1.5401 -1.34%

683 RENAL FAILURE W CC 0.9512 0.9655 -1.48%

690 KIDNEY & URINARY TRACT INFECTIONS W/O MCC

0.7794 0.7693 1.31%

871 SEPTICEMIA OR SEVERE SEPSIS W/O MV 96+ HOURS W MCC

1.8072 1.8527 -2.46%

872 SEPTICEMIA OR SEVERE SEPSIS W/O MV 96+ HOURS W/O MCC

1.0582 1.0687 -0.98%

378 G.I. HEMORRHAGE W CC 1.0021 1.0029 -0.08%

392 ESOPHAGITIS, GASTROENT & MISC DIGEST DISORDERS W/O MCC

0.7388 0.7395 -0.09%

46

New Technology Add-ons

For FY 2015 continuing : Voraxaze® Zenith® Fenestrated Abdominal Aortic Aneurysm (AAA)

Endovascular Graft Kcentra™ Argus® II Retinal Prosthesis System Zilver® PTX® Drug Eluting Peripheral Stent

47

New Technology Add-ons

3 new for FY 2015 CardioMEMS™ HF Monitoring System MitraClip® System RNS® System

48

I/P Admissions2 Midnight Rule

No real changes

49

IPPS DSH Formula

Mandated by Section 3133 of ACA Splits system

25 percent remains as old formula Rescrambles 75 percent Uses 3 factors

50

DSH Factor One

Determines 75 percent of what would have been paid under the old methodology

Excluded hospitals MD wavier SCHs paid on a hospital-specific basis Hospitals in Rural Community Demo

Using CMS actuary estimates from July 2014 Current DSH total estimate is $12.772 billion Current 25% estimate is $3.193 billion Current 75% estimate – Factor 1 is $9.579 Billion

51

DSH Factor One

Previous estimate was $14.205 billion Current DSH estimate is $13,383,462,195.71 Current 25% estimate is $ 3,345,865,548.93 Current 75% estimate – Factor 1 is $10.038 billion

52

DSH Factor Two

Reduces Factor One amount by percentage reduction in uninsured from 2014 to 2015

Using CBO “projections” CY 2014 rate of insurance coverage (April 2014 CBO

estimate): 84 percent CY 2015 rate of insurance coverage (April 2014 CBO

estimate: 87 percent FY 2015 rate of insurance coverage: (84 percent * .25) +

(87 percent * .75) = 86.25 percent.

53

DSH Factor Two

Percent of individuals without insurance for 2013 (March 2010 CBO estimate): 18 Percent

Percent of individuals without insurance for FY 2015 (weighted average): 13.75 Percent

Formula; 1 – |[(0.1375 - 0.18)/0.18]| = 1 – 0.2361 = 0.7639 (76.39

percent) 0.7639- 0.002 (0.2 percentage points) = 0.7699 0.7619 = Factor 2

54

DSH Factor Two

For the purpose of this final rule, the amount available for uncompensated care payments for FY 2015 will be approximately $7.647 billion (0.7619 times Factor 1 estimate of $10.038 billion)

The FY 2014 “pool” is $9.033 billion DSH is decreasing by $1.386 billion

55

DSH Factor Three

Factor 3 is “equal to the percent, for each subsection (d) hospital, that represents the quotient of (i) the amount of uncompensated care for such

hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines alternative data is available which is a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (ii) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under this subsection for such period (as so estimated, based on such data)”

Based on each hospital’s share of total uncompensated care costs across all PPS hospitals that received DSH payments So the numerator is all PPS hospitals, but denominator is just DSH

hospitals

56

DSH Factor Three

CMS is using the utilization of insured low-income patients defined as inpatient days of Medicaid patients plus inpatient days of Medicare SSI patients as defined in 42 CFR 412.106(b)(4) and 412.106(b)(2)(i), respectively to determine Factor 3

57

Readmissions

Maximum reduction increases to 3.0 percent – based on individual hospital ratio

Will use 5 measures Heart attack, heart failure; pneumonia; chronic

obstructive pulmonary disease, and hip/knee arthroplasty

Will add CABG in 2017 Will use Planned Readmission Algorithm Version 3.0 Based on 2010-2013 data Is not budget neutral

58

Readmissions

Expected to impact 2,638 hospitals $424 million loss

59

Readmissions

Aggregate payments for excess readmissions = [sum of base operating DRG payments for AMI x (Excess Readmission Ratio for AMI-1)] + [sum of base operating DRG payments for HF x (Excess Readmission Ratio for HF-1)] +[sum of base operating DRG payments for PN x (Excess Readmission Ratio for PN-1)].

Aggregate payments for all discharges = sum of base operating DRG payments for all discharges.

60

Readmissions

Ratio = 1-(Aggregate payments for excess readmissions/Aggregate payments for all discharges)

Readmissions Adjustment Factor for FY 2015 is the higher of the ratio or 0.9700

61

Value Based Purchasing

Withhold amount increases to 1.50 percent for all hospitals

Total amount available for performance-based incentive payments for FY 2015 will be approximately $1.4 billion –up from $1.1 billion

Supposed to be budget neutral

62

Value Based Purchasing

17 measures for FY 2016 AMI-7a IMM-2 PN-6 SCIP-INF-2; -3; 9 SCIP-Card-2 SCIP-VTE-2, HCAHPS CAUTI CLABSI MORT-30 AMI; MORT-30-HF; MORT-30 PN PSI-90 SSI MSPB-1

63

Value Based Purchasing

FY 2017 Adding

• MRSA• C. DIFFICILE• PC-01

Removing• PN-6• SCIP Card-2• SCIP-INF-2; -3; -9; • SCIP-VTE-2

64

HAC Reduction

Affects payment in FY 2015 Lowest-performing quartile get 1.0 percent reduction Two measures of two types (domains)

Each weighted equally First domain – six patient safety indicators

Pressure ulcers rate Foreign objects left in body percent Iatrogenic Pneumothorax rate Post-op physiologic / metabolic derangement rate Post-op pulmonary embolism / deep vein thrombosis rate

Second domain – two infection measures CLABSI CAUTI

65

Quality Reporting

63 measures for FY 2017 47 required 16 voluntary

Removing 19 measures Adding 11

66

LTCHs

Net Update of 2.2 percent MB of 2.9 percent MFP of -0.5 ACA of -0.2

Third year of BN adjustment of 0.98734 Area wage factor of 1.0016703 Results in Federal rate of $41,043.71

(calculated as $40,607.31 (FY 2014 rate) X 1.022 X 0.98734 x 1.0016703)

67

Questions