 |
Tribal Technical Advisory Groupto the Centers for Medicare and Medicaid Services |
 |
Medicare UpdateApril 14, 2006
CMS Proposes Payment and Policy Changes for Acute Care Hospital Services to Inpatients The Centers for Medicare & Medicaid Services (CMS) issued a notice of proposed rulemaking on April 12, 2006 that would begin the transition to the first significant revision of the Inpatient Prospective Payment System (IPPS) since its implementation in 1983. When fully implemented, which is planned to occur by fiscal year (FY) 2008 and potentially earlier, the revised IPPS would improve the accuracy of payment rates for inpatient stays by basing the weights assigned to Diagnosis Related Groups (DRGs) on hospital costs rather than charges, and adjusting the DRGs for patient severity. The estimated market basket increase of 3.4 percent in FY 2007 would increase payments to acute care hospitals by $3.3 billion. Over 1000 hospitals in rural areas would see an average increase of 6.7 percent. “The hospital payment reforms we are proposing today will mean payments for hospital inpatient services will more accurately reflect the costs of providing the services,” said CMS Administrator Mark B. McClellan, M.D., Ph.D. “We are taking important steps to make payments fairer to hospitals and to assure beneficiary access to services in the most appropriate setting.” “This proposed rule will be shaped by the public comment process,” Dr. McClellan added. “We look forward to comprehensive feedback from hospitals, suppliers, and other stakeholders that will help to refine and improve the final version of the rule.” The proposed changes reflect recommendations from the Medicare Payment Advisory Commission (MedPAC), and respond to some Congressional concerns that the existing system may create incentives for certain hospitals to “cherry-pick” more profitable cases. The reforms will significantly affect payments to specialty hospitals – hospitals that typically are owned, in whole or in significant part, by physicians who serve as referral sources. The growth in specialty hospitals has been slowed temporarily by statute or regulation since the Medicare Modernization Act was signed in December 2003. CMS is considering a two-step process of transformation. The first step, set out in the proposed rule, would assign weights to DRGs based on hospital costs, rather than hospital charges. This would eliminate biases in the current DRG system arising from the differential markup hospitals assign for ancillary services among the DRGs. The new DRG weights would go into effect October 1, 2006. A second step, currently scheduled for FY 2008, would replace the current 526 DRGs with either the proposed 861 consolidated severity-adjusted DRGs or an alternative severity adjusted DRG system developed in response to the public comments CMS is soliciting on this issue. CMS is also considering ways of improving recognition of severity in the current DRG system by FY 2007. When the two steps are fully implemented, hospitals can expect more accurate payment for their services. CMS is proposing to increase the outlier threshold for FY 2007 to $25,530, up from $23,600 in 2006. This proposed increase is based on data suggesting a consistent pattern of inflation in hospital charges which affect hospital cost-to-charge ratios used in determining eligibility for outlier payment. The proposed FY 2007 threshold is expected to keep aggregate hospital outlier payments within the target of 5.1 percent of total payments under the IPPS. In addition to accurate payment for existing technologies, CMS is committed to ensuring that Medicare beneficiaries have rapid access to new technologies by providing for temporary add-on payments for appropriate technologies. In order to be eligible for additional reimbursement, a product must be:
CMS has received three applications for new technology add-on payments in FY 2007. CMS is soliciting comments on whether these technologies meet the criteria for the temporary add-on payments. CMS is also proposing to continue new technology payments for two of the three technologies that were approved for payment in FY 2006. The proposed rule was published in the April 25, 2006 Federal Register. Comments will be accepted until June 12, 2006, and a final rule will be published later this year. The display copy can be viewed at http://www.cms.hhs.gov/AcuteInpatientPPS/downloads/cms1488p.pdf.
****************************** Availability of Expanded Modified MedPAR Data CMS makes available for purchase the Expanded Modified MedPAR data that were used in simulating the policies in the Inpatient Prospective Payment System (IPPS) proposed rule. If readers have already ordered the proposed rule data, we are in the process of filling the orders and will be providing the FY 2005 MedPAR data that were used to model the proposed changes to the DRGs and relative weights for FY 2007 as well as the FY 2004 MedPAR data that we used to model the consolidated severity adjusted DRGs that we are proposing to implement in FY 2008 (if not earlier). If readers have not ordered the proposed rule MedPAR data but are interested in receiving them, we encourage them to order the data as soon as possible by following the directions provided below. We will process orders in the order they are received. For information on how to order the Expanded Modified MedPAR,
go to the following Web site: Centers for Medicare & Medicaid Services,
CMS Improves Payment for Training Medical Residents in Programs Affected by Natural Disasters The Centers for Medicare & Medicaid Services (CMS) recently issued an interim final rule with comment period that provides for continued Medicare financing of medical residents in training programs affected by natural disasters or public health emergencies, promoting the continuity of training in affected hospitals and programs. The interim final rule will apply retroactively to arrangements between home hospitals in the areas affected by Hurricanes Katrina and Rita that temporarily closed parts of their residency programs and the host hospitals that accepted the displaced residents as well as to future disasters. To view the entire press release, go to: http://www.cms.hhs.gov/apps/media/press/release.asp?Counter=1829 To view the display version of the interim final rule with comment, go to: http://www.cms.hhs.gov/AcuteInpatientPPS/Downloads/CMS-1531-IFC.pdf. For additional information, go to: http://www.cms.hhs.gov/AcuteInpatientPPS/ ****************************** Proposed Rule: Notification Procedures for Hospital Discharges On April 5, 2006 the Centers for Medicare & Medicaid Services (CMS) published a notice of proposed rulemaking (NPRM), CMS-4105-P, Notification Procedures for Hospital Discharges. This rule proposes to revise the discharge notice requirements in the inpatient hospital setting by establishing a simple, standardized notice for all hospital discharges, both for Original Medicare and Medicare Advantage (MA) patients. A more detailed notice would be required only in situations where a patient wishes to dispute the hospital’s discharge decision and contacts the Quality Improvement Organization (QIO) to initiate an appeal. This proposed process largely parallels the process applicable to other Medicare providers, such as home health agencies (HHAs) and skilled nursing facilities (SNFs) in both Original Medicare and Medicare Advantage. These proposed regulations stem from the settlement agreement associated with the Weichardt vs.Leavitt lawsuit. CMS welcomes comments and suggestions related to the proposed process and all aspects of the hospital discharge notice process. The proposed regulation, CMS-4105-P can be viewed at http://www.gpoaccess.gov/fr/index.html, search on “page 17052”. There is a 60-day comment period. Comments should be submitted according to the instructions in the regulation. The announcement regarding the proposed notices (CMS10066) associated with this regulation was also published on April 5 and can be found at http://www.gpoaccess.gov/fr/index.html, search on “page 17104”, under the heading “Agency information collection activities; proposals, submissions and approvals.” To be assured consideration, comments and recommendations for the proposed regulation and notices must be received no later than 5 p.m. on June 5, 2006. ****************************** |