CMS Releases Proposed Changes to the IPPS and Fiscal Year 2009 Rates

01 May 2008 Publication
Author(s): Lawrence W. Vernaglia

Legal News Alert: Health Care

On April 14, 2008, the Centers for Medicare and Medicaid Services (CMS) released Proposed Changes to the hospital inpatient prospective payment systems (IPPS) and fiscal year (FY) 2009 rates. The proposed regulation addresses a variety of issues that impact hospitals. On April 18, 2008, Foley & Lardner LLP reported on a number of proposed changes to the Physician Self-Referral (Stark) law, including the implementation of Stark’s requirement for hospitals to report physician financial relationships.

This issue addresses a variety of other topics addressed by the proposed regulation, including: (1) an expansion of the list of Hospital-Acquired Conditions (HACs) for which CMS will no longer pay at a higher rate; (2) the addition of 43 new quality measures for 2010 and others that are proposed for 2011 and beyond; (3) a proposed expansion of a hospital’s Emergency Treatment and Active Labor Act (EMTALA) obligation where specialty care is required; (4) a clarification of a hospital’s obligation to maintain an on call list for Emergency Departments; and (5) new proposed incentives to reduce hospital readmissions.

Reporting Hospital Quality Data for Annual Payment Update
CMS established the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program as part of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). The RHQDAPU program now requires IPPS hospitals to submit data regarding 27 quality measures for the treatment of certain health conditions related to heart attack, heart failure, pneumonia, and surgical infections. In addition, data on 30-day mortality rates for heart attack and heart failure patients and on certain quality measures from the patient experience of care survey are included in the RHQDAPU quality measure set. Failure to submit quality data “in the form and manner specified by CMS” now results in a two-percent reduction in the IPPS hospital’s annual payment update for the fiscal year involved. RHQDAPU quality measures are expected to become the basis for establishing the right to payment under Medicare’s Value-Based Purchasing Program and many of the quality measures are reported now to the public on the Hospital Compare Web site.

For FY 2009, CMS adopted three additional quality measures, for a total of 30 quality measures in the RHQDAPU program. These new quality measures include a 30-day mortality measure for Medicare pneumonia patients and two new surgical infection measures.

For FY 2010, CMS proposes to add 43 new quality measures, to retire one measure, and to update two existing quality measures. For some of these new quality measures, data submission is not required because CMS can calculate the quality measures from existing data. However, if the proposed rule is finalized without change, there will be a total of 72 quality measures for FY 2010.

In addition to adding quality measures to the RHQDAPU program for FY 2010, CMS is seeking comment on 59 measures and four quality measures sets to be included in the RHQDAPU program for FY 2011 and subsequent years. CMS also is seeking input from the affected parties on the challenges for data collection posed by these quality measures and quality measures sets.

A summary of the proposed quality measures to be included in the RHQDAPU program for FY 2010 and beyond can be found below.

For discharges beginning January 1, 2009, CMS proposes that IPPS hospitals would no longer be required to submit data on pneumonia oxygenation assessment. This is the first time CMS has proposed to remove a quality measure from a quality measure set. Because almost all hospitals are performing near 100 percent on the pneumonia oxygenation measure, and because oxygenation assessments are performed routinely for all admitted patients regardless of the specific diagnosis, CMS determined the burden on IPPS hospitals to report this data greatly outweighs the benefit of public reporting. CMS also requests guidance on future quality measure retirements. Specifically, it is inviting comment on the following:

  • Should a RHQDAPU quality measure be retired when hospital performance has reached a high threshold of compliance even if the quality measure still reflects best practice?
  • Are there reasons to consider retiring a quality measure other than high overall performance?
  • When a quality measure is retired on the basis of substantially complete compliance by hospitals, should data collection on the quality measure again be required after one or two years to assure that a high compliance level remains, or should some other method of monitoring continued compliance be used?

Finally, CMS proposes to implement endorsements by the National Quality Forum (NQF) to update two existing quality measures. These NQF-endorsed changes revise the timing interval for percutaneous coronary interventions from within 120 minutes of hospital arrival to within 90 minutes of arrival, and the timing interval for the receipt of initial antibiotics for pneumonia from within four hours of hospital arrival to within six hours of arrival. CMS proposes to begin calculating the quality measures using the new timing intervals effective with discharges on or after January 1, 2009.

Additional HACs
CMS proposes to increase the number of HACs that, if not present on admission (POA), are deemed reasonably preventable through proper care and, therefore, will no longer be eligible for payment. The requirement to report secondary diagnoses that are POA became effective on October 1, 2007 and requires hospitals to report on their Medicare claims whether specific diagnoses were present when the patient was admitted. Effective October 1, 2008, CMS will no longer pay higher payments to treat those conditions identified as HACs. The initial list of eight HACs that Medicare will not cover if not POA was released last year and includes retained foreign body following surgery, blood incompatibility, and air embolisms (so-called “never events”). Effective for FY 2009, CMS proposes to expand the list to include: surgical site infections after certain elective procedures, Legionnaires’ disease, extreme blood sugar derangement, iatrogenic pneumothorax, delirium, ventilator-associated pneumonia, deep vein thrombosis, Staphyloccus aureus bloodstream infection, and Clostridum difficile infection. CMS also proposes changes to the indicator codes for POA reporting to better identify when an HAC that was not reported as POA may nonetheless be paid (for example, where the patient died or left against medical advice precluding the POA determination).

Incentives to Reduce Avoidable Readmissions
Medicare currently spends about $15 billion annually on hospital readmissions. Within 30 days of discharge, 18 percent of Medicare beneficiaries are readmitted. CMS has found that about $12 billion of this Medicare expenditure might be avoided through improved quality of care during the initial hospitalization. Thus, CMS is proposing to provide incentives for decreasing the number of readmissions in three ways: (1) a direct reduction to a hospital’s diagnosis related group (DRG) payments for admissions that are deemed to be avoidable; (2) adjustments to a hospital’s DRG payments through a method that takes quality performance into account; and (3) public reporting of readmission rates. CMS has listed a number of evidence-based interventions in the proposed rule designed to reduce readmissions such as timely follow-up visits with physicians, discharge to a proper setting of care, and clear discharge and medication management instructions.

CMS’ proposed changes to EMTALA are notable in the areas of specialty care and physician–on-call requirements.

Specialty Care In 2003, CMS took the position that a hospital’s obligations under EMTALA were satisfied when the hospital admitted an unstable patient in the emergency room as an inpatient in the hospital. This eliminated inpatients from EMTALA’s reach on the reasoning that other regulations such as the Medicare Conditions of Participation (COP), already protected inpatients. However, CMS did not address at that time a hospital’s obligations when an inpatient needs specialty care that the admitting hospital cannot provide. CMS now is clarifying that a hospital’s EMTALA obligations will end only with regard to the hospital that admitted the unstable patient from the emergency department in good faith. Another hospital with specialized capabilities still may have an EMTALA obligation for that same patient if the patient cannot be treated at the hospital to which he or she was admitted.

The proposed rule now states that a participating hospital with specialized capabilities cannot refuse to accept an inpatient who is transferred appropriately from another hospital, if the patient remains unstable after admission and requires specialty care that is not available at the admitting hospital. As long as the hospital with specialized capabilities has the capacity to treat the transferred patient, that hospital must accept that patient. CMS has requested specific comment on how EMTALA should apply to hospitals with specialized capabilities when a patient was stabilized at another hospital, but becomes unstable after admission and prior to transfer.

Physician-on-Call Requirements — CMS proposes to eliminate the EMTALA requirement that hospitals maintain physician-on-call lists because separate regulations already require on–call- physician lists and the statute under which the EMTALA regulations are promulgated does not. Thus, although a hospital’s obligation to maintain physician-on-call lists remains, CMS now proposes that failure to maintain an on-call-physician list no longer will be an EMTALA violation. Further, CMS also proposes to allow hospitals to comply with the requirement to maintain an on-call-list by participating in formal community call plans, which would permit specific hospitals in a region to be designated as the on-call facility for a specific time period, a specific service, or both. The community call plans must be formalized in an agreement among participating hospitals, which will be subject to review and enforcement by CMS, but do not necessarily require preapproval.

The proposals made by CMS summarized above are a mixed result for hospitals. The reporting requirements are increased dramatically under this proposed regulation — from 27 quality measures currently to more than 72 by 2010. The EMTALA changes bring relief to hospitals struggling with physicians over on-call list requirements by eliminating the EMTALA violation threat, but blur the EMTALA line when it comes to treatment of inpatients. Exactly how a hospital with specialized capabilities can know when it has the option to refuse an inpatient transfer still remains to be seen.

FY 2010 Proposed Additional Quality Measures

Surgical Care Improvement Project (SCIP)

  • SCIP Cardiovascular 2: Surgery patients on beta blocker prior to arrival who received a beta blocker during the perioperative period

Nursing Sensitive Measures

  • Failure to rescue
  • Pressure ulcer prevalence and incidence by severity
  • Patient falls prevalence
  • Patient falls with injury


  • Pneumonia 30-day risk standardized re-admission measure (Medicare patients)
  • Heart Attack 30-day risk standardized re-admission measure (Medicare patients)
  • Heart Failure 30-day risk standardized re-admission measure (Medicare patients)

Venous Thromboembolism

  • VTE-1: VTE Prophylaxis
  • VTE-2: VTE Prophylaxis in the ICU
  • VTE-4: Patients with overlap in anticoagulation therapy
  • VTE-5/6: (as combined measure) Patients with UFH dosages who have platelet count monitoring and adjustment of medication per protocol or nomogram
  • VTE-7: Discharge instructions to address: follow-up monitoring, compliance, dietary restrictions and adverse drug reactions/interactions
  • VTE-8: Incidence of preventable VTE

Inpatient Stroke Care

  • STK-1 DVT Prophylaxis
  • STK-2 Discharged on Antithrombotic Therapy
  • STK-3 Patients with Atrial Fibrillation Receiving Anticoagulation Therapy
  • STK-5 Antithrombotic Medication by End of Hospital Day Two
  • STK-7 Dysphasia Screening

AHRQ Patient Safety Indicators

  • PSI 4 - Death among surgical patients with treatable serious complications
  • PSI 6 - Iatrogenic pneumothorax adult
  • PSI 14- Postoperative wound dehiscence
  • PSI 15 - Accidental puncture or laceration

AHRQ Inpatient Quality Indicators

  • IQI 4 - Abdominal aortic aneurysm (AAA) mortality rate (with volume)
  • IQI 11 - AAA mortality rate (without volume)
  • IQI 19 - Hip fracture mortality rate
  • IQI - Mortality for selected medical conditions (composite)
  • IQI - Mortality for selected surgical procedures (composite)
  • IQI - Complication/patient safety for selected indicators (composite)

Cardiac Surgery Measures

  • Participation in a systematic database for cardiac surgery
  • Pre-operative beta blockade
  • Deep sternal wound infection rate
  • Stroke/CVA
  • Post-operative renal insufficiency
  • Surgical re-exploration
  • Anti-platelet medication at discharge
  • Beta blockade therapy at discharge
  • Risk-adjusted operative mortality for CABG
  • Risk-adjusted operative mortality for Aortic Valve Replacement
  • Risk-adjusted operative mortality for mitral valve replacement/repair
  • Risk-adjusted mortality for mitral valve replacement and CABG surgery
  • Risk-adjusted mortality for aortic valve replacement and CABG surgery

Possible Measures and Measure Sets for FY 2011 and Subsequent Years

Chronic Pulmonary Obstructive Disease Measures

Complications of Vascular Surgery

  • AAA stratified by open and endovascular methods
  • Carotid endarterectomy
  • Lower extremity bypass

Inpatient Diabetes Care Measures

Healthcare Associated Infection

  • Central line-associated blood stream infections
  • Surgical site infections

Timeliness of Emergency Care Measures, including Timeliness

  • Median time from ED arrival to ED departure for admitted ED patients
  • Median time from ED arrival to ED departure for discharged ED patients
  • Admit decision time to ED departure time for admitted patients
  • Surgical Care Improvement Project (SCIP) – named SIP for discharges prior to July 2006 (3Q06)
  • SCIP Infection 8 – Short half-life prophylactic administered preoperatively redosed within 4 Hours after preoperative dose

Complication Measures (Medicare patients)

Healthcare Acquired Conditions

  • Serious reportable events in healthcare (never events)
  • Pressure ulcer prevalence and incidence by severity
  • Catheter-associated UTI

Hospital Inpatient Cancer Care Measures

  • Patients with early stage breast cancer who have evaluation of the axilla
  • College of American Pathologists breast cancer protocol
  • Surgical resection includes at least 12 nodes
  • College of American Pathologists colon and rectum protocol
  • Completeness of pathologic reporting

Serious Reportable Events in Healthcare (“Never Events”)

  • Surgery performed on the wrong body part
  • Surgery performed on the wrong patient
  • Wrong surgical procedure on a patient
  • Retention of a foreign object in a patient after surgery or other procedure
  • Intraoperative or immediately post-operative death in a normal health patient (defined as a Class 1 patient for purposes of the American Society of Anesthesiologists patient safety initiative)
  • Patient death or serious disability associated with the use of contaminated drugs, devices, or biologics provided by the healthcare facility
  • Patient death or serious disability associated with the use or function of a device in patient care in which the device is used or functions other than as intended
  • Patient death or serious disability associated with intravascular air embolism that occurs while being cared for in a healthcare facility
  • Patient death or serious disability associated with patient elopement (disappearance) for more than four hours
  • Patient suicide, or attempted suicide resulting in serious disability, while being cared for in a healthcare facility
  • Patient death or serious disability associated with a medication error (e.g., error involving the wrong drug, wrong dose, wrong patient, wrong time, wrong rate, wrong preparation, or wrong route of administration)
  • Patient death or serious disability associated with a hemolytic reaction due to the administration of ABO-incompatible blood or blood products
  • Patient death or serious disability associated with hypoglycemia, the onset of which occurs while the patient is being cared for in a health care facility
  • Stage 3 or 4 pressure ulcers acquired after admission to a health care facility
  • Patient death or serious disability due to spinal manipulative therapy
  • Patient death or serious disability associated with an electric shock while being cared for in a healthcare facility
  • Any incident in which a line designated for oxygen or other gas to be delivered to a patient contains the wrong gas or is contaminated by toxic substances
  • Patient death or serious disability associated with a burn incurred from any source while being cared for in a health care facility
  • Patient death associated with a fall while being cared for in a health care facility
  • Patient death or serious disability associated with the use of restraints or bedrails while being cared for in a health care facility
  • Any instance of care ordered by or provided by someone impersonating a physician, nurse, pharmacist, or other licensed health care provider
  • Abduction of a patient of any age
  • Sexual assault on a patient within or on the grounds of a health care facility
  • Death or significant injury of a patient or staff member resulting from a physical assault (i.e., battery) that occurs within or on the grounds of a health care facility

Average Length of Stay Coupled with Global Readmission Measure

Preventable Hospital-Acquired Conditions (HACs)

  • Catheter-associated urinary tract infection (UTI)
  • Vascular catheter-associated infection
  • Surgical site infections — mediastinitis after Coronary Artery Bypass Graft (CABG)
  • Surgical site infections following elective procedures — total knee replacement, laparoscopic gastric bypass, litigation and stripping of varicose veins.
  • Legionnaires’ Disease
  • Glycemic control — diabetic ketoacidosis, nonketotic hypersmolar coma, hypoglycemic coma
  • Iatrogenic pneumothorax
  • Delirium
  • Ventilator-Associated Pneumonia (VAP)
  • Deep Vein Thrombosis (DVT)/Pulmonary Embolism (PE)
  • Staphylococcus aureus Septicemia
  • Clostridium-Difficile Associated Disease (CDAD)
  • Methicillin-Resistant Staphylococcus aureus (MRSA)

Legal News Alert is part of our ongoing commitment to providing up-to-the minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals: 

Janice A. Anderson
Chicago, Illinois

Anne M. Cooper
Chicago, Illinois

Alpana M. Kumar
Boston, Massachusetts

Michael Scarano
San Diego/Del Mar, California

Lawrence W. Vernaglia
Boston, Massachusetts

Cheryl L. Wagonhurst
Los Angeles, California

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