Update on 2010 Hospital Inpatient Quality-Reporting Requirements

04 August 2009 Publication
Authors: Lawrence W. Vernaglia

American Health Lawyers Association

By Lawrence W. Vernaglia and Cheryl Wagonhurst

It is no surprise that reporting quality-of-care data in Medicare continues to grow in materiality and is an important component leading to healthcare reform's overall success. After all, the government has made it clear in several forums that the public trust will only reward for good quality of care. Reporting of data about quality of care is not unique to inpatient hospital services. Medicare now requires reporting for inpatient and outpatient hospital services, physicians and other practitioners, home health agencies, skilled nursing facilities, and end-stage renal disease facilities.

On July 31, 2009, the Centers for Medicare & Medicaid Services (CMS) issued a Final Rule on payment rates for the Hospital Inpatient Perspective Payment System (IPPS), including modest, incremental changes to the quality-reporting system. However, due to the small inflation factor for 2011, the impact of the quality-reporting requirements is significant. For discharges on or after October 1, 2009, hospitals that do not successfully report quality measures in accordance with the terms of the Final Rule will have virtually all of their annual inflation update eliminated from their 2011 inpatient rates. (For 2009, hospitals that did not report would still have received a 1.6% update.) The IPPS Final Rule is scheduled to be published on August 27, 2009.

Originally styled as a "financial incentive" program under Section 501(b) of the Medicare Prescription Drug Improvement and Modernization Act of 2003, Pub. L. 108-173 (MMA), and enhanced under Section 5001(a) of the Deficit Reduction Act of 2005, Pub. L. 109-171 (DRA) and 42 C.F.R. 412.64(d)(2), hospitals that do not report data are subject to a reduction in their annual payment update of 2%. (Hospital inpatient reporting is called the Reporting Hospital Quality Data for Annual Payment Update or RHQDAPU.) Notable elements of this Final Rule relating to inpatient quality-measure reporting include the following:

  • New RHQDAPU Measures. CMS retained the existing forty-three RHQDAPU measures for the FY 2010 payment update and added four additional measures. Two new measures relate to surgical care improvement and redemption of surgical infection, both of which require medical chart review to obstruct the data. The two new structural measures relate to participation in registries for stroke care and nursing sensitive care. Each of the RHQDAPU measures are abstracted from other national measures such as the Institute of Medicine (IOM) and the Leapfrog Groups' "three leaps" measures.
  • No Change to HAC List. CMS has not increased the number of Hospital Acquired Conditions (HACs) for FY 2010. (Under the HAC provisions, hospitals that report a secondary diagnosis that is on the HAC list, and which was not identified as present on admission (POA) will not receive the higher-severity-adjusted "MS-DRG" payment for that HAC).
  • Use With Hospital Compare. The quality reporting under the RHQDAPU program is not only important for avoiding a 2% payment cut, as these data are also reported by the Department of Health and Human Services' (HHS) Hospital Compare tool.
  • When to Retire a Guideline. The preamble to the Final Rule includes discussion on decisions around whether and when to retire various of the quality measures. Obviously, it is unreasonable to include a quality measure that is inconsistent with current clinical guidelines. Indeed, CMS is aware that quality measures should be evaluated for "negative unintended consequences."
  • Validation of Hospital Reports. CMS will randomly select 800 hospitals that submitted chart-abstracted data for at least 100 discharges combined for validation. CMS will select hospitals for the FY 2012 validation if they met the 100-case threshold during calendar year 2009. Hospitals that do not comply with the validation may receive a zero score to each measure in each missing record. Hospitals will have to meet a passing threshold of 75% (down from 80%) and would have the opportunity to appeal the results to their Quality Improvement Organization (QIO).
  • Appeal Rights Have Special Requirements. Hospitals dissatisfied with the penalty of the loss of the 2% payment increase must request a reconsideration by November 1, 2009. CMS believes that the request for reconsideration must be submitted (and, apparently, denied) prior to filing an appeal with the Provider Reimbursement Review Board (PRRB). There are some additional appeal requirements associated with the request for reconsideration, such as the requirement for hospital chief executive officer (CEO) signature, that are worth noting by any hospital seeking to appeal a 2% payment reduction.
  • Electronic Acknowledgement is New Compliance Risk. CMS is now requiring hospitals to "electronically acknowledge" the "completeness and accuracy" of the data submitted for RHQDAPU payment determinations. This change heightens the awareness of the compliance considerations inherent in quality data reporting with such a significant payment factor associated.

In light of the above, recipients of Medicare payments have an opportunity to be proactive in their efforts. Such proactive efforts would not only ensure that recipients of Medicare payments receive the benefit of appropriate reimbursement but will also help to reduce compliance risks in this area. Such examples include: (1) ensuring that the reported data is accurate and complete; and (2) conducting proactive assessments of the structures, systems, and processes to ensure that quality of care is appropriately delivered and documented accordingly.

Access the CMS press release and fact sheet that accompanied the rule's release. 

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