The Centers for Medicare and Medicaid Services (CMS) April 23 and 24 released the Inpatient Rehabilitation Prospective Payment System (IRF PPS) proposed rule and the Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) proposed rule, which include proposed changes to the Medicare payment policies and rates for the IRF PPS and IPF PPS. Comments on the IRF PPS proposed rule are due June 22, 2015, and comments on the IPF PPS proposed rule are due June 23, 2015.
In the fiscal year (FY) 2016 proposed rules, CMS proposes to adopt separate IRF-specific and IPF-specific market baskets based on 2012 data to replace the Rehabilitation, Psychiatric, and Long-Term Care (RPL) market basket. Additionally, CMS proposes to use the revised Office of Management and Budget (OMB) delineations for Metropolitan Statistical Areas and to develop the IRF and IPF wage indexes.
To ease the impact of the proposed changes, CMS proposes a one-year transition, during which a fifty-fifty blend of current and revised OMB delineations would be used for the 2016 wage indexes. Additionally, if the adoption of the revised OMB delineations result in a status change from rural to urban for any of these facilities, CMS proposes an incremental three year phase out of their rural adjustments.
In both proposed rules, CMS finalized conversions from ICD-9-CM to ICD-10-CM, which will become effective when ICD-10-CM is implemented on Oct. 1, 2015.
FY 2016 IRF PPS
CMS proposes to update estimated payments to IRFs by 1.9 percent (or $80 million) relative to estimated IRF payments in FY 2015. This includes a proposed new IRF-specific market basket estimate of 2.7 percent. The payment update also reflects a productivity adjustment of minus 0.6 percentage points, a 0.2 percentage point reduction required by the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152), and a 0.2 percent decrease to aggregate payments resulting from updating the outlier threshold (producing an estimated $15 million decrease in aggregate payments to IRFs). The combined effect is to increase estimated payments by about 1.7 percent (amounting to $130 million) above FY 2015 payments.
Given that CMS froze facility-level adjustment factors (the teaching status adjustment factors and the rural, low income percentage) at the FY 2014 levels beginning in FY 2015 and continuing in subsequent years, the proposed rule includes no changes to facility-level adjustment factors. CMS indicated that the agency will monitor the most recent IRF claims data to analyze the effects of the FY 2014 changes.
The rule also proposes changes to the IRF Quality Reporting Program (QRP), including implementing IRF reporting requirements mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act, P.L. 113-185). For 2016, the rule proposes to adopt measures that would satisfy three of the IMPACT Act’s required quality domains: skin integrity and changes in skin integrity; functional status, cognitive function, and changes in function and cognitive function; and incidence of major falls. Failure to submit required quality data to CMS results in a two percentage point reduction to an IRF’s applicable annual increase factor.
In the rule, CMS proposes to begin public reporting of IRF quality reporting program data in fall 2016, followed by a period for review and correction of these data before public display of IRF performance data. To provide more time to develop a potentially more comprehensive, well-aligned, and less burdensome policy, CMS is proposing to temporarily suspend the validation policy the agency previously finalized.
FY 2016 IPF PPS Proposed Rule
CMS proposes to update estimated payments to IPFs by 1.6 percent (or $80 million) relative to estimated IPF payments in FY 2015. This includes a proposal to update the IPF market basket by 2.7 percent. The payment update also reflects a productivity adjustment of -0.6 percentage points and a 0.2 percentage point reduction required by the ACA. The proposals in the rule result in a net update to estimated IPF payments of 1.9 percent.
Because of a proposal that would adjust the outlier threshold amount to set total estimated outlier payments equal to 2 percent of total payments in FY 2016, estimated total IPF payments across all hospital groups are expected to be reduced by 0.3 percent. According to CMS, the largest decrease in payments associated with this proposal is estimated to reflect a 0.7 percent decrease in payments for IPFs located in teaching hospitals with an intern and resident Average Daily Census (ADC) ratio that is 10 percent or greater. The proposed rule includes no changes to the IPF teaching adjustment for FY 2016.
Also included in the rule are updates to the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program, which mandates reductions in annual payment updates for IPFs that do not report on quality measures. The rule proposes to expand measure sets for this program into future fiscal years from its 14 current measures to 16 measures. This would be accomplished through the proposed addition of five measures and the removal of three measures.
The rule also proposes to change certain data reporting requirements for IPFQR Program measures. CMS is proposing to require IPFs to report measure data as a single, yearly count rather than by quarter and age in an effort to reduce the burden associated with reporting requirements. Additionally, CMS is proposing to require reporting of aggregate population counts for discharges as a single, yearly count rather than by quarter.