Cardiovascular Rounds

The FY 2018 Inpatient Proposed Rule: Early insights for CV leaders

by Megan Tooley

April showers bring May flowers and—this year, at least—CMS's FY 2018 Inpatient Prospective Payment System (IPPS) proposed rule. Per usual, this rule outlines CMS's proposed updates to inpatient reimbursement for acute and long term care hospitals as well as changes to policy and quality reporting requirements for these providers. If approved, these changes will go into effect on October 1, 2017.

Register for the webconference on the IPPS proposed rule

Fortunately, in the midst of an eventful year, CV leaders at least will not find too many changes impacting the service line in this proposal, allowing the focus to remain on the cadre of other new regulations that have reached their doorsteps (e.g., cardiac bundling). 

Still, there are plenty of important takeaways, and we're combing through the 1,837-page rule to highlight key implications for CV leaders. Here's our initial assessment of the provisions that would have the greatest impact on CV providers.

A healthy inpatient payment update for FY 2018

CMS foresees a 1.6% increase in overall operating payment rates for FY 2018, a much stronger payment update than we have seen in recent years. As my colleague Eric Fontana describes in further depth in his recent post, much of this was driven by the expiration of previous payment cuts, such as those implemented by the 2012 American Tax Relief Act.

Incorporating socioeconomic status into the readmissions reduction program

CMS's proposed updates to the Hospital Readmissions Reduction Program (HRRP) this year do not involve new conditions—like the addition of CABG in FY2017—but instead program methodology.

More specifically, CMS proposed a methodology for adjusting hospital performance to account for patient's socioeconomic status (SES). This move, which has been viewed as long overdue by many in the medical community, aims to address the concern that the HRRP disproportionately impacts hospitals that serve low-income and socially unsupported patient populations. While the HRRP does provide risk-adjustment for certain patient clinical risk factors, the methodology has not incorporated SES factors.

This change was mandated by the 21st Century Cures Act, which Congress passed in December 2016. Per the law, beginning in FY 2019 the HRRP will compare hospital performance to other hospitals with a similar ratio of dual-eligible beneficiaries, using this as a proxy for the SES of the hospital's patient population. CMS intends to sort hospitals into five peer groups according to the ratio of the hospitals' Medicare inpatient stays that were for full-benefit dual-eligible beneficiaries. Hospital performance would then be compared to the median readmissions performance of their peer group.

CMS predicts this budget-neutral proposal would have the following effect on HRRP penalties:

  • Decrease the average safety-net hospital HRRP payment reduction by about one-tenth, to 0.56%;
  • Hold the average non-safety-net hospital HRRP payment reduction steady at 0.61%;
  • Reduce the share of HRRP penalties incurred by rural hospitals;
  • Reduce the share of HRRP penalties incurred by safety net hospitals; and
  • Increase the share of HRRP penalties incurred by non-DSH eligible hospitals.

No new CV-specific measures in VBP, IQR

After several eventful years, CV received a respite in this year's proposed rule, as none of the suggested metrics (either for addition or removal) for the Value-Based Purchasing program (VBP) or Inpatient Quality Reporting (IQR) were specific to CV services. That said, programs still must prepare for the implementation in FY 2021 of the two new VBP measures finalized in last year's rule: 30-day episodic spending for acute myocardial infarction (AMI) and heart failure (HF).

CMS is also proposing to add a Hospital-Wide All-Cause Unplanned Readmission Hybrid Measure as a voluntary measure for the CY 2018 reporting period for IQR, and is considering proposing this as a required measure as early as CY 2021 (which would require mandatory submission of the core clinical data elements as early as CY 2020). CMS's goal with the voluntary measure would be to increase hospital familiarity with submitting data for hybrid quality measures from the EHR system, and to allow for measure refinement if necessary.

CMS also indicated that it plans to evaluate in the future if it is appropriate to incorporate risk adjustment for socioeconomic status (SES) factors into both the IQR and VBP as they will with the HRRP. The agency is currently analyzing new reports prepared by the Office of the Assistant Secretary for Planning and Evaluation and the National Academies of Sciences, Engineering, and Medicine on this issue. CMS is also awaiting the results of a two-year trial period in which the National Quality Forum (NQF) is evaluating the need for risk adjustment for select social risk factors in NQF-endorsed measures. For now, we will have to wait and see how and if social factors will be incorporated into these programs in the future.

More scrutiny over short-stay cases to come?

CMS in the proposed rule reaffirmed its commitment to eliminating the payment differentials between similar services that are provided in the inpatient and outpatient settings, specifically alluding to one-day stays reimbursed as inpatient. While CMS didn't expand on this, the agency did open a request for public comments on "transparent ways to identify and eliminate inappropriate payment differentials" between the inpatient and outpatient settings. Reading the tea leaves, this could signal a renewed focus on short-stays beyond the Two-Midnight Rule. We'll be eagerly awaiting the final rule to see what comments CMS receives.

Collocating percutaneous valve replacement in the same DRG family

In response to requests, CMS has proposed to move four ICD-10 procedure codes for percutaneous mitral valve replacement procedures that had previously been assigned to MS-DRGs 216-221 (cardiac valve and other major cardiothoracic procedures with and without cardiac cath with MCC, with CC and without CC/MCC, respectively) to MS-DRGs 266-267 (endovascular cardiac valve replacement with and without MCC, respectively). These codes are outlined below. As there are currently no FDA-approved devices for this procedure, this would primarily impact programs involved in trials for the procedure.

ICD-10 1

Note that percutaneous mitral valve repair (e.g., MitraClip procedures) would not be impacted by this change, and those cases would remain in MS-DRGs 228 and 229 (other cardiothoracic procedures with and without MCC, respectively).

CMS also proposed to place eight new ICD-10 procedure codes for percutaneous tricuspid valve replacement, below—which go into effect October 1, 2017—in these same MS-DRGs 266-267. As with mitral valve replacement, there is no FDA-approved device for this procedure as of yet.

ICD-10 2

This proposal would group all percutaneous valve replacement procedures (e.g., aortic, pulmonary, mitral, tricuspid) within the same DRGs, as was the original intent.

On the other hand, CMS declined a request to create a new DRG for transcatheter aortic valve replacement (TAVR) combined with left atrial appendage closure (LAAC) given lack of volume.

PCI gets a change of name

CMS also proposed to change the titles for MS-DRGs 246 and 248 (percutaneous CV procedures with MCC or 4+ vessels or stents, with drug-eluting and non-drug-eluting stent, respectively) to replace "vessels" with "arteries." This is meant to reflect the new ICD-10-PCS terminology for procedure code titles within this classification.

CMS is evaluating several CV new technology add-on payments

New technology add-on payments are designed to provide additional reimbursement on top of existing MS-DRG payment for novel, more costly technologies. When determining whether to grant additional payment, CMS considers newness, cost of the technology compared to what would be received through the MS-DRG, and clinical improvement.

With these criteria in mind, CMS each year evaluates whether to continue providing these payments for previously approved technologies, and reviews applications for new technologies.

For FY 2018, CMS has proposed to discontinue new-technology add-on payments for the following CV technologies because they no longer meet CMS's newness criteria as the three-year anniversary date of the entry of the technologies onto the U.S. market will occur prior to the beginning of FY 2018:

  • CardioMEMS HF Monitoring System
  • Lutonix Drug Coated Balloon PTCA Catheter
  • In.PACT Admiral Paclitaxel Coated PTA Balloon Catheter

They have proposed to continue new technology add-on payments for the following CV technologies:

  • GORE EXCLUDER Iliac Branch Endoprosthesis (maximum add-on payment: $5,250)
  • Idarucizumab (maximum add-on payment: $1,750)

Furthermore, CMS will be evaluating the request for new technology add-on payment for the following devices in advance of the final IPPS rule:

  • Edwards Intuity Elite Valve System and LivaNova Perceval Valve (sutureless prosthetic surgical aortic valves)

What you need to know about the FY 2018 IPPS proposed rule

There's a lot changing in health care right now—but you can prepare for the future by exploring CMS's proposals to change inpatient payments in FY 2018 at our webconference on May 17.


Register now



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