This evening, the Centers for Medicare and Medicaid Services (CMS) released proposed payment rules for four settings of care: hospices, inpatient rehabilitation facilities (IRF), skilled nursing facilities (SNF), and inpatient psychiatric facilities. Each rule contains payment updates for the prospective payment system for each type of facility as well as update to additional policies. All the rules are scheduled to be published in the Federal Register on May 8, 2018.

As with the proposed rule for the Inpatient Prospective Payment System (IPPS), these payment rules contain a request for information (RFI) on promoting interoperability and electronic healthcare information exchange. This RFI is part of the administration’s recent My HealthEData Initiative that aims to help patient data access.

Public comments on all four proposed rules are due on June 26, 2018.

CMS Notes Rising Hospice Utilization, Proposes to Increase Payments by $340 Million While Monitoring Expenditure Trends

Medicare’s hospice benefit began in 1983, and the number of patients receiving these services has nearly tripled to 1.5 million in 2017, with an attendant six-fold increase in expenditures to $17.5 billion. With concerns about inappropriate hospice benefit utilization swirling since a 2016 HHS Inspector General’s report, CMS has undertaken a significant monitoring function focused on stay length, live discharges, prescription drug usage, and non-hospice care. For 2019, CMS proposes to increase hospice payments by 1.9 percent, primarily reflecting hospital cost increases and statutorily-mandated adjustments. As a result, hospices should see an overall increase of approximately $340 million. This increase will be further moderated by whether beneficiaries submit required quality data; failure to do so will result in a -0.2 percent reduction. In addition, CMS proposes to cap the Medicare hospice benefit at $29,205, an increase from the FY 2018 cap of $28,689. Responding to public comment after the FY 2018 request for burden reduction ideas, CMS will make subregulatory guidance changes to hospice drug reporting effective October 1, 2018. CMS also proposes a number of updates to the hospice quality reporting system focused on reducing reporting burden and removing unnecessary measures, as well as to include physician assistants within the hospice-specific definition of attending physician.

Skilled Nursing Facilities to See Payment Increase of $850 Million, New Incentive Payments Based on Readmissions for SNF VBP Proposed

In the proposed rule, CMS estimates that Medicare payments to SNFs will increase by $850 million in FY 2019. Based on historical data from 2017 and 2018, the growth rate for the SNF market basket index is estimated to be 2.7%. However, after applying the multifactor productivity adjustment, CMS proposes to update rates using a 2.4% market basket percentage. CMS also proposes to continue the 1% market basket percentage required for FY 2018 and to revise the market basket formula.

Rate Component	Nursing Case-Mix	Therapy Case-Mix	Therapy Non-Case Mix	Non-Case Mix
FY 2019 Unadjusted Per Diem Amount – Urban	$181.50	$136.71	$18.01	$92.63
FY 2019 Unadjusted Per Diem Amount – Rural	$173.39	$157.65	$19.23	$94.34

 

SNFs that fail to meet reporting requirements will have a 2% penalty applied to their SNF payments.

To compensate for increasing SNF costs, CMS proposes to adjust the case mix formula model. Formerly known as the Resource Utilization Group, Version IV (RUG-IV), this case-mix classification is renamed in this rule to the SNF Patient-Driven Payment Model (PDPM). The new PDPM would reduce the number of payment group combinations by approximately 80% and simplify paperwork requirements by approximately $2 billion over 10 years. This simplified PDPM would become effective October 1, 2019. These changes are intended to align Medicare payments with value and patient care needs rather than volume of care.

For consolidated billing purposes, CMS proposes revisions to regulation text with regards to the “midnight rule” which refers to the status of the beneficiary as “resident” with regards to readmissions and a technical correction that required content of the SNF level of care certification. These revisions do not change the underlying principles.

The rule does not propose any changes to the current measures in SNF Quality Reporting Program (QRP) but instead proposes the addition of a new factor aligned with the Meaningful Measures Initiative to consider whether the costs associated with a measure outweigh the benefit of continued use. The SNF QRP currently has 12 measures for the FY 2020 program year. The rule also proposes public display of data on SNF QRP assessment-base quality measures in CY 2020 including discharge to the community and Medicare spending per beneficiary based on 4 consecutive quarters.

Beginning October 2018, SNF Value-Based Purchasing Program (VBP) program will apply positive or negative incentive payments to SNFs based on the readmissions measure. The rule does not propose any changes to the program’s measures; however, it includes updates to performance and baseline periods for the FY 2021 program year, adjustment to the scoring methodology, and a request to codify these policies.

Inpatient Psychiatric Hospitals Can Expect Payment Increase and Reduced Quality Reporting Burdens in FY 2019

CMS is proposing to increase the per diem base rate for inpatient psychiatric hospitals from $771.35 for FY 2018 to $782.66 for FY 2019. This rate is the payment hospitals receive per-day to cover the costs of services for patient care, and is adjusted for factors including patient diagnosis and geography. The new payment rate, if finalized, would apply to discharges between October 1, 2018 – September 30, 2019. For hospitals that do not meet requirements for quality data reporting, the per diem base rate will be $756.66. This increase is expected to result in an overall increase in program payments of $50 million in FY 2019. In 2016, Medicare spent a total of $4.5 billion on inpatient psychiatric services.

As part of the department-wide “Meaningful Measures Initiative,” CMS is also proposing to remove eight measures from the inpatient psychiatric hospital quality reporting program, and will no longer require facilities to submit a sample size count for measures. The primary reason that measures are slated for removal is that the agency feels that the costs to implement or report the measures outweigh their benefits, frequently because the measures are duplicative of other federal and state requirements. Several “topped out” measures – meaning the hospitals are generally performing uniformly well – are also on the list. If finalized, the removal would result in 10 remaining measures in the quality reporting program. Hospitals are required to report aggregate data on all measures used in the program. These changes are expected to reduce hospital costs by $68.1 million (approximately $40,000 per hospital) in FY 2019.

Inpatient Rehabilitation Facilities to See Estimated $75 Million Increase in Payments; CMS Solicits Feedback on Face-to-Face Requirement

For FY 2019, CMS is proposing an overall estimated payment update of 0.9 percent. This includes a 2.9 percent market update, a 0.8 percentage point reduction for the MFP adjustment, a statutorily required reduction of 0.75, and an approximately 0.4 percentage decrease from updating the outlier threshold. CMS is estimating the IRFs will see an estimated $75 million increase in payments in FY 2019.

As part of their effort to reduce unnecessary regulatory burden, CMS is soliciting public feedback on the face-to-face requirement for rehabilitation physician visits, including and allowing the rehabilitation physician to determine whether a patient needs to be assessed face-to-face or through a remote mode of communication. CMS would also like feedback on possibly expanding the role of non-physician practitioners, like physician assistants and nurse practitioners, in the IRF setting.

In conjunction with the department-wide Meaningful Measures initiative, CMS is proposing to remove two measures from the IRF Quality Reporting Program, to update non-compliance notification, and to display data on the four assessment-based functional outcomes measures in CY 2020. Finally, CMS is proposing to remove the Functional Independence Measures instrument and associated Function Modifiers from the IRF Patient Assessment Instrument in an effort to reduce provider burden.