The Provider Reimbursement Review Board ruled in favor of Western Medical Center – Santa Ana in one of the only Board cases involving the “Reporting Hospital Quality Data for Annual Payment Update” or “RHQDAPU” program.  PRRB Dec. No. 2011-D13 (Dec. 3, 2010).  The CMS Administrator declined to review the decision. As a result of the decision, the Hospital’s federal fiscal year 2008 Medicare inpatient payments will be recalculated to restore a 2 percent reduction to the annual payment update that CMS had imposed.

The RHQDAPU program requires that hospitals respond to questions on various quality measures by abstracting data from its charts.  A hospital must pass a chart validation audit to ensure the accuracy of its quality reports.  HHS had alleged that Western Medical Center did not receive a passing score on its chart validation audit for federal fiscal year 2008 and therefore was not entitled to the full inpatient payment update for that year.

Among the issues raised by the Hospital was whether HHS had scored the Hospital’s responses to “parent/child” questions properly.  A parent/child question involves an algorithm of questions such that, if the initial question (the parent) is answered “yes,” a series of other, related questions (child questions) are asked. If the initial question is answered “no,” the related questions do not have to be answered.

In the Federal Register discussion about the scoring of parent/child questions, HHS stated that only questions answered by a hospital would be scored. HHS’s actual practice was precisely the opposite, however. If HHS determined that a hospital answered a “parent” question incorrectly, and the correct response would have required a response to additional child questions, HHS answered those additional questions. Any child questions not answered by the hospital were scored as incorrect and penalized the hospital.

The Board determined that HHS’s of scoring of parent/child violated the Administrative Procedure Act and remanded the case with instructions to correct the Hospital’s score consistent with HHS’s Federal Register statements. This rescoring will result in the Hospital receiving its full annual payment update for federal fiscal year 2008.

Please contact Barbara Straub Williams at Barbara.Wiliams@ppsv.com or 202. 872.6733 with any questions.