Powers summarizes key changes to the acute-care hospital IPPS proposed by the Centers for Medicare and Medicaid Services (CMS) for FFY 2019, as well as proposals related to quality reporting programs for cancer hospitals, long-term care and psychiatric facilities.  The proposed rule is in the May 7, 2018 Federal Register.  Comments are due by 5 pm Eastern on June 25, 2018.  The tables and data files for the proposed FFY 2019 IPPS rule are available on the FFY 2019 Proposed Rule Home Page.

Among the proposed IPPS changes are the following:

IPPS Updates

The proposed IPPS increase in operating payment rates for acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 1.7%.  CMS projects that the rate increase, together with other proposed changes to IPPS payment policies, will increase IPPS operating payments by approximately 2.1%, and that proposed changes in uncompensated care payments, capital payments and low-volume hospital payments will increase IPPS operating payments by an additional 1.3% for a total increase of 3.4%.  The net increase in the standardized amounts from FFY 2018 to FFY 2019 is about 1.5% for hospitals that meet the quality reporting and EHR meaningful use requirements.  Adjustments may be made to a hospital’s payments under the Hospital Acquired Condition Reduction Program and the Hospital Value-Based Purchasing Program

The tables below show the updates to the standardized amounts for FFY 2019.  These tables are located on the FFY 2019 IPPS Proposed Rule Home page.

Table 1A. – Proposed National Adjusted Operating Standardized Amounts, Labor/Nonlabor (if Wage Index is Greater Than 1)

Hospital Submitted Quality Data and is a Meaningful EHR User (Update = 1.25 Percent) Hospital Submitted Quality Data and is NOT a Meaningful EHR User (Update=

-0.85 Percent)

Hospital Did NOT Submit Quality Data and is a Meaningful EHR User (Update = 0.550 Percent) Hospital Did NOT Submit Quality Data and is NOT a Meaningful EHR User (Update = -1.55 Percent)
 Labor-related Nonlabor-related Labor-related Nonlabor-related Labor-related Nonlabor-related Labor-related Nonlabor-related
$3,863.17 $1,793.01 $3,783.04 $1,755.82 $3,836.46 $1,780.61 $3,756.34 $1,743.43

Table 1B. – Proposed National Adjusted Operating Standardized Amounts, Labor/Nonlabor (if Wage Index is Less Than or Equal to 1)

Hospital Submitted Quality Data and is a Meaningful EHR User (Update = 1.25 Percent) Hospital Submitted Quality Data and is NOT a Meaningful EHR User (Update

= -0.85 Percent)

Hospital Did NOT Submit Quality Data and is a Meaningful EHR User (Update =

0.550 Percent)

Hospital Did NOT Submit Quality Data and is NOT a Meaningful EHR User (Update =

-1.55 Percent)

 Labor-related Nonlabor-related Labor-related Nonlabor-related Labor-related Nonlabor-related Labor-related Nonlabor-related
$3,506.83 $2,149.35 $3,434.09 $2,104.77 $3,482.58 $2,134.49 $3,409.86 $2,089.91

Table 1D. – Proposed Capital Standard Federal Payment Rate – $459.78

Table I in the proposed rule (p. 20,603) shows the estimated impact of all the proposed changes on Medicare hospitals.  The explanation of Table I begins on page 20,575.

Disproportionate Share Hospital (DSH) and Uncompensated Care Pool Payments (pages 20,386-20,401)

Section 3133 of the Affordable Care Act (ACA) requires that, effective with FFY 2014, eligible hospitals  receive 25 percent of their current Medicare DSH payments.  The reduced DSH payment (designated as the “empirically justified DSH payment”) is supplemented by an additional payment that is based on an “uncompensated care pool,” derived from the remaining 75 percent of current DSH payments.  The uncompensated care pool is adjusted for decreases in the rate of uninsured individuals nationally and distributed to DSH hospitals based on each hospital’s share of uncompensated care relative to all DSH hospitals.

In the FFY 2014 IPPS rule, CMS implemented the ACA changes to the Medicare DSH payment, establishing rules for estimating each of the three factors required to determine the amount of each hospital’s “uncompensated care payment.”  In the proposed FFY 2019 IPPS rule, CMS is proposing that the total uncompensated care pool (i.e., Factor 1) will be $12,221,027,955, based on the Office of the Actuary’s December 2017 estimate.

Factor 2 is an adjustment equal to 1 minus the percentage change in the national rate of uninsurance for the current year as compared to a base of 2013.  Previously, CMS used Congressional Budget Office (CBO) uninsured population estimates for the under 65 population in calculating Factor 2, but the ACA allows the use of other data sources beginning in FFY 2018.  Therefore, for FFY 2018, CMS used uninsured estimates produced by the Office of the Actuary as part of the development of the National Health Expenditure Accounts (NHEA), which reflect the rate of uninsurance in the U.S. across all age groups.  CMS proposes to continue this methodology in FFY 2019.  Using the NHEA data, CMS estimates that the uninsurance rate for FFY 2019 will be 9.48 percent.  Compared to the 2013 base rate of 14 percent (also now calculated based on NHEA data), this represents a percentage change of 32.29 percent, which, when subtracted from 1, equals an adjustment of 67.71 percent. The ACA requires an additional adjustment of 0.2 percent for FFY 2019, so that the proposed Factor 2 for FFY 2019 (rounded to the second decimal) is 67.51 percent; this results in a proposed total uncompensated care pool of approximately $8,250,415,972 (i.e., 67.51 percent times $12,221,027,955).

Factor 3 is each eligible DSH hospital’s estimated uncompensated care amount relative to the estimated uncompensated care amount for all eligible DSH hospitals.  For FFY 2014, CMS decided to use insured low-income patient utilization, defined as Medicaid inpatient days plus Medicare SSI inpatient days, as a proxy for uncompensated care, and this was also used for FFYs 2015, 2016 and 2017.  In the proposed FFY 2017 IPPS rule, CMS proposed transitioning to the use of data from Worksheet S-10 of the Medicare cost report to calculate Factor 3 for FFY 2018 and subsequent years, but did not finalize that proposal.  In FFY 2018, CMS adopted that proposal, having concluded that, for FY 2014 and subsequent years, Worksheet S-10 is an accurate data source for determining uncompensated care.  CMS is proposing to use an average of data derived from three periods to calculate Factor 3.  For FFY 2019, CMS would use data from hospitals’ FY 2013, 2014 and 2015 cost reporting periods.  For the FY 2013 cost reporting period, it would use Medicaid days from FY 2013 and the FY 2016 SSI ratios; and for the FY 2014 and FY 2015 cost reporting period, it would use Worksheet S-10 data.

Similar to previous years, CMS will perform the factor 3 calculation using HCRIS data updated through February 15, 2018.  However, due to the data reporting delays resulting from hurricanes Irma, Maria, and Nate, CMS may instead use data updated through May 31, 2018.

CMS proposes to discontinue its prior policy of using multiple cost reports to determine a hospital’s factor 3 data when a hospital files more than one cost report in the same fiscal year.  Instead, CMS would annualize the cost report that is closest to twelve months.

CMS states that it is not making any proposals with respect to the calculation of Factor 3 for FFY 2020 (or subsequent years) at this time.  It notes, however, if the methodology proposed for FFY 2019 is adopted, it would expect to use a similar methodology for calculating Factor 3 for subsequent years.  This would mean that, for FFY 2020, the 3-year time period would be advanced by one year, with Worksheet S-10 data used for all three years (i.e., FYs 2014, 2015 and 2016) in calculating Factor 3.

In conjunction with the FFY 2019 proposed IPPS rule, CMS is publishing on its website a table listing Factor 3 for all hospitals that it estimates will receive DSH payments for FFY 2019 (go to Table 18).  CMS is also publishing a supplemental data file with a list of the hospital mergers that CMS is aware of and the computed uncompensated care payments for each merged hospital. The proposed rule states that hospitals should notify CMS within 60 days from the date of public display of the proposed rule of any inaccuracies. The proposed rule also notes that after publication of the final FFY 2019 IPPS rule, hospitals will have until August 31, 2018 to review and submit comments on the accuracy of the table.

CMS is also proposing to apply “trims” to anomalous CCRs using the methodology adopted for FY 2018, similar to its current method for calculating high-cost outlier payments, to ensure that reasonable CCRs are used to convert charges to costs for purposes of determining uncompensated care costs.

Outlier Payments (page 20,582)

CMS is proposing an outlier threshold of $27,545.  The FFY 2018 threshold is $26,601.

Wage Index and Wage Data (page 20,353 – 20,377)

The proposed occupational mix adjusted national average hourly wage for FFY 2019 is $42.9484.  The tables listing the proposed wage index for all geographic areas are in the downloads section of the FFY 2019 Proposed Rule Home Page.

Currently, a hospital may include in its wage data fringe benefits that are listed by CMS on Worksheet S-3, Part IV, as well as other fringe benefits that meet certain criteria.  These criteria are that the cost of the fringe benefit exceeds 1% of the total adjusted salaries (net of excluded area salaries), is a fringe benefit as defined by the IRS, has been reported to the IRS as a fringe benefit and is otherwise not listed on Worksheet S-3, Part IV.  CMS is proposing that, beginning with the FFY 2020 wage index, it will not allow hospitals to include fringe benefits that are not included in the core list on Worksheet S-3, Part IV.  CMS states that it believes that only eight hospitals correctly reported these “other” fringe benefit costs for purposes of the FFY 2019 wage index and, therefore, the change should have minimal effect on wage indexes nationwide.

Expiration of Imputed Rural Floor (page 20,362 – 20,363)

CMS is proposing (once again) to discontinue the imputed rural floor, which benefits hospitals in states that have no rural areas (New Jersey, Delaware and Rhode Island).

Notification of Error in Wage Index (page 20,369)

Hospitals have until May 30, 2018 to notify their MACs and CMS of needed corrections to the wage index public use files (PUFs) due to a MAC or CMS error or to dispute wage data corrections made by CMS between March 23, 2018 and May 16, 2018 that do not arise from a hospital’s request for revisions.

Reclassification Criteria for Hospitals With No Other IPPS Hospital in Geographic Area (page 20,365)

A hospitals that is the only IPPS hospital in an urban area does not have to meet the wage index reclassification requirement that the hospital’s average hourly wage is 108% of the average hourly wage of other hospitals in the area.  CMS states that stakeholders have complained that proving that a hospital is the only hospital in the urban area is problematic.  CMS is proposing to allow hospitals to provide the wage index data from the current year’s IPPS final rule to show that the hospital is the only IPPS hospital in the urban area.

Change in Lock-In Date (page 20,367 – 20, 368)

Under 42 C.F.R. § 412.103, a hospital that is located in an urban area may be redesignated as a rural hospital if it meets certain criteria.  If the hospital is redesignated as rural and is not reclassified by the Medicare Geographic Classification Review Board, the wage data for the hospital will be included in the calculation of the rural wage index.  Under current rules, the hospital must apply to be designated as a rural hospital under 42 C.F.R. § 412.103 no later than 70 days prior to the second Monday in June in order for the hospital’s wage data to be included in the rural wage index for the following federal fiscal year.  CMS is proposing to change this rule to require that a hospital’s application for rural designation must be approved by CMS no later than 60 days after the public display date of the proposed IPPS rule in order for the hospital’s wage data to be included in the rural wage index for the following federal fiscal years.

Multi-Campus Hospitals and Qualification Criteria for Status as Sole Community Hospital, Rural Referral Center, Medicare-dependent Hospital and Rural Location under 42 C.F.R. §412.103 (pages 20,358 – 20,360)

CMS is proposing to change and codify recent policies related to the qualification criteria for status as a sole community hospital (SCH), rural referral center (RRC) and Medicare-dependent hospital (MDH) and for a rural designation under 42 C.F.R. § 412.103 when the hospital has more than one campus offering inpatient services operating under a single provider number.  The eligibility requirements for SCH, RRC and MDH status include criteria related to location, mileage, travel time and distance requirements.  CMS’s proposed rule would require both the main campus and a remote location to meet these requirements.  For example, for a hospital that qualifies as an SCH because it is located more than 35 miles from another “like” hospital (42 C.F.R. 412.92(a)), both the main campus and the remote location would have to meet this distance requirement.   In this situation, CMS’s proposed rule could conceivably affect not only eligibility for the hospital with the remote location, but also other SCHs that are located within 35 miles of a remote location of another hospital.

CMS also proposes that, for qualification criteria that are derived from the Medicare cost report, data for both the main campus and remote location will be used.  As an example, one of the qualification criteria for RRC designation is that the hospital has 275 or more beds.  Under CMS’ proposal, beds from both the main campus and remote location would be counted to determine RRC eligibility.

CMS implies that its proposal would not grandfather multi-campus hospitals with designations as an SCH, RRC, MDH or rural designation under 42 C.F.R. § 412.103.  CMS states that approved MDHs and SCHs must notify CMS within thirty (30) days if there is a change in the circumstances under which the hospital qualified as an MDH or SCH.  CMS states that, “while we believe that this proposal is consistent with the policies for multicampus hospitals that we have developed in response to recently questions, current MDHs and SCHs should make sure that this proposal does not create a change in circumstance . . . which an MDH or SCH is required to report to the MAC within 30 days of the event….”  (p. 20,359).

Overhaul of Wage Index (pages 20,372 – 20,377)

CMS discusses problems with the wage index that it has described in the past and that have been analyzed in several other reports.  CMS describes four reports that have reviewed the wage index methodology and made recommendations for improvements. These reports are:  1) a 2007 report from MedPAC 1; 2) a 2011 report from Acumen 2; 3) a 2012 report from CMS to Congress 3; and 4) a 2011 report from the Institute of Medicine. 4 CMS is requesting comments on regulatory and policy changes to address shortcomings in the current wage index calculation, with supporting data and specific recommendations if practicable.  CMS also asks the public to consider and comment on CMS’ scope of statutory authority in setting the wage index.

Direct Graduate Medical Education (DGME) and Indirect Medical Education (IME) (page 20,386, 20,438 – 20,440, & 20,360)

CMS proposes to keep the indirect medical education (IME) adjustment factor at 1.35 as required by statute.

Currently, teaching hospitals can enter into GME affiliated groups to share their FTE caps applicable to direct graduate medical education (DGME) and IME.  A new urban teaching hospital, however, can only enter into an affiliation agreement that results in an increase to the new urban teaching hospital’s caps.  In other words, the affiliation agreement cannot result in the new urban teaching hospital transferring FTE cap slots to other hospitals.  A “new” teaching hospital is one that did not train any residents during the 1996 cost reporting year and established its residency programs (and FTE caps) since 1996.  CMS proposes to permit two or more new urban teaching hospitals to enter into GME affiliation agreements with each other, even though at least one new urban teaching hospital in the group would transfer cap slots to another hospital.  The proposed revision would only apply to affiliated groups that contain solely new urban teaching hospitals.  The same rule would apply to emergency affiliation agreements.   If adopted, the new rule would be effective beginning with affiliation agreements entered into for the July 1, 2019 through June 30, 2020 residency training year.

CMS announced the closure of Affinity Medical Center in Massillon, Ohio and Baylor Scott & White Medical Center–Garland, located in Garland, Texas.  CMS will redistribute the DGME and IME FTE cap slots from these hospital using the process established under section 5506 of the Affordable Care Act.  Applications to receive redistributed cap slots are due July 23, 2018.

As explained above, CMS proposes to apply certain location requirements applicable to sole community hospitals (SCHs), rural referral centers (RRCs) and Medicare-dependent hospital (MDHs) and to rural designations under 42 C.F.R. § 412.103 to remote locations in addition to the provider’s main location.  This proposal would impact the IME payment for a hospital that receives a redesignation under 42 C.F.R. § 412.103 because  such a hospital receives a 30% increase to its IME FTE cap and receives an increase in its cap if it adds new programs.  CMS proposes that the cap increase and new program add-on would only be available if both the main campus and the remote location are reclassified as rural under 42 C.F.R. § 412.103.   Although it is not clear from CMS’ commentary, CMS also seems to be proposing that a hospital with a main campus located in a rural area and a remote location in an urban area would not receive the 30% cap increase or add-on for new programs.

Proposed Revisions of the Supporting Documentation Required for Submission of an Acceptable Cost Report (pages 20,544 – 20,548 )

CMS proposes several revisions to the requirements for filing an acceptable Medicare cost report.  Current regulations require providers to complete the Provider Cost Reimbursement Questionnaire.  This Questionnaire is incorporated into the cost report for all provider types other than Organ Procurement Organizations and Histocompatibility Laboratories.  CMS proposes to incorporate the Provider Cost Reimbursement Questionnaire into the cost reports for Organ Procurement Organizations and Histocompatibility Laboratories and to delete the provision in the regulation at 42 C.F.R. § 413.24(f)(5)(i) that a cost report will be rejected if it does not include a Provider Cost Reimbursement Questionnaire separate from the cost report.

The following changes apply to cost reporting periods beginning on or after October 1, 2018.  To receive DGME and IME payments, hospitals must submit data for the Intern and Resident Information System (IRIS), which enables MACs to determine whether more than one hospital has claimed the same resident rotation (known as an “overlap”).  CMS proposes to delete from the regulation the requirement that the IRIS be submitted on a “diskette.”  CMS also proposes to require that the total DGME and IME FTE counts on the IRIS match the FTEs claimed on the cost report.

Providers claiming reimbursement for bad debts must submit a bad debt listing with the cost report.  CMS proposes that the Medicare bad debt listing correspond with the amount of bad debts claimed on the cost report.

Currently, a provider is not required to submit with the cost report data substantiating its claimed DSH Medicaid-eligible days.  CMS proposes to require hospitals to submit a listing of DSH Medicaid-eligible days with the cost report that corresponds to the claimed days.  Providers will still be able to submit an amended cost report within twelve months with an updated number of DSH Medicaid-eligible days, but the amended cost report would have to be accompanied by an updated listing of the Medicaid-eligible days.

Currently, providers that are eligible for DSH and uncompensated care payments are not required to submit with the cost report data supporting the charity care or discounts reported on Worksheet S-10.  CMS proposes to require hospitals to submit “a detailed listing of charity care and/or uninsured discounts that contains information such as the patient name, dates of service, insurer (if applicable), and the amount of charity care and/or uninsured discount given that corresponds to the amount claimed in the hospital’s cost report as a supporting document with the hospital’s cost report.”

Currently, the Provider Reimbursement Manual requires hospitals that claim home office costs to submit a Home Office Cost Statement with the cost report.  CMS proposes to add this requirement to the regulation governing acceptable cost reports.

Proposed Revision of Hospital Inpatient Admission Orders Documentation Requirement (pages 20,447-20,448)

CMS proposes to revise 42 C.F.R. § 412.3(a) to eliminate the requirement that documentation of the physician inpatient admission order be in the patient’s medical record in order to for Medicare to pay for the inpatient admission.  CMS found that contractors are issuing denials for inpatient hospital admissions solely on the basis of missing or otherwise deficient physician admission orders.  This is apparently contrary to CMS’ intent, and CMS wishes its contractors to focus instead on whether the admission was medically reasonable and necessary.  The hospital conditions of participation continue to require patient medical records to generally include properly authenticated orders (including admission orders), on a claim by claim basis.  The absence of a documented physician admission order for inpatient services, however, would not be the basis for denial of a claim if “other available documentation, such as the physician certification statement when required, progress notes, or the medical record as a whole, supports that all the coverage criteria (including medical necessity) are met.”

Proposed Revisions Regarding Physician Certification and Recertification of Claims (page 20,550)

Similarly, CMS proposes to eliminate the requirement that a physician certification or recertification statement specifically reference the location in the medical record where supporting information can be found.  CMS believes this requirement is being applied too literally by contractors, resulting in unnecessary claim denials.

CMS Proposes Streamlining Its Quality Programs

CMS has a variety of quality reporting programs applicable to different care settings under Medicare Part A, including multiple programs for a single setting (i.e., acute care hospitals) in some instances.  These programs are frequently complicated and burdensome on providers.  CMS proposes to streamline some of the reporting burden in its proposed rule by including a new removal factor under each quality program based on the cost-effectiveness of the measure.  In addition, CMS proposes removal of multiple measures under each program, in order to enable providers to focus on tracking and reporting the measures with the most impact and with a minimum of duplication.

Furthermore, CMS proposes to continue to evaluate the quality reporting programs’ ability to factor in health disparities.  CMS acknowledges that some providers’ quality reporting is necessarily impacted by the health disparities in their patient populations.  Even more importantly, however, CMS seeks to use the information gleaned from the quality reporting programs to help improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures.  CMS will continue to consider options to address health disparities through the value-based purchasing programs.

Hospital Value-Based Purchasing (VBP) Program (pages 20,407-20,426)

CMS estimates that approximately $1.9 billion is available for value-based incentive payments for FFY 2019, but CMS will update this estimate in the final rule using the March 2018 update of the FFY 2017 MedPAR file.  CMS published its proxy value-based incentive payment adjustment factors in Table 16 on the CMS website, and these factors are based on the Total Performance Score (TPS) from FFY 2018; CMS will update this table in the final rule.  Hospitals will be given an opportunity to review and correct their TPSs for the FFY 2019 program year after the final rule is published.  CMS will then publish the actual value-based incentive payment adjustment factors and estimated amount available for FFY 2019 in Table 16B on the CMS website in the fall of 2018.

CMS addresses the following topics in the proposed rule:

  • CMS proposes to adopt the Hospital IQR Program measure removal factors, and a measure removal factor where the costs associated with a measure outweigh the benefit of its continued use in the program, for use in determining whether to remove Hospital VBP Program measures. For a summary of the proposed factors, please refer to pages 20,408 through 20,409.
  • CMS proposes that, if CMS believes that a measure poses specific patient safety concerns, CMS may promptly remove the measure from the Hospital VBP Program without rulemaking. For a summary of measure removal, please refer to page 20,409.
  • CMS proposes to remove, beginning with the FFY 2021 program year, the elective delivery measure because the costs outweigh the benefit of its continued use in the program. For a summary of the proposed measure for removal and the previously adopted measure for FFY 2020, please refer to pages 20,410 through 20,411.
  • CMS proposes to remove, beginning with the FFY 2021 program year, the following five measures of hospital association infections because the costs outweigh the benefit of their continued use in the program: catheter-associated urinary tract infection outcome measure, central line-associated bloodstream infection outcome measure, harmonized procedure specific surgical site infection outcome measure, facility-wide inpatient hospital-onset MRSA bacterium outcome measure, and facility-wide inpatient hospital-onset Clostridium difficile infection outcome measure. For a summary of the proposed measures for removal, please refer to page 20,411.
  • CMS proposes to remove, beginning with the effective date of the final rule, PSI 90 measure because the costs associated outweigh the benefit of its continued use in the program. For a summary of the proposed measure for removal, please refer to page 20,411.
  • CMS proposes to remove, beginning with the effective date of the final rule, the following three condition-specific payment measures because the costs associated with the measures outweigh the benefit of their continued use in the program: acute myocardial infraction (AMI) payment measure, heart failure (HF) payment measure, and pneumonia (PN) payment measure. For a summary of the proposed measure for removal, please refer to pages 20,411 through 20,412.
  • For details regarding the previously adopted measures for the FFY 2020 program year, please refer to pages 20,412 through 20,414.
  • For a summary of feedback received regarding accounting for social risk factors in the Hospital VBP Program, please refer to pages 20,414 through 20,415.
  • CMS proposes to remove the Safety domain, beginning with the FFY 2021 program year, from the Hospital VBP Program because there would no longer be any measures in that domain if CMS’s measure removal proposals are finalized. For a summary of the proposed domain removal, please refer to pages 20,415 through 20,416.
  • CMS proposes, beginning with the FFY 2021 program year, to increase the weight of the Clinical Outcomes domain (currently referred to as the Clinical Care domain) to 50% of hospitals’ TPSs, while the Personal and Community Engagement domain and the Efficiency and Cost Reduction domain would each constitute 25%. For further details regarding weighting measures, please refer to pages 20,416 through 20,420.
  • For details concerning the proposed and previously adopted minimum number of cases for Hospital VBP measures beginning with the FFY 2021 program year, please see pages 20,420 through 20,421.
  • For details regarding the proposed and previously adopted baseline and performance periods, please refer to pages 20,421 through 20,423.
  • For details regarding the proposed and previously adopted performance standards for various FFY program years, please see pages 20,423 through 20,426.

Hospital-Acquired Condition (HAC) Reduction Program (pages 20,426-20,437)

In the proposed rule, CMS addresses the following HAC Reduction Program policies:

  • CMS proposes two alternative scoring methodologies to calculate hospitals’ Total HAC Scores: the Equal Measure Weights approach, CMS’ preferred approach, and the Variable Domain Weights approach. The Equal Measure Weights approach would remove domains and assign equal weight to each measure for which a hospital has a measure score in Total HAC Score calculations.  The Variable Domain Weights approach would apply a different weight to each domain depending on the number of measure scores a hospital has in each domain.  For more information, please refer to pages 20,435-37.
  • CMS proposes to establish administrative policies for FY 2019 and subsequent years to collect, validate, and publicly report National Healthcare Safety Network (NHSN) healthcare-associated infection (HAI) quality measure data, independent of the Hospital IQR Program. For more information, please refer to pages 20,429–34.
  • CMS proposes to implement the applicable period for the FY 2021 HAC Reduction Program for the CMS PSI 90 as the 24-month period from July 1, 2017 through June 30, 2019, and the applicable period for NHSN HAI measures as the 24-month period from January 1, 2018 through December 31, 2019.
  • CMS requests comments on additional HAC Reduction Program measures for potential future adoption.  For more information, please refer to page 20,437.
  • For information on how CMS plans to implement steps to address health disparities under the HAC Reduction program, please refer to page 20,428.

Hospital Readmissions Reduction Program (HRRP) (pages 20,403-20,407)

CMS proposes the following with respect to the HRRP:

  • CMS proposes to establish the following “applicable periods” for FYs 2019, 2020, and 2021: For FY 2019, the 3-year period from July 1, 2014 through June 30, 2017; for FY 2020, the 3-year period from July 1, 2015 through June 30, 2018; for FY 2021, the 3-year period from July 1, 2016 through June 30, 2019.
  • For FY 2019, CMS proposes to ascertain aggregate payments for excess readmissions and aggregate payments for all discharges using data from MedPAR claims with discharge dates from July 1, 2014 through June 30, 2017. For more information, please refer to page 20,405.
  • CMS proposes to codify the previously finalized definition of “applicable period for dual-eligibility,” “dual-eligible,” and “proportion of dual-eligibles.”
  • CMS sets forth proposals concerning the calculation of payment adjustment factors for FY 2019. For more information, please refer to page 20,406.
  • CMS is not proposing to adopt any new readmission measures. Accordingly, the six readmission measures—Acute myocardial infarction (AMI); heart failure (HF); pneumonia; total hip arthroplasty/total knee arthroplasty (THA/TKA); chronic obstructive pulmonary disease (COPD); and coronary artery bypass graft (CABG)—are the only readmission measures under the HRRP.
  • For information on how CMS plans to implement steps to address health disparities under the HRRP, please refer to pages 20,406-07.

Hospital Inpatient Quality Reporting (IQR) Program (Pages 20,470-20,500)

Under the IQR Program, hospitals report to CMS on various quality measures.  Failure to participate or successfully submit the required quality data carries an IPPS payment reduction equal to 25% of a hospital’s annual payment increase.  The reported measures are published on the Hospital Compare website and may be used later in the VBP Program.

  • CMS conducted an overall review of the IQR Program under its “Meaningful Measures Initiative,” and determined that the IQR Program should focus on measure topics not covered in other programs measures to remove duplicative measures. Although new VBP measures will be selected from the measures specified under the IQR Program, CMS proposes the VBP Program will no longer necessarily be a subset of the IQR Program measure set.  See page 20,471 for more detail.
  • CMS proposes to adopt an additional measure removal factor for “the costs associated with a measure outweigh the benefit of its continued use in the Program.” CMS proposes removing measures under this factor on a case-by-case basis.   See page 20,472 for additional details.
  • CMS proposes to remove a total of 39 measures across the FY 2020, 2021, 2022, and 2023 payment determinations based on the below removal factors. For a detailed description of each measure see pages 20,473 through 20,484.  For a summary of all of the measures proposed for removal, see pages 20,484 through 20,485.
    • See pages 20,487 through 20,489 for a summary of previously adopted IQR measures for the FY 2021 and 2022 payment determinations and subsequent years, which do not include the measures proposed for removal.
    • See pages 20,497 through 20,498 for a description of the proposed changes to the reporting and submission requirements for eCQMs. Specifically, CMS: (1) clarifies the Clinical Quality Language (CQL) measure logic will used in eCQM development for the FY 2021 payment determination and subsequent years; (2) proposes to continue the requirement that hospitals report one, self-selected calendar quarter of data for four self-selected eCQMs previously established for the FY 2021 payment determination; and (3) proposes to require hospitals to use the 2015 Edition certification criteria for CEHRT beginning with the  FY 2021 payment determination.

CMS also seeks comments on the following:

  • Whether to propose the inclusion of one or both of the following hospital wide mortality measures: Claims-Only, Hospital-Wide, All-Cause, Risk- Standardized Mortality measure and Hybrid Hospital-Wide, All-Cause, Risk- Standardized Mortality measure. See pages 20,489 through 20,493 for additional details and requests for specific feedback.
  • Whether to propose the inclusion of the Hospital Harm-Opioid-related Adverse Events eCQM in the IQR and Medicare and Medicaid Promoting Interoperability Programs, which assesses, by hospital, the proportion of patients who had an opioid-related adverse event. See pages 20,493 through 29,494 for additional details and requests for specific feedback.
  • The inclusion and development of eCQMs generally, including requests for specific feedback on pages 20,494 through 20,495.
  • For information on how CMS plans to implement steps to address health disparities under the IQR Program, please refer to pages 20,495 through 20,496.

Other Quality Reporting Programs (pages 20,500-20,515)

The proposed rule addresses the quality reporting measures for PPS-exempt cancer hospitals and long-term care hospitals (LTCHs) for FFY 2018 and subsequent years.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program (Pages 20,500-20,510)

  • CMS proposes to adopt a new factor to consider when evaluating measures for removal from the PCHQR program—whether the costs associated with a measure outweigh the benefit of its continued use in the program. For a summary of the factors used to consider measure removal, including the newly proposed factor, please refer to page 20,501 and 20,502.
  • For the FY 2021 program year, CMS proposes the removal of four web-based, structural measures:
    • Oncology: Radiation Dose Limits to Normal Tissues (PCH-14/NQF #0382)
    • Oncology: Medical and Radiation—Pain Intensity Quantified (PCH-16/NQF #0384)
    • Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Patients (PCH-17/NQF #0390)
    • Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients (PCH-18/NQF #0389)
  • For the FY 2021 program year, CMS also proposes the removal of two National Healthcare Safety Network (NHSN) chart-abstracted measures under the newly proposed removal factor based on cost outweighing benefit (if that removal factor is finalized):
    • NHSN Catheter-Associated Urinary Tract Infection (CAUTI) Outcome Measure (PCH-5/NQF #0138)
    • NHSN Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (PCH-4/NQF #0139)
  • For further information on the measures proposed for removal, see pages 20,502 and 20,503.
  • CMS proposes to adopt an additional measure for FY 2021 and subsequent years: 30-Day Unplanned Readmissions for Cancer Patients (NQF #3188).  This measure will be claims-based so PCHs would not be required to submit or report any new data, with the data collection period running from July 1 or one year through June 30 of the following year.  The data collection period for a fiscal year begins three years prior to the program year—for FY 2021, the collection period begins July 1, 2018 and ends June 30, 2019.  For further details on the proposed measure, see pages 20,504 and 20,505.
  • CMS proposes to defer the public display of hospital data on four measures:
    • Colon and Abdominal Hysterectomy SSI (NQF #0753)
    • MRSA (NQF #1716)
    • CDI (NQF #1717)
    • HCP (NQF #0431)

Currently, CMS only has one year’s worth of data on these measures for PCHs and prefers to defer public display of the data until it has two years’ worth of comparable data to properly assess trends.  See page 20,509 for more details.

  • CMS also seeks comment on the following:
    • Two measures for potential future inclusion: (1) Risk-Adjusted Morbidity and Mortality for Lung Resection for Lung Cancer (NQF #1790) and (2) Shared Decision Making Process (NQF #2962).  See pages 20,507 and 20,508 for more details.
    • Specific suggestions on the inclusion of quality measures that examine general cancer care versus the inclusion of quality measures that examine cancer-specific clinical conditions in future rulemaking.
  • For information on how CMS plans to implement steps to address health disparities under the PQHQR Program, please refer to pages 20,506 and 20,507.

LTCH QRP (Pages 20,510-20,515)

  • CMS proposes to adopt an additional factor for consideration when evaluating potential measures for removal from the LTCH QRP measure set—whether the costs associated with a measure outweigh the benefit of its continued use in the program. CMS also proposes to codify the removal factors CMS previously finalized for the LTCH QRP, as well as the proposed measure removal factor.  For more information, please refer to pages 20,511-12.
  • Beginning with the FY 2020 LTCH QRP, CMS proposes to remove the following two measures from the LTCH QRP measure set: (1) NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716); and (2) NHSN Ventilator-Associated Event (VAE) Outcome Measure. Beginning with the FY 2021 LTCH QRP, CMS proposes to remove one additional measure: Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680).  For more information, please refer to pages 20,513-15.
  • CMS provides an IMPACT Act implementation update and sets forth proposed changes to the LTCH QRP reconsideration requirements. For more information, please refer to page 20,515.
  • CMS seeks comments on whether it should move the implementation date of any new version of the LTCH CARE Data Set to October.
  • For information on how CMS plans to implement steps to address health disparities under the LTCH QRP, please refer to pages 25,510-11.

Electronic Health Record (EHR) Program Changes (pages 20,515 – 20,544 and 20,550 – 20,553)

CMS is proposing to overhaul the EHR program to better achieve interoperability, improve flexibility, reduce administrative burden and promote the exchange of electronic health information between providers and patients.  CMS is releasing a Request for Information (RFI) for input on ways to better achieve interoperability in the EHR program and whether to revise the Medicare Conditions of Participation related to interoperability to promote sharing of health data.  CMS will not respond to the RFI in the final rule but states that it will take comments into consideration as it develops future changes.  More information about the Request for Information is on pages 20,550 – 20,553.

CMS is proposing that the reporting periods in 2019 and 2020 for meaningful use attestations to CMS or a State Medicaid agency would be a minimum of any continuous 90-day period within each of the calendar years 2019 and 2020.  CMS is also proposing a new scoring methodology and a reduced set of Electronic Clinic Quality Measures (eCQMs) in an effort to focus on interoperability and sharing of data with patients and to reduce administrative burdens.  CMS is removing some measures from the program but adding two measures that are related to the CMS initiative on the treatment of opioid and substance use disorders.  CMS is proposing that the reporting period for eCQMs would be one, self-selected calendar quarter of CY 2019 data and that the submission period would be the 2 months following the close of the calendar year (or February 29, 2020).  The proposed meaningful use reporting period and scoring methodology is discussed at pages 20,518 – 20,524.  The new measure set is discussed at pages 20,524 – 20,537 and the new eCQM reporting period is discussed at page 20,539 – 20,540.

Online Posting of Standard Charges (page 20,548 – 20,549)

Hospitals are currently required to make public a list of their standard charges. CMS is updating its guidelines to require hospitals to publish the lists of their standard charges on the internet.


1The discussion about the wage index is in Chapter 6 of the June 2007 MedPAC Report to Congress, which is available at the MedPAC website: http://medpac.gov/docs/default-source/reports/Jun07_EntireReport.pdf.
2The Acumen report is available at:  https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/Medicare_Wage_Index_Commuting_DOC_2011.pdf.
3The CMS report is available at:  https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html (first link under downloads).
4The Institute of Medicine report is available at:  http://nationalacademies.org/hmd/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.


If you have any questions, please call, Barbara Straub Williams at Barbara.Williams@PowersLaw.com;  Ron Connelly at Ron.Connelly@PowersLaw.com; or Christina Hughes at Christina.Hughes@PowersLaw.com.