The Centers for Medicare and Medicaid Services (CMS) published a proposed rule on January 13 to implement section 3001 of the Affordable Care Act (ACA) on Medicare “value-based purchasing” for inpatient hospital services. This major rule will apply to Medicare DRG payments for 3,000 acute care hospitals for discharges on or after October 1, 2012. It provides for reductions in base operating Medicare DRG payments to be offset by the opportunity to earn payment incentives tied to key indicators of patient safety and quality of care. The incentives will be based on how well each hospital performs compared to its peers and compared to its own performance in prior periods. Performance will be measured using a subset of the indicators that hospitals have been reporting to CMS for several years under the Hospital Inpatient Quality Reporting Program (HIQRP) authorized by the Medicare Modernization Act of 2003 and the Deficit Reduction Act of 2005. CMS already requires hospitals to report reliably on 45 measures of care, imposes payment reductions on hospitals that fail to do so (about 95 percent of hospitals subject to the HIQRP requirements comply), operates a Hospital Quality Improvement Demonstration (HQID) which awarded $12 million in Medicare payment incentives to 212 voluntarily participating hospitals in 2010, and posts HIQRP data to a “Hospital Compare” website accessed by consumers, researchers, medical professionals, state Medicaid agencies, and managed care organizations. The new performance incentive program that will begin in 2012 for 3,000 acute care hospitals initially will be based mainly on clinical process of care measures, such as proper administration of antibiotics before surgery, beta blockers for patients with heart conditions, and availability of tobacco cessation counseling, but CMS will move more aggressively in 2013 toward reliance on patient outcome measures, such as 30-day survival rates for patients admitted with heart attacks, heart failure, and pneumonia. CMS plainly states its strategic intention to reward hospitals for better value, outcomes, and innovations, instead of service volume or costs, so as to motivate hospitals to take action to improve quality of care and to reduce patient safety risks. PCG strongly encourages widespread analysis and consideration of this major rule, which may be used by state Medicaid agencies and tailored to their own payment methodologies. Comments on the proposed rule are due March 8.
About Sam Fish
Sam Fish has over 40 years of legal experience in federal and state human services laws and programs, having joined PCG in 1995 after serving as Chief Counsel, Region I, for the U.S. Department of Health and Human Services for more than 25 years. At PCG, Sam provides legal advice and counsel and has served on many projects that required legal research and interpretation and implementation of many federal and state laws.