Industry leader disappointed IPPS proposed rule doesn't address two-midnight rule


An industry leader expressed disappointment that the Centers for Medicare & Medicaid Services' proposed Inpatient Prospective Payment System (IPPS) rule for 2015 provides no changes to the controversial two-midnight rule.

The 1,688-page proposed rule, issued late Wednesday, calls for a reduction in payment for readmissions and hospital-acquired conditions, as well as an increase in incentive payments for value-based purchasing.

However, the rule doesn't include changes to the two-midnight rule, which states patients must stay in a hospital for two consecutive midnights before Medicare reimburses the hospital at inpatient rates. Instead the agency invites the public to comment about special exceptions to the rule beyond the exclusion for medical necessary, newly mechanical ventilation it identified earlier this year.

Last month the American Hospital Association, and several individual healthcare delivery systems and hospital associations, filed two suits challenging the rule and its associated Medicare payment cuts, FierceHealthFinance previously reported.

A representative from the  Charlotte, North Carolina-based Premier Inc., a quality improvement and group purchasing organization, said the alliance was "deeply disappointed" that the agency didn't address the fundamental problems with the two-midnight rule.

"CMS makes no concrete proposals and provides no indication that it will imminently abandon its flawed policy in favor of a new, more equitable approach. This leaves hospitals trying to implement an unclear, unfair policy where they will soon be subject to audits," said Blair Childs, senior vice president of Premier public affairs, in an emailed statement to FierceHealthcare.

The proposed rule would increase the payment rate for inpatient stays at general acute care hospitals by 1.3 percent in fiscal year 2015, but only 0.8 percent for long-term care hospitals.

CMS Administrator Marilyn Tavenner said in an announcement that the aim of the proposed rule is to improve hospital performance while "creating an environment for improved Medicare beneficiary care and satisfaction."

The proposed rule includes the following changes:

Readmission reductions: CMS proposes to increase the maximum reduction in payments under the Hospital Readmissions Reduction Program from 2 percent to 3 percent in fiscal year 2015. The agency also plans to assess hospital penalties using five readmissions measures endorsed by the National Quality Forum.

Value-based purchasing: The agency will increase incentive payments to 1.5 percent of the base operating diagnosis-related group payment amounts to all participating hospitals. The total amount available for value-based incentives will be $1.4 billion, CMS estimated in the announcement.

Hospital-acquired conditions: The proposed rule calls for a 1 percent reduction in Medicare inpatient payments for hospitals that score in the top quartile for the rate of these preventable conditions. CMS projects that so far the HAC program has saved $25 million by reducing Medicare payments for these conditions.

Quality, reporting programs: CMS also proposes to align the 2015 and 2016 reporting and submission timelines for clinical quality measures for the Medicare Electronic Health Record (EHR) Incentive Program with the Hospital Inpatient Quality Reporting program.

Wage index, updated labor market areas: The agency plans a one-year transition for all hospitals that would experience a decrease in their actual payment wage index due to the proposed implementation of the new labor market area delineations issued by the Office of Management and Budget (OMB), which uses 2010 census data. It also proposes a three-year transition for hospitals in urban country areas that would become rural under the new OMB delineations.

To learn more:
- read the announcement