Along with “eat better” and “exercise more,” “learn more about the Hospital Inpatient Prospective Payment System (IPPS) final rule” should definitely be on your list of 2017 resolutions.
Unraveling the complexities of the hospital IPPS final rule will be a hefty undertaking, but if you get started now, you’ll be ahead of the pack.
Here are a few of the key ways the IPPS final rule will affect hospitals.
Changes to Payment Rates
In fiscal year 2017 (FY 2017), acute-care hospitals that participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users will see Hospital Inpatient Prospective Payment System (IPPS) operating payment rates increase by 0.95 percent, after accounting for inflation and other required adjustments.
However, hospitals that fail to participate in the Hospital IQR Program and do not submit the required quality data can expect a 25 percent reduction of the market basket update while hospitals who do not demonstrate meaningful use of EHR will be subject to a 75 percent reduction.
Repeal of the Two-Midnight Rule
In 2013, the Centers for Medicare & Medicaid Services (CMS) announced the Two-Midnight Rule, which required hospitals to bill stays as inpatient admissions instead of outpatient observations if the visit takes place over two consecutive midnights. The proposal cut inpatient payments by 0.2 percent with the goal of covering increased inpatient admissions
Following criticism from healthcare providers, CMS decided to not only eliminate the 0.2 percent reduction, but also implemented a one-time 0.6 percent payment increase to offset the reductions hospitals saw from 2014 to 2016, increasing FY 2017 payments by approximately 0.8 percent.
Medicare Uncompensated Care Payments
The payment methodology for uncompensated care (when hospitals or providers are not reimbursed for healthcare services, often due to the patient being uninsured) has been revised for the upcoming fiscal year.
Whereas in the past, the Centers for Medicare & Medicaid Services (CMS) used data from one cost reporting period, now three cost reporting periods will be used. As a result of these changes, CMS expects to decrease uncompensated care payments by $400 million in 2017. By 2019, CMS plans to reduce payments by $49.9 billion.
Notification Procedures for Outpatients Receiving Observation Services
The Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act requires hospitals to provide notification to Medicare beneficiaries who receive observation services as outpatients for more than 24 hours.
The notification must explain that the person is an outpatient—despite the observation—and explain why the individual is considered an outpatient (instead of an inpatient), including the implications of the status as it relates to coverage for post-hospitalized skilled nursing facilities and Medicare cost sharing.
The FY 2017 Hospital Inpatient PPS Final Rule will affect thousands of acute care hospitals across the country. The above list is not comprehensive but gives hospital administrators an idea of what new regulations were enacted in 2016 as well as new rules that will go into effect in 2017. To see the full description of the FY 2017 Hospital Inpatient PPS Final Rule, visit the CMS website.
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