Newsroom

Proposed Inpatient Reimbursement Rates Continue Pressure on Hospitals

06/03/16

Category:

By:

Craig Lukowski, Director, Physician Preference Sourcing Operations

Each year, the arrival of spring coincides with announcements from the Centers for Medicare & Medicaid Services (CMS) about proposed changes to hospital inpatient reimbursement policy and rates for the coming year. So while the calendar and weather signal a coming of better things, reading over the Inpatient Prospective Payment System (IPPS) plan for 2017 signals continued turbulence for hospitals.

With over 50 percent of hospital payments coming from CMS, changes have big potential impacts on profitability. Here is a rundown of what CMS is recommending for hospital inpatient payments that will be challenging for providers in 2017 as well as a few proposed changes that should have providers cheering.   

Keeping to the strategy support by the Affordable Care Act, the government continues to take action to get control over increased spending on health care. CMS is proposing a modest overall payment increase of 0.9 percent if certain conditions are met relating to participation in the Hospital Inpatient Quality Reporting and Meaningful Electronic Health Record (EHR) programs.

For Fiscal Year 2017, there are four possible scenarios related to payments to hospitals:
1. Those submitting quality data and are meaningful EHR users will be rewarded
2. Those not submitting quality data but are meaningful EHR users realize some reward 
3. Those submitting quality data but are not meaningful EHR users will realize some penalties
4. Those that do not submit quality data and are not meaningful EHR users will be penalized
 
The increases proposed by CMS will apply as follows:
• Successfully participating = 0.9 percent
• Not successfully participating = 0.675 percent
• Not participating = 0.225 percent

The Hospital Readmissions Reduction Program, established by the Affordable Care Act, will continue to pressure hospitals to improve care with the 3 percent penalty in full force. The program requires CMS to reduce payments to hospitals with excess patient readmissions within 30 days of the procedure. For 2017, add coronary artery bypass graft (CABG) procedures to the penalized procedure list.

For 2017, nine applications for the New Technology Add-on Payment are under review. These include four drugs (two to reverse the effects of the new generation antiplatelet drugs) and five devices that include:

• MIRODERM™ Biologic Wound Matrix
• Titan Spine Endoskeleton® nanoLOCK™ Interbody Device
• EDWARDS INTUITY Elite™ Aortic Heart Valve
• GORE EXCLUDER® Iliac Branch Endoprosthesis
• MAGEC® Spinal Bracing and Distraction System

Add-on payments will end for Abbott MitraClip® system, Argus® II retinal prosthesis system and RNS® neurostimulators.

So what’s the good news?

New Technology Add-on Payments will continue for the St. Jude CardioMEMS™ Heart Failure Monitoring System, CR Bard Lutonix® and Medtronic In.Pact™ Admiral™ Drug-coated Balloons.

The unpopular “two-midnight” rule that penalized hospitals 0.2 percent for extended patient stays will be permanently removed beginning in October 2016.

Other good news is new inpatient procedure reimbursement codes are being recommended to help hospitals better cover the costs of new technology devices.

Changes will occur for:
- Transcatheter mitral valve repair
- Decompression laminectomy

No changes to MS-DRGs, but changes to ICD-10 PCS:
- Pacemaker procedures to address leadless pacemaker implantation
- Implantation of loop recorders
- Endovascular thrombectomy procedures to better capture procedures describing endovascular thrombectomy of the lower limbs
- Bypass procedures of the veins
- Combine codes for removal and replacement of knee joints

The final CMS ruling for hospital inpatient reimbursement policy and rates for FY 2017 is due in August. Fingers crossed that our conversations then are around the real promise of a World Series run for the Cubs and not about stunning new changes in reimbursement payments.   

About the author. As director of strategic initiatives and new technology for physician preference sourcing operations, Lukowski leads the team’s strategic support, innovative program development, new technology assessment and education initiatives. His extensive experience working with both domestic and international medical device suppliers, health care providers and markets gives him the insight to assist hospitals in developing strategies for cost reduction through supplier negotiations, physician relationship development and practice change management.

Interested in more content like this? Subscribe to our blog.

Related Materials