Advancing Risk Capability in 2015: MACRA and 2016 Medicare Proposed Rule. May 26, 2015 // 12:00 P.M. 1:00 P.M. EST

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Advancing Risk Capability in 2015: MACRA and 2016 Medicare Proposed Rule


Center For Industry Transformation

The DHG Healthcare Center for Industry


Melinda Hancock

Partner, DHG Healthcare

• Responsibility for development of services pointed to the mandatory elements of payment reform (value-based purchasing, readmissions, hospital-acquired conditions), shared savings models, governmental and commercial bundled payments, and the Medicare innovation model

• More than 22 years of healthcare experience in the public and industry sectors

• A member of HFMA since 1994, Melinda’s

Today’s Presenters

Trent Messick

Partner, DHG Healthcare

• Leads the DHG Healthcare Reimbursement team serving clients in the areas of cost reports and related reimbursement engagements, appeals, feasibility studies and reimbursement analysis

• 20 years of experience in the healthcare

industry working with hospitals, long-term care facilities, home health agencies, rehabilitation agencies and other healthcare entities


Session Goals And Objectives

This session will provide an update on changes in Medicare hospital reimbursement. It will focus on the recently published FY 2016 Inpatient PPS Proposed Rule and the recently enacted Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).




– Payment Rates – Medicare DSH





– Value Based Purchasing

– Readmission Reduction Penalty – Hospital Acquired Conditions – IQR Changes


FY 2016 IPPS Proposed Rule

• Display copy published April 17, 2015

• Published in Federal Register April 30, 2015

– Incorrectly stated comments are due by June 29, 2015

– Correction notice published by CMS on May 5, 2015 revised comment deadline to June 16, 2015

• Final Rule expected around August 1, 2015

• Effective for discharges on or after October 1, 2015


Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Proposed-Rule-Home-Payment Rates

Market Basket Update 2.7%

Market Basket Adjustment (PPACA) -0.2%

Productivity Adjustment (PPACA) -0.6%

Documentation and Coding Effect (ATRA)** -0.8%

1.1% FY 16 IPPS Proposed Operating Payment - Full Update


Payment Rates

FY 16 IPPS Proposed Payment: Full UpdateFY 2015


FY 2016

Proposed Change

National Adjusted Operating Standardized Amount (Full Update) $5,437.85 $5,479.03 $47.18 FY 2015 Final FY 2016 Proposed Change

Capital Standard Federal


Payment Rates

Full Update

(1.9% increase) 5,479.03

Hospital Did NOT Submit Quality Data

(.425% increase) 5,442.74

Hospital is NOT a Meaningful EHR User

(-.25% decrease) 5,406,44

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

(-.925% decrease) 5,370.15


Medicare DSH

• No change in methodology or UCC proxy

• Empirical DSH is 25%

• UCC DSH is 75% of what “would otherwise be made”

without ACA

• UCC DSH is reduced by the decrease in uninsured and

then allocated to all qualifying hospitals

• UCC DSH proposed FFY 2016 = $6.371B (Total UCC DSH for

FFY 2015 was $7.647B)

• UCC DSH allocation continues to be based on Medicaid


Medicare DSH

• UCC DSH allocation data source – 2012/2013 cost reports

and 2012 SSI days. Proposed rule “holds” the data source time period from 2015 due to comments from industry

• Table published with Medicaid days and SSI days for every

provider. Comment on any changes or short period cost reports

• Merged hospitals – 2015 policy continued:

– List of proposed mergers published on CMS web site. Providers should notify CMS if list is incorrect within 60 days


Medicare DSH

Medicare published FY 2013 SSI file

subsequent to proposed rule – final

FY 2016 UCC DSH amounts will be

updated to reflect new SSI days per

2013 file.



Polling Question

What is the deadline for submitting

comments on the FY 2016 IPPS Proposed



Other Recent Proposed Rules

Inpatient Rehab Facilities PPS:

– Published April 23, 2015

– 1.7% payment rate increase – Comments due June 22, 2015

Inpatient Psych Facilities PPS:

– Published April 24, 2015





ACT OF 2015



Signed into law April 16, 2015

Not reflected in FY 2016 IPPS proposed rule

Although primary focus was the elimination

of the Sustainable Growth Rate (SGR) formula

for physicians, several provisions impact



• Extends Low Volume Payment Adjustment and Medicare

Dependent Hospital (MDH) status through FY 2017, both retroactive to April 1, 2015 when they had expired

– Recent extensions have been tied to SGR patch legislation – could be problematic now that SGR is gone?

• Prevents CMS from implementing expected 3.2% payment

increase in FY 18 – instead can only increase .5% per year from 2018 through 2023

• Extends two-midnight rule provision of “probe and



Revisions to Medicaid DSH Reductions:

– Implemented with ACA. Due to declining uninsured rates, less DSH should be required to offset uncompensated care – ACA reductions were set to begin in FFY 2014 at $500M but

were delayed to FFY 2016 with Bipartisan Budget Act of 2013

– Total ACA reductions $18.1B, revised to $17.6B with Bipartisan Budget Act of 2013



Revisions to Medicaid DSH Reductions (cont.)

– Changed yet again by MACRA - Delayed one more year


MACRA: Physician Payments

• Payment rates for 2015-2019 will be .5% annually and then frozen 2020-2025 and thereafter tiered .25% (MIPS

participants) or .75% (APM participants).

• Creates MIPS: Merit-Based Incentive Payment System

– Starts 2019 & combines EHR incentive program, PQRS and VBPM • Develops 4 categories of measures

– Quality, Resource Use, Clinical Improvement, & EHR Use • Range of payment adjustments

– In 2019: -4% to +12% – In 2027: -9% to +27%

• Program is budget neutral


Polling Question

Value Based Purchasing is challenging to

manage as an organization because:

A. Domains/related metrics have changed

each year

B. You are in multiple performance periods

at the same time


Road Ahead: VBP Summary

• Definitions out to 2021

• Tightening up and equality on domains

• Expansion of definitions

• Adding new measures


VBP Details

• Amount available for FY 2016: $1,489,095 (1.75%)

• Two new measures introduced

– HCAHPS: CTM-3 for 2018 – COPD Mortality for 2021

• Dropping two measures and dropping the subdomain and moving the one remaining measure of PC 01 to Safety.

– AMI 7a is not widely reported and collection is “burdensome” – IMM 2 is “topped out”

• Fully defined 2018 and partially defined through 2021

• Changing the standard population data used for outcome metrics



• Three questions form a composite score:

1. During this hospital stay, staff took my preferences and those of my family or caregiver into account in deciding what my health care needs would be when I left

2. When I left the hospital, I had a good understanding of the things I was responsible for in managing my health

3. When I left the hospital, I clearly understood the purpose for taking each of my medications

• Possible answers range from ‘Strongly Disagree’ to


COPD Mortality

COPD is the 3


leading cause of death in the US

and is one of the top 20 conditions contributing to

Medicare costs

Adopting within IQR so will be on Hospital

Compare for 1 year prior to the start of the

performance period as required

Added to the 2021 Clinical Care Domain


Expansion of Efficiency Measure

Invites comments on expansion of this measure

with more condition and/or treatment specific

episode measures

Related metrics already in Hospital IQR

– AMI Payment, HF Payment, PN Payment

Proposed related metrics already in Hospital IQR

– Kidney/UTI, Cellulitis, Gastrointestinal Hemorrhage and


Polling Question

The proposed rules have what impact on

the 2018 Value Based Purchasing Program:

A. All domains have equal weight

B. Only one core measure left - now included

in safety domain


FFY 2019


FFY 2020 and 2021


HAC Summary

• Potential addition of three metrics to PSI-90 composite through the NQF review process:

– Perioperative hemorrhage rate, Perioperative physiologic metabolic derangement rate and Post-operative respiratory failure rates. Would engage in additional rule-making if so

• Finalization of time periods for FY 2017: Domain 1= 24 month period ending 6/30/15 and Domain 2= CY 2014 and 2015.

Weights are: Domain 1=15% and Domain 2= 85%

• Narrative on scoring if data is not reported and a waiver is not obtained- a score of ‘10’ will be assigned

• Refinements in measurements for CLABSI and CAUTI to include Non-ICU locations starting in 2018 (CY 2015 and 2016

performance periods)


Hospital IQR: Removal

• STK-01 Venous Thromboembolism Prophylaxis* • STK-06 Discharged on Statin Medication*#

• STK-08 Stroke Education*#

• VTE-1 Venous Thromboembolism Prophylaxis*#

• VTE-2 ICU Venous Thromboembolism Prophylaxis*# • VTE-3 Venous Thromboembolism Patients with

Anticoagulation Overlap Therapy*#

• IMM-1 Pneumococcal Immunization

• AMI-7a Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival


Expansion of Pneumonia

• Expansion to include principal diagnosis of aspiration

pneumonia, sepsis and respiratory failure with a

secondary diagnosis of pneumonia present on admission

• Retrospective analysis on FY 2015 Mortality shows:

– Expansion would include an additional 686,605 patients bringing the total to 1,663,195 patients

– An additional 86 hospitals would meet the min case requirement – 41% of the cohort would consist of these expanded definitions

• Retrospective analysis on 2015 Readmissions shows:


Hospital IQR: Additions

• Hospital Survey on Patient Safety Culture (structural)

• Kidney/UTI clinical episode payment

• Cellulitis clinical episode payment

• Gastrointestinal Hemorrhage clinical episode payment

• Lumbar Spine Fusion/Re-Fusion clinical episode payment

• Hospital-Level, Risk Standardized Payment Associated with

an Episode of Care for Primary Elective THA/TKA

• Excess Days in Acute Care after hospitalization for AMI


Polling Question

Which of these statements are true about the

hospital mandatory elements of reform:

A. All programs expand the population

included in programs

B. VBP only has proposed metrics in play

through 2018

C. Opt out reporting infections for HAC without



Expansion of BPCI

Solicited comments for expansion of the program in defined categories. The Secretary has the authority to expand

through rulemaking if the program is found to either:

(1) reduce Medicare spending without reducing quality OR

(2) improve quality of patient care without increasing spending.


Comments on BPCI

They are seeking comments specifically on: • Breadth and Scope of an expansion

• Episode Definitions • Models for Expansion

• Roles of an organization and relationships necessary or beneficial to care transformation

• Setting bundled payment amounts • Mitigating risk of high cost cases • Administering bundled payments • Data needs

• Use of health information technology






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