April 29, 2015

Contact NAME, TITLE, at (202) 626-XXXX or EMA

The Issue: Arial 12pt Our Take: Arial 12pt What You Can Do:

• Arial 12pt Further Questions:

The Issue: Arial 12pt

At Issue The Centers for Medicare & Medicaid Services (CMS) published its fiscal year (FY) 2016 proposed rule for the hospital inpatient and long-term care prospective payment systems (PPS) on April 17. The proposed rule affects inpatient PPS hospitals, critical access hospitals (CAHs), long-term care hospitals (LTCHs) and PPS-exempt cancer hospitals. Major provisions of the rule related to inpatient PPS, CAHs, and PPS-exempt cancer hospitals are described below. The AHA will issue a separate advisory on proposals related to the LTCH PPS. Comments on the proposed rule are due to CMS by June 16. The final rule will be published around July 31 and take effect Oct. 1. The proposed rule would increase inpatient PPS rates by 1.1 percent in FY 2016 compared to FY 2015, after accounting for inflation and other adjustments required by law. Hospitals that were not meaningful users of electronic health records (EHR) in FY 2014 or that do not submit quality data would be subject to market-basket penalties. Documentation and Coding Adjustment: The rule proposes a cut of 0.8 percentage point to inpatient PPS payments that would, in part, fulfill a requirement of the American Taxpayer Relief Act of 2012 (ATRA). CMS plans to recoup what the agency claims is the effect of documentation and coding changes from FYs 2010-2012 that the agency says do not reflect real changes in case mix. CMS has noted in previous rules that, if it implements an additional cut of 0.8 percentage point in FY 2017, it will fulfill the ATRA requirement within the statutory four-year timeline; however, the agency does not make specific proposals for FY 2017. Two-Midnight Policy: CMS does not propose or discuss any potential changes to the two-midnight policy in the rule. The agency does note, however, that the hospital field continues to voice concerns about the policy, and that the agency is carefully considering this feedback, as well as recent recommendations from the Medicare Payment Advisory Commission that included withdrawing the policy and targeting recovery audit contractor (RAC) reviews to hospitals with the most short inpatient stays. CMS expects to include a discussion of the broader set of issues related to short inpatient hospital stays, long outpatient stays with observation services, and the -0.2 percent inpatient PPS payment adjustment in the calendar year (CY) 2016 hospital outpatient PPS proposed rule to be published this summer. The AHA believes that the two-midnight policy is an arbitrary time-based benchmark that results in inadequate reimbursement for beneficiaries who require an inpatient level of care, but who stay in the hospital less than two midnights. We appreciate CMS’s continued consideration of the issue. However, we believe this work must go hand-in-hand with reform of the RAC program. Therefore, the AHA continues to urge the agency to examine fundamental RAC reforms, including addressing the perverse financial incentives that encourage RACs to deny claims inappropriately.

MEDICARE INPATIENT PPS: THE PROPOSED RULE FOR FY 2016

AT A GLANCE

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© 2015 American Hospital Association

Disproportionate Share Hospital (DSH) Payment Changes: The Affordable Care Act (ACA) required changes to the way in which DSH payments are made to hospitals. For FY 2016, CMS proposes to further decrease the amount in the 75-percent pool to reflect additional decreases in the percentage of uninsured. It also proposes to continue to use inpatient days of Medicaid beneficiaries and Medicare supplemental security income beneficiaries as a proxy for measuring uncompensated care, rather than the Worksheet S-10 of the Medicare cost report. The agency anticipates that DSH payments will decrease by an additional $1.3 billion in FY 2016 compared to FY 2015. This calculation is based on estimates from the Congressional Budget Office that the rate of uninsured will decrease from 13 percent to 11 percent from CY 2015 to 2016. This estimate will be updated in the final rule based on more recent data. Hospital Readmissions Reduction Program (HRRP): The HRRP assesses penalties on hospitals for having “excess” readmissions rates when compared to their expected rates and will continue to impose a maximum payment penalty of 3 percent of base Medicare payments in FY 2016, as required by the ACA. For FY 2017, CMS proposes to expand the patient population included in the pneumonia readmission measure, thereby affecting hospital-specific and national pneumonia readmission rates. CMS also proposes an extraordinary circumstance exception policy beginning with the FY 2016 HRRP. The AHA is concerned that that the significant change to the pneumonia measure has not yet been endorsed by the National Quality Forum. Moreover, we are disappointed that the agency has again failed to propose any sociodemographic adjustment for the HRRP. Inpatient Quality Reporting (IQR) Program: For FY 2018, the agency proposes to require hospitals to submit 16 electronic clinical quality measures (eCQMs). The agency suggests that it wishes to foster greater alignment between the Medicare EHR Incentive Program and the IQR, as well as promote the use of EHRs to report quality data. The AHA believes setting a date certain to require the reporting of eCQMs in the IQR is premature given the serious questions about the feasibility and accuracy of eCQMs. What You Can Do: Register to attend the AHA’s member-only webinar on the proposed rule on Thursday, May 7,

at 3:00 p.m. ET. Share this advisory with your senior management team and ask your chief financial officer to examine

the impact of the proposed payment changes on your Medicare revenue for FY 2016. Hospitals may assess the impact of these provisions on their organizations by using AHA’s calculators:

• Readmissions Penalty Calculator: http://www.aha.org/readmissionscalc • Value-based Purchasing Calculator: http://www.aha.org/vbpcalc • DSH Payment Calculator: http://www.aha.org/dshcalc

Verify CMS’s table listing the factor used to calculate uncompensated care payments in FY

2016 for DSH hospitals. Hospitals have until June 16 to review this table on the CMS website and notify CMS in writing of any inaccuracies.

We also recommend that hospitals verify that their wage data are accurate. CMS will release the final wage index data public use files on May 1 on its website, and hospitals must submit a letter requesting correction of errors and supporting documentation to CMS by June 1.

Hospitals also should verify whether they have attested to meaningful use. Attestation status can be determined through CMS’s website.

Share this advisory with your billing, medical records, quality improvement and compliance departments, as well as your clinical leadership team – including the quality improvement committee and infection control officer – to apprise them of the proposals around the diagnosis-related groups and quality measurement requirements.

Submit comments to CMS with your specific concerns by June 16 at www.regulations.gov. The final rule will be published around July 31 and take effect Oct. 1.

Further Questions: For additional questions, please contact Priya Bathija, AHA senior associate director, at (202) 626-2678 or pbathija@aha.org.

© 2015 American Hospital Association

April 29, 2015

MEDICARE INPATIENT PPS: THE PROPOSED RULE FOR FY 2016

TABLE OF CONTENTS

INPATIENT PPS RATE UPDATE ................................................................................... 1 DOCUMENTATION AND CODING ADJUSTMENT FOR MS-DRG CHANGES ............. 3 DISPROPORTIONATE SHARE HOSPITAL PAYMENT CHANGES ............................. 3 TWO-MIDNIGHT POLICY AND SHORT INPATIENT HOSPITAL STAYS ...................... 6 WAGE INDEX ................................................................................................................. 7 HOSPITAL-ACQUIRED CONDITIONS ........................................................................... 9 HOSPITAL READMISSIONS REDUCTION PROGRAM .............................................. 11 HOSPITAL VALUE-BASED PURCHASING PROGRAM .............................................. 13 INPATIENT QUALITY REPORTING PROGRAM ......................................................... 15 SOLICITATION OF COMMENTS ON EXPANDING THE BPCI INITIATIVE ................. 22 OUTLIER PAYMENTS .................................................................................................. 23 CAPITAL PPS RATE UPDATE ..................................................................................... 23 CHANGES IN MS-DRG CLASSIFICATIONS ................................................................ 24 NEW TECHNOLOGY PAYMENTS ............................................................................... 27 PENALTY FOR FAILING TO MEET MEANINGFUL USE ............................................. 29 RURAL REFERRAL CENTERS .................................................................................... 30 RURAL COMMUNITY HOSPITAL DEMONSTRATION PROGRAM ............................. 30 HOSPITALS AND HOSPITAL UNITS EXCLUDED FROM THE INPATIENT PPS ....... 31 PPS-EXEMPT CANCER HOSPITAL QUALITY REPORTING PROGRAM .................. 31 APPENDIX A: HOSPITAL VALUE-BASED PURCHASING PROGRAM ...................... 34 APPENDIX B: INPATIENT QUALITY REPORTING PROGRAM MEASURES ............ 36

BACKGROUND The Centers for Medicare & Medicaid Services (CMS) released its proposed rule for the fiscal year (FY) 2016 hospital inpatient and long-term care hospital (LTCH) prospective payment systems (PPS) on April 17. The final rule will be published by Aug. 1 and will take effect Oct.1. The proposed rule would increase operating inpatient PPS rates by 1.1 percent in FY 2016 compared to FY 2015, after accounting for inflation and other adjustments required by law. Specifically, this update includes a 2.7 percent market-basket adjustment, less 0.6 percentage point for productivity, less an additional 0.2 percentage point mandated by the Affordable Care Act (ACA), and less 0.8 percentage point for documentation and coding changes, as required by the American Taxpayer Relief Act of 2012 (ATRA). Hospitals that were not meaningful users of electronic health records (EHRs) in FY 2014 or that do not submit quality data would be subject to additional market basket penalties. A detailed summary of the proposed rule follows. The AHA will issue a separate advisory on proposals related to the LTCH PPS.

SUMMARY Inpatient PPS Rate Update The proposed rule would increase inpatient PPS rates by 1.1 percent in FY 2016 compared to FY 2015, after accounting for inflation and other adjustments required by law. Specifically, the update includes a proposed market-basket rate of increase to the standardized amount for FY 2016 of 2.7 percent. CMS proposes a 0.6 percentage point reduction to this market-basket update for productivity, as well as an additional 0.2 percentage point reduction, as mandated by the ACA. In addition, CMS proposes a 0.8 percentage point reduction as required by ATRA. (See “Documentation and Coding Adjustment for MS-DRG Changes” for more information). Table 1 below details the factors CMS includes in its estimate.

Table 1: Impacts of FY 2016 CMS Proposed Policies

Policy Average Impact on Payments

Market-basket update 2.7% Productivity cut mandated by the ACA - 0.6% Additional cut mandated by ACA - 0.2% Documentation and coding cut for FYs 2010, 2011 and 2012 mandated by ATRA

- 0.8%

Total +1.1%

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Hospitals that were not meaningful users of EHRs in FY 2014 or that do not submit quality data would be subject to market basket penalties. (See “Inpatient Quality Reporting” and “Penalty for Failing to Meet Meaningful Use” for more information.) Specifically:

• Hospitals not submitting quality data would be subject to a one-quarter reduction in their initial market-basket rate. Thus, they would start with a market-basket rate of 2.025 percent, and would receive an update of 0.425 percent.

• Hospitals that were not meaningful users of EHRs in FY 2014 would be subject to a one-half reduction in their initial market-basket rate. Thus, they would start with a market-basket rate of 1.35 percent, and would receive an update of -0.25 percent.

• Hospitals that fail to meet both of these requirements would be subject to a three-quarter reduction in their initial market-basket rate. Thus, they would start with a market basket rate of 0.675, and would receive an update of -0.925 percent.

Also by law, CMS must adjust the proportion of the standardized amount that is attributable to wages and wage-related costs (known as the labor-related share) by a factor that reflects the relative difference in labor costs among geographic areas (known as the area wage index). For FY 2016, CMS proposes to continue use of the labor-related share the agency finalized in FYs 2014 and 2015 – 69.6 percent for those hospitals with wage indices greater than 1.0. By law, the labor-related share for those hospitals with wage indices less than or equal to 1.0 will remain at 62 percent. For Puerto Rico hospitals, CMS proposes to use a labor-related share of 62 percent in FY 2016 because the national wage index for all Puerto Rico hospitals is less than 1.0. The proposed standardized amounts for FY 2016 are:

Area Wage Index Greater Than 1.0

Hospital submitted quality data and is a meaningful user

of EHR

Hospital did NOT submit quality data but is a meaningful

user of EHR

Hospital submitted quality data but is NOT a meaningful

user of EHR

Hospital did NOT submit quality data

and is NOT a meaningful user of

EHR Labor Non-labor Labor Non-labor Labor Non-labor Labor Non-labor

$3,813.40 $1,665.63 $3,788.14 $1,654.60 $3,762.88 $1,643.56 $3,737.62 $1,632.53

Area Wage Index Less Than 1.0

Hospital submitted quality data and is a meaningful user

of EHR

Hospital did NOT submit quality data but is a meaningful

user of EHR

Hospital submitted quality data but is NOT a meaningful

user of EHR

Hospital did NOT submit quality data

and is NOT a meaningful user of

EHR Labor Non-labor Labor Non-labor Labor Non-labor Labor Non-labor

$3,397.00 $2,082.03 $3,374.50 $2,068.24 $3,351.99 $2,054.45 $3,329.49 $2,040.66

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For Puerto Rico hospitals, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) mandated that the payment per discharge equal the sum of 25 percent of a Puerto Rico-specific rate, which reflects the base year average costs per case of Puerto Rico hospitals, and 75 percent of the federal national rate. The operating standardized amounts for Puerto Rico for FY 2015 are:

For Hospitals in Puerto Rico

Rates if wage index is greater than 1.0

Rates if wage index is less than or equal to 1.0

Labor Non-labor Labor Non-Labor National1 Not Applicable Not Applicable $3,397.00 $2082.03 Puerto Rico $1,638.15 $953.86 $1,607.05 $984.96

Documentation and Coding Adjustment for MS-DRG Changes As discussed above, the proposed rule includes a cut of 0.8 percentage point, or approximately $800 million, that will fulfill part of the ATRA requirement that CMS recoup what the agency claims is the effect of documentation and coding changes from FYs 2010, 2011 and 2012 that the agency says do not reflect real changes in case-mix. CMS does not propose how it will complete the ATRA cuts, but has noted in previous rules that, if it implements an additional cut of 0.8 percentage point in FY 2017, it will fulfill the ATRA requirement within the statutory four-year timeline. This 0.8 percentage point cut does not apply to sole community hospitals’ (SCHs) or Medicare-dependent Hospitals’ (MDHs) hospital-specific rates, or to the Puerto Rico-specific amount. CMS does not have the authority to apply recoupment cuts to payments to those hospitals. Disproportionate Share Hospital (DSH) Payment Methodology Changes The ACA requires that, beginning in FY 2014, hospitals initially receive 25 percent of the DSH funds they would have received under the pre-FY 2014 formula (which CMS describes as “empirically justified DSH payments”), with the remaining 75 percent flowing into a separate funding pool for DSH hospitals (the “75-percent pool”). This 75-percent pool will be reduced each year as the percentage of uninsured declines and will be distributed based on the proportion of total uncompensated care each Medicare DSH hospital provides. CMS describes payments made from this pool as “uncompensated care DSH payments.” These changes apply to DSH payments made through the operating PPS only and not the capital PPS. As required by the ACA, CMS proposes that the amount in the 75-percent pool be further decreased in FY 2016 to reflect additional decreases in the percentage of uninsured that have occurred since FY 2015. DSH Eligibility. CMS proposes no changes to the eligibility requirements for either the empirically justified Medicare DSH payments or the uncompensated care payments. CMS reiterates that hospitals not eligible to receive empirically justified Medicare DSH payments in a fiscal year will not receive uncompensated care payments for that year.

1 For FY 2015, there are no areas in Puerto Rico with a proposed national wage index greater than 1.

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CMS proposes to continue to determine initial eligibility for interim uncompensated care payments based on each hospital’s estimated DSH status for the applicable fiscal year; the final determination of the hospital’s eligibility for uncompensated care payments would be based on the hospital’s actual DSH status on the cost report for that payment year. In addition, as finalized in the FYs 2014 and 2015 inpatient PPS final rule, CMS states that Puerto Rico hospitals and hospitals participating in the Bundled Payments for Care Improvement Initiative (BPCI) are eligible for payments under the ACA DSH payment methodology. CMS also indicates that Maryland hospitals, now being paid under the Maryland All-Payer Model, and hospitals participating in the Rural Community Hospital Program are not eligible to receive DSH payments under the revised methodology. With regard to SCHs, which are paid the higher of the federal PPS amount or their hospital-specific amount, only those SCHs paid the federal PPS amount will be eligible for Medicare DSH payments. Empirically Justified DSH Payments. Empirically justified DSH payments will continue to be distributed in the exact manner in which DSH payments were distributed prior to FY 2014, but at 25 percent of the amount of what otherwise would have been paid. CMS estimates that the empirically justified Medicare DSH payments for FY 2016 will be $3.335 billion (25 percent of the total amount estimated). CMS also proposes that it will continue to cost-settle these payments at the appropriate level on the cost report. Uncompensated Care Payments. The second portion of the DSH payment amount for each DSH hospital – the uncompensated care payment – will remain the product of three factors. • Factor One – The Initial Size of the 75-percent Uncompensated Care DSH

Payment Pool. Factor One is the difference between CMS’s estimates of: (1) the amount that would have been paid in Medicare DSH payments for FY 2016 in the absence of the ACA payment provision; and (2) the amount of the empirically justified Medicare DSH payments that are made for FY 2016. The agency uses the most recently available projections of Medicare DSH payments to estimate the final size of this pool. That is, CMS sets the size of the pool prospectively, based on estimated Medicare DSH payments for the year, and will not revise or update its estimate after it knows the final Medicare DSH payments for FY 2016. In the rule, CMS uses data from the Office of the Actuary’s (OACT) February 2015 estimate of Medicare DSH payments to determine the proposed size of the 75-percent pool. CMS estimates the total amount of Medicare DSH payments that otherwise would have been paid for FY 2016 to be $13.338 billion. As stated above, the estimate of the empirically justified Medicare DSH payments for FY 2016 is $3.335 billion. Therefore, CMS proposes that the 75-percent pool for FY 2016 will be $10.003 billion.

• Factor Two – Change in the Percentage of Uninsured. The next step in

determining hospitals’ uncompensated care DSH payments is to determine how

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much the 75-percent pool will be reduced as a result of the decline in the uninsured population. Using the Congressional Budget Office’s (CBO) January 2015 estimate of the effects of the ACA on health insurance coverage, CMS proposes that the estimate of individuals under the age of 65 with insurance in calendar year (CY) 2015 is 87 percent and the rate of uninsurance in calendar year 2015 is 13 percent (i.e., 100 percent minus 87); and the estimate of individuals under the age of 65 with insurance in calendar year 2016 will be 89 percent and the rate of uninsurance in calendar year 2015 is 11 percent. CMS then weighted these figures to determine the rate of uninsurance for FY 2016 and after inputting that rate into the statutory formula proposes that Factor Two equal 0.6369. Accordingly, CMS proposes to retain 63.69 percent – or $6.371 billion – of the 75-percent pool in FY 2016. This amounts to a reduction of about $1.3 billion in Medicare DSH payments in FY 2016 compared to FY 2015.

• Factor Three – Hospitals’ Uncompensated Care Payments. The last step in determining hospitals’ uncompensated care DSH payments is to determine the proportion of hospitals’ aggregate uncompensated care that each hospital provides. CMS proposes to continue using inpatient days of Medicaid beneficiaries plus inpatient days of Medicare supplemental security income (Medicare SSI) beneficiaries as a proxy for measuring the amount of uncompensated care each hospital provides. Specifically, CMS proposes to use the March 2015 update of the 2011/2012 Medicare cost reports for the Medicaid days and the FY 2013 Medicare SSI ratios for the Medicare SSI days.2 The agency calculates the total number of Medicaid inpatient and Medicare SSI days among DSH hospitals; it then determines what percentage of these days each individual DSH hospital accounts for. Hospitals will receive that percentage of what remains of the 75-percent pool as their uncompensated care DSH payment. For example, if Hospital A accounts for 1 percent of the total Medicaid and Medicare SSI days provided by all DSH hospitals, it will receive 1 percent, or $63.7 million, of the $6.371 billion that remains in the 75-percent pool. CMS has published on its website a table listing Factor 3 for all hospitals it estimates would receive uncompensated care payments in FY 2016. Hospitals have until June 16 to review this table and notify CMS in writing of any inaccuracies.

The AHA has created a DSH calculator for hospitals to assess the impact of the policy on their organizations. It is available at: www.aha.org/dshcalc. The

2 CMS proposes to hold constant the cost report years used to calculate Factor 3 between FYs 2015 and 2016. After publication of the FY 2015 final inpatient PPS rule, CMS received comments from the hospital field expressing concerns about the data used to calculate Factor 3. Specifically, hospitals indicated they have been experiencing difficulties submitting accurate data for Medicaid days within the timeframes noted in the Provider Reimbursement Manual, Part 2 and there is a variation in the ability of hospitals and MACs, respectively, to submit and accept amended cost report data in time for the computation of Factor 3. As a result, and in an effort to increase accuracy of the data used to determine Factor 3, for FY 2016, CMS is proposing to use the March 2015 update of the 2011/2012 Medicare cost reports for the number or Medicaid days.

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calculator is designed basic financial information regarding a hospital can be entered, including its CMS Certification Number (CCN), and the dollar amount of the hospital’s DSH payment will be estimated. Worksheet S-10. In the FYs 2014 and 2015 inpatient PPS final rules, CMS discussed the alternative of using Worksheet S-10 of the Medicare cost report to determine the amount of uncompensated care each hospital provides. However, at that time, because of concerns regarding variations in the data reported on Worksheet S-10 and the completeness of these data, CMS did not propose to use these data to determine uncompensated care costs. In the proposed rule, CMS indicates that it is still premature to propose the use of Worksheet S-10 for purposes of determining uncompensated care payments in FY 2016. The agency states that it still intends to propose use of the Worksheet S-10 sometime in the future. Two-Midnight Policy and Short Inpatient Hospital Stays CMS finalized its two-midnight policy in the FY 2014 inpatient PPS final rule. Under this policy, CMS generally considers hospital admissions spanning two midnights as appropriate for payment under the inpatient PPS. In contrast, hospital stays of less than two midnights are generally considered outpatient cases, regardless of clinical severity. The AHA believes that the two-midnight policy has many shortcomings, including that it is an arbitrary time-based benchmark that results in inadequate reimbursement for beneficiaries who require an inpatient level of care, but who stay in the hospital less than two midnights. As part of its work related to the two-midnight policy, the AHA has modeled and analyzed several potential short stay payment policy approaches. This work was shared with CMS in a letter on Feb. 13 and with the Medicare Payment Advisory Commission (MedPAC) in a letter on March 30. CMS does not propose or discuss any changes to the two-midnight policy in the proposed rule. The agency notes, however, that the hospital field continues to voice concerns about the two-midnight policy, and that the agency is carefully considering this feedback, as well as recent recommendations from MedPAC that include withdrawing the two-midnight policy and targeting recovery audit contractor (RAC) reviews to hospitals with the most short inpatient stays. CMS expects to include a discussion of the broader set of issues related to short inpatient hospital stays, long outpatient stays with observation services, and the -0.2 percent inpatient PPS payment adjustment implemented with the two-midnight policy, in the CY 2016 hospital outpatient PPS proposed rule to be published this summer. We appreciate CMS’s continued consideration of the issue. However, we believe this work must go hand-in-hand with reform of the RAC program. Therefore, AHA continues to urge the agency to examine fundamental RAC reforms, including addressing the perverse financial incentives that encourage RACs to deny claims inappropriately.

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Wage Index The area wage index adjusts payments to reflect differences in labor costs across geographic areas. The proposed rule would base the FY 2016 wage index on data from FY 2012 cost reports. According to CMS, the national average hourly wage increased 1.02 percent compared to FY 2015. As a result, a number of hospitals could see a decline in their wage indices relative to last year because, even though their wages rose, they did not rise as quickly as those at other hospitals. Occupational Mix. The purpose of the occupational mix adjustment is to control for the effect of hospitals’ employment choices on the calculation of the wage index. CMS is required to collect data every three years on the occupational mix of employees for each short-term, acute care hospital participating in the Medicare program. CMS collected data on the new 2013 Medicare Wage Index Occupational Mix Survey to compute the occupational mix adjustment for FYs 2016, 2017 and 2018. Accordingly, CMS proposes to calculate the FY 2016 occupational mix adjustment based on data from the new 2013 Medicare Wage Index Occupational Mix Survey. CMS also proposes to apply the occupational mix adjustment to 100 percent of the wage index, as it did for FY 2015. Transitional Wage Indexes. In FY 2015, CMS finalized applying the most recent labor market delineations issued by the Office of Management and Budget (OMB) that reflected the OMB’s new 2010 standards and 2010 Census data. That update resulted in a number of significant changes to the previously existing labor markets. As a result, CMS finalized wage index transition periods applicable to all hospitals that experienced negative impacts due to the implementation of the new labor markets. In the proposed rule, CMS indicates how these transitions will be handled for FY 2016.

• Transition for Urban Counties that Would Become Rural. This transition applies to hospitals that, for FY 2014, were located in an urban county that became rural under the new labor market delineations, and had no form of wage index reclassification or redesignation in place for FY 2015. CMS will apply the urban wage index value of the core based statistical area where the hospitals are physically located in FY 2014 for a three-year period. This three-year transition period also will apply to hospitals that are deemed to be urban under Section 1866(d)(8)(B) of the Social Security Act in FY 2014 and that will lose deemed status under the new labor market delineations in FY 2015. CMS indicates in the proposed rule that this transition would continue in FY 2016, its second year.

• Hospitals Experiencing Wage Index Decreases Solely Due to New Labor

Markets. In the FY 2015 final inpatient PPS rule, CMS finalized a one-year blended wage index for all hospitals that experienced a decrease in their actual payment wage index exclusively due to the proposed implementation of the new OMB labor market delineations. This one year transition expires at the end of FY 2015 and CMS proposes to discontinue the transition for FY 2016.

For more information on the transition periods offered by CMS, please see our Regulatory Advisory on the FY 2015 inpatient PPS final rule.

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Imputed Rural Floor. CMS proposes an additional one-year extension of the imputed rural floor through Sept. 30, 2016 for those states with no rural counties. CMS proposes to continue using both the original and alternative methodologies for computing the imputed rural floor. Under the alternative methodology, which was finalized in the FY 2014 inpatient PPS final rule, the lowest post-reclassified wage index assigned to a hospital in a state with one CBSA will be increased by a factor equal to the average percentage difference between the post-reclassified, pre-floor area wage index and the post-reclassified, rural floor wage index. CMS anticipates that in FY 2016, there will be 16 providers in New Jersey and no providers in Delaware benefitting from the imputed rural floor policy under the original methodology and four hospitals in Rhode Island that will benefit from the policy under the alternative methodology. Proposed FY 2016 Wage Index Tables. CMS proposes to streamline and consolidate the wage index tables associated with the inpatient PPS proposed and final rules for FY 2016 and subsequent fiscal years. The wage index tables currently consist of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C, 4D, 4E, 4F, 4J, 9A and 9C) that are made available on CMS’s website. CMS proposes to consolidate eleven of these tables into two new tables. The new Table 2 would contain information by CMS Certification Number and information from the following tables that has been provided in previous fiscal years: Tables 2, 4J, 9A and 9C. The new Table 3 would contain information by CBSA and information from the following tables that has been provided in previous fiscal years: Tables 3A, 3B, 4A, 4B, 4C, 4D and 4F. Table 4E would continue to be displayed in its current form. Hospital Redesignations and Reclassifications. Hospitals may apply to the Medicare Geographic Classification Review Board (MGCRB) for geographic reclassifications for purposes of inpatient PPS payment. Generally, hospitals must be proximate to the labor market area to which they are seeking reclassification and must demonstrate characteristics similar to hospitals located in that area. At the time the proposed rule was drafted, the MGCRB had completed its review of FY 2016 reclassification requests and 285 hospitals were approved for wage index reclassifications for FY 2016. Hospitals reclassified during FYs 2014 (275 hospitals) and 2015 (312 hospitals) will continue to be reclassified, because wage index reclassifications are effective for three years. Applications for hospital reclassifications for FY 2017 are due to the MGCRB by Sept. 1, 2015. Hospitals with current reclassifications are encouraged to analyze the area wage indexes published in the proposed rule, and confirm that the areas to which they have been reclassified still result in a higher wage index than their geographic area wage index. Hospitals may withdraw their reclassifications by contacting the MGCRB within 45 days of the publication of the proposed rule.

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Hospital-acquired Conditions (HACs) The HAC Reduction Program imposes a 1 percent reduction to all Medicare inpatient payments for hospitals in the top (worst performing) quartile of risk-adjusted national HAC rates. The HAC Reduction Program’s eligibility criteria, basic payment adjustment approach, measures and scoring methodology were established in the FY 2014 inpatient PPS final rule and modified in the FY 2015 inpatient PPS final rule. CMS does not propose major changes to the program. However, the agency would make several noteworthy adjustments in how the program is administered. Highlights of those modifications are described below. Quality Measures for FY 2016. CMS does not propose to add or remove any measures for the FY 2016 program. Therefore, the HAC Reduction Program includes the following measures for the FY 2016 program: the AHRQ PSI-90 composite and Centers for Disease Control and Prevention (CDC) measures for central line-associated bloodstream infection (CLABSI), catheter-associated urinary tract infection (CAUTI), and colon and abdominal hysterectomy surgical site infection (SSI). However, CMS notes that the AHRQ PSI-90 measure is undergoing maintenance review at NQF, which may add three new component measures to that composite. If that happens, CMS would engage in notice-and-comment rulemaking before including the updated measure in the HAC Reduction Program. CMS also notes that modified versions of the CAUTI and CLABSI measures were re-endorsed by NQF in November 2014. The updated versions include a new statistical option for calculating the measure result, called the Adjusted Ranking Metric (ARM), in addition to the standardized infection ratio (SIR) statistical option. However, CMS will continue to use the CDC National Health Safety Network CLABSI and CAUTI measures as previously finalized for the program, which use the SIR option. If CMS later determines that the ARM is appropriate to use, the agency will propose such a change through notice-and-comment rulemaking. Policy Changes for FY 2017. CMS does not propose any changes to the measure set or the individual measures for FY 2017. Thus, the measures for use in the FY 2017 program are: AHRQ PSI-90 Composite and CDC NHSN CLABSI, CAUTI, Colon and Abdominal Hysterectomy SSI, Methicillin-Resistant Staphylococcus aureus (MRSA) Bacteremia and Clostridium difficile (CDI). However, CMS proposes three updates to existing program policies for FY 2017. The first update establishes the applicable performance periods used to calculate the HAC score. For FY 2017, CMS proposes that for the Domain 1 PSI-90 measure, the agency would use the period from July 1, 2013 through June 30, 2015. Thus the claims for all Medicare fee-for-service (FFS) beneficiaries discharged during this 24-month period would be included in the measure result calculations. For the Domain 2 CDC measures, CMS would use data from CYs 2014 and 2015. Second, CMS proposes to partially amend how the Domain 2 score is calculated.

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Currently, a score is assigned for each Domain 2 measure and the measure scores are averaged to provide a Domain 2 Score. For the FY 2015 and FY 2016 programs, if a hospital reports data for at least one of the Domain 2 measures, its Domain 2 Score is based only on the measure(s) the hospital reported and the hospital is not assigned the maximum number of points (10) for any non-reported measure(s). For FY 2017 and onward, CMS proposes that every Domain 2 measure “be treated independently when determining if a score of 10 (maximal score) should be assigned to the measure for non-submission of data without a waiver.” For example, if a hospital fails to submit data for the Colon and Abdominal Hysterectomy SSI measure and has no valid waiver for non-reporting, the measure would receive a score of 10. That score would be combined with the measure scores the hospital received for data submitted on the other FY 2017 Domain 2 measures to calculate the total Domain 2 score. This change to the scoring approach was reviewed and supported by a CMS-convened Technical Expert Panel (TEP) in November 2014. While the AHA believes this change is appropriate, the TEP’s draft report suggests the change will affect only six hospitals across the country. Third, for FY 2017, CMS proposes to adjust the weighting of Domains 1 and 2 so that the weight of Domain 1 would be 15 percent and the weight of Domain 2 would be 85 percent. CMS made this proposal in part because MedPAC and other stakeholders believe that the CDC NHSN chart-abstracted measures in Domain 2 are more reliable and actionable than claims-based measures in Domain 1. The AHA agrees that the PSI 90 measure comprising Domain 1 is unreliable, and will again urge CMS to phase PSI 90 out of the program altogether. The need to phase PSI 90 out of the HAC Program is especially urgent given that smaller hospitals lacking sufficient data to be scored on Domain 2 currently have their entire HAC Program performance tied to the deeply flawed PSI-90 measure. Measure Refinements for the FY 2018 HAC Reduction Program. The current CLABSI and CAUTI measures reflect hospital performance only in pediatric and adult intensive care units (ICUs). However, beginning on Jan. 1, 2015, hospitals also were required to collect CAUTI and CLABSI data on non-ICU locations, including pediatric and adult medical wards, surgical wards, and medical/surgical wards. CMS proposes to include data from both the ICU and non-ICU locations to calculate hospital performance on CAUTI and CLABSI beginning with the FY 2018 HAC Reduction Program. Update to CDC NHSN Measures Standard Population Data. CDC NHSN measures use a SIR that compares a hospital’s observed number of healthcare-associated infections (HAIs) to its predicted number of infections, with some risk adjustment. To calculate the predicted number of infections, CDC uses infection rates and other data from a standard population. CDC is updating the standard population information to ensure the number of predicted infections in its measures is current for the U.S. CMS states that measure results using infections reported in CY 2016 will reflect the use of the new standard population data. Thus, the new standard population data will affect the HAC Reduction Program starting in FY 2018, when the applicable performance period for the CDC measures in the program will probably be CY 2015 and CY 2016. While the AHA

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agrees with the need to update the standard population data used in the NHSN measures, this proposal may inappropriately combine data calculated using different standard populations. Extraordinary Circumstance Exception Policy for the HAC Reduction Program for FY 2016 and Onward. CMS proposes an exceptions policy “to provide relief for a hospital whose ability to accurately collect quality measure data and/or to report those data in a timely manner has been negatively impacted as a direct result of experiencing a significant disaster or other extraordinary circumstance beyond the control of the hospital.” Under the proposed policy, hospitals would submit an extraordinary circumstance exception request form (available at the QualityNet website) within 90 calendar days of a natural disaster or other extraordinary circumstance. CMS would review each request for an extraordinary circumstance exception on a case-by-case basis at the agency’s discretion and would try to coordinate its review with similar requests pertaining to other programs (such as the hospital inpatient quality reporting (IQR) and value-based purchasing (VBP) programs). In addition to using the request process to grant exceptions, CMS could proactively provide exceptions for hospitals in an entire affected region. However, CMS does not intend for hospitals to use the request policy to seek exclusion from the program in its entirety for a given year. Hospital Readmissions Reduction Program (HRRP) The HRRP assesses penalties on hospitals for having “excess” readmission rates when compared to expected rates. As required by the ACA, the maximum penalty of the HRRP topped out at 3.0 percent of Medicare base operating payments in FY 2015, and remains at 3.0 percent in FY 2016 and future fiscal years. HRRP penalties for FY 2016 will again be determined by performance on five 30-day readmission measures – heart failure (HF), pneumonia (PN), acute myocardial infarction (AMI), chronic obstructive pulmonary disease (COPD), and total hip and total knee arthroplasties (THA/TKA). As finalized in the FY 2015 inpatient PPS final rule, CMS will add a readmission measure for patients receiving coronary artery bypass grafts (CABG) to the FY 2017 HRRP. Unfortunately, the agency has again failed to propose any sociodemographic adjustment for the HRRP. The existing readmissions measures fail to account for community factors beyond hospitals’ control that affect the likelihood of readmissions, such as poverty and access to support services. The AHA remains very concerned that, without sociodemographic adjustment, readmissions penalties will continue to accrue disproportionately to hospitals treating our nation’s poorest and most vulnerable patients. The AHA will continue to urge Congress to pass S. 688/H.R. 1343, which would require CMS to incorporate sociodemographic adjustment into the HRRP. PN Readmission Measure Changes. For FY 2017, CMS proposes to expand significantly the patient population included in the pneumonia readmission measure to include two additional groups of hospitalized patients:

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• Patients with a principal discharge diagnosis of aspiration pneumonia, and; • Patients with a principal discharge diagnosis of either sepsis or respiratory failure

who also have a secondary diagnosis of pneumonia that is coded as present on admission.

CMS estimates the proposed changes would result in the inclusion of over 600,000 (or 65 percent) more patients in the PN measure population, thereby increasing the national average PN readmissions rate, and affecting individual hospital performance on the measure. Additional details on the measure changes can be found on CMS’s measure methodology website. CMS indicates the proposed changes would result in a more accurate measure that assesses performance on the “complete population” of patients receiving treatment for pneumonia. CMS also suggests that the expanded measure population would reduce performance variation resulting from differences in coding practices across hospitals. Specifically, the agency states that hospitals increasingly are using sepsis and respiratory failure as the principal diagnosis codes for pneumonia patients, and that this practice results in better performance on the readmission measure by excluding the most severely ill patients. The AHA is concerned that that the significant change to the PN readmission measure has not yet been endorsed by the National Quality Forum (NQF). The NQF endorsement review process would allow multiple stakeholders to better assess the quality of the evidence to support the change, and whether the measure’s accuracy actually improves. For the same reason, the Measure Applications Partnership (MAP) also recommended that the measure change be reviewed by NQF before being implemented in the HRRP. As required by the ACA, the MAP reviews the measures being considered by CMS for nearly all federal quality reporting and pay-for-performance programs before the agency proposes them. Performance Period and Payment Adjustment Factor. CMS proposes to continue using three years of Medicare claims data to calculate HRRP performance. For FY 2016, the agency would use claims from July 1, 2011 through June. 30, 2014. CMS proposes no substantive changes to its existing approach to calculating the payment adjustment factor used to apply HRRP penalties. Extraordinary Circumstance Exception (ECE) Policy. CMS proposes to adopt an ECE policy beginning with the FY 2016 HRRP whereby those hospitals affected by natural disasters and other extenuating issues can request that CMS not use data from the time period affected by the circumstance to calculate HRRP performance. The proposed ECE process is virtually identical to the process CMS adopted for the VBP program, which is outlined on CMS’s QualityNet website. Hospitals would be required to submit, within 90 days of the occurrence of the extraordinary circumstance, an exception request that identifies the affected measures and time periods, and explains the impact of the circumstance on measure performance.

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The AHA has created a readmissions penalty calculator for hospitals to assess the impact of the policy on their organizations. It is available at: www.aha.org/readmissionscalc. The calculator is designed so that you can enter your hospital's CCN and the calculator will then estimate the dollar amount of your readmissions penalty, if applicable. Hospital VBP Program As required by the ACA, CMS proposes to fund the FY 2016 VBP program by reducing base operating DRG payment amounts to participating hospitals by 1.75 percent. The VBP program is budget neutral; all funds withheld must be paid out to hospitals. CMS estimates that the available pool of funds for VBP payments is $1.5 billion for FY 2016. Removal of Measures for FY 2018. CMS proposes to remove two measures from the FY 2018 VBP program:

• IMM-2 (Patient influenza immunization): CMS states that IMM-2 performance has “topped out.” That it, the measure has uniformly high performance across hospitals and is unlikely to show further improvement.

• AMI-7a (Fibrinolytic Therapy received within 30 minutes of hospital arrival): CMS states that many hospitals no longer have a sufficient minimum number of cases to report the measure because most AMI patients are receiving percutaneous coronary interventions (PCIs) rather than fibrinolytic therapy.

Proposed New Measures. CMS proposes to add two measures to the VBP program – one each in FY 2018 and FY 2021:

• FY 2018 – Three-item Care Transition Measure (CTM-3): The CTM-3 would be added to the patient experience of care/care coordination measure domain. CTM-3 is calculated from the responses to three questions on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey that are designed to solicit patient feedback on hospital care transition planning.

• FY 2021 – Chronic Obstructive Pulmonary Disease (COPD) mortality: The COPD mortality measure would be added to the Clinical Care measure domain. The measure uses Medicare claims data to calculate risk-adjusted hospital mortality rates within 30 days of hospital admission for patients with either a principal discharge diagnosis of COPD, or a principal discharge diagnosis of respiratory failure with a secondary diagnosis of acute exacerbation of COPD. The measure uses the same methodology as the other mortality measures in VBP.

FY 2019 HAI Measure Changes. For FY 2019, CMS proposes two changes to HAI measure calculations in order to account for recent measure methodology updates. First, CMS proposes to use CY 2015 “standard population data” to calculate the predicted number of infections used in the SIRs for each measure. The SIR compares a hospital’s observed number of infections to the predicted number. In part, the predicted number is based on infection rates that occurred in a “standard population” during a specified time period. The CDC is updating the data for all of the HAI measures during

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CY 2015. For FY 2019, CMS would use the CY 2015 standard population data in the calculation of HAI measure baseline and performance period data. CMS cannot use the new standard population data any sooner because the data in the baseline and performance periods would not be comparable. Second, CMS proposes to include performance data from non-ICU locations for the CLABSI and CAUTI measures. Hospitals were required to begin collecting CLABSI and CAUTI measure data in non-ICU locations on Jan. 1, 2015. The FY 2019 VBP program is the earliest opportunity for CMS to use the expanded measure in determining VBP scores. Proposed Revision of Measure Domains and Weighting. The measures used in the VBP program are grouped into measure domains, and each domain is assigned a weight that counts toward a hospital’s Total Performance Score (TPS). The TPS is used in determining VBP payments to hospitals. For FY 2018, CMS proposes to eliminate the Clinical Care – Process subdomain. The agency suggests this change is appropriate because it is proposing the removal of all but one measure from the process subdomain, and because it is not proposing any new measures for the subdomain. The agency would move the Process subdomain’s one remaining measure – PC-01 (Elective delivery prior to 39 completed Weeks gestation) – to the Safety domain, and increase the weight of the Safety domain to 25 percent. The changes to the VBP domain weights are outlined in Table 2. The proposed VBP program measures and their domains from FY 2018 through FY 2021 are provided in Appendix A of this advisory. Appendix A also includes the previously finalized VBP domains and weights for the VBP program from FY 2015 and FY 2016.

Table 2: Proposed Revision to FY 2018 VBP Measure Domains and Weights

Measure Domain FY 2017 Weight Proposed FY 2018 Weight

Safety 20% 25% Clinical Care

• Clinical Care – Outcomes • Clinical Care – Process

30% • 25% • 5%

25%, and Clinical Care-Process subdomain eliminated

Efficiency and Cost Reduction 25% 25% Patient and Caregiver Centered Experience of Care/Care Coordination

25% 25%

VBP Baseline and Performance Periods. In this rule, CMS proposes the FY 2018 baseline and performance periods for the HAI measures, PC-01, the Medicare spending per beneficiary (MSPB) measure, HCAHPS and CTM-3. CMS also proposes the FY 2020 and FY 2021 baseline and performance periods for certain claims-based measures. Additional details can be found in Appendix A.

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Performance Standards. In the VBP program, hospitals receive both “improvement” and “achievement” points. Improvement points are calculated by comparing a hospital’s performance in the baseline period to its performance in the performance period. In contrast, hospitals must score at or above a minimum achievement threshold to receive achievement points. CMS proposes the performance standards for earning “achievement points” for most of the measures in the VBP program for FY 2018. The performance standards for several claims-based measures for FYs 2018 through 2020 were finalized in previous rulemaking. The specific numerical standards are provided in the tables on pp. 747-755 of the display copy of the proposed rule. The AHA has created a VBP calculator for hospitals to assess the impact of the policy on their organizations. It is available at: www.aha.org/vbpcalc. The calculator is designed so that your hospital's CCN can be entered, and the calculator will then estimate the dollar amount of your hospital’s VBP payment. IQR Program CMS proposes several significant changes to the IQR program. Most notably, for FY 2018, CMS proposes to require hospitals to submit 16 of 28 available electronic clinical quality measures (eCQMs). The agency suggests it wishes to foster greater alignment between the Medicare EHR Incentive Program and the IQR, as well as promote the use of EHRs to report quality data. The AHA believes setting a date certain to require the reporting of eCQMs in the IQR is premature given the serious questions about the feasibility and accuracy of eCQMs. For FY 2018, CMS also proposes to remove the chart-abstracted versions of nine measures from the IQR, while retaining the eCQM versions of six of them for use in the proposed mandatory eCQM reporting process. CMS also proposes to add eight new measures, and to slightly modify its measure validation process. The key proposed IQR program changes are detailed in the sections below. A summary of the proposed changes to the measures in the program through FY 2018 can be found in Appendix B. IQR Measure Retention Criteria. CMS proposes to add three additional criteria to the set of factors it uses to determine which measures it retains in the IQR program:

• The measure aligns with National Quality Strategy or CMS Quality Strategy goals;

• The measure aligns with other CMS programs, including other quality reporting programs, or the EHR incentive program; and

• The measure supports efforts to move facilities towards reporting electronic measures.

Proposed Measure Removal for FY 2018. CMS proposes the removal of the chart-abstracted versions of nine measures from the IQR, stating that six measures are “topped out,” two are no longer feasible to collect, and one lacks sufficient volume in most hospitals to collect measure data. However, in light of the newly proposed measure retention criteria (described above) that promote the use of electronic

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measures, CMS proposes to retain the eCQM versions of the six measures for use in the proposed mandatory eCQM reporting process. CMS’s measure removal proposals are summarized below. Proposed for Removal as Chart-Abstracted Measure but Retention for the IQR eCQM Reporting Process:

• Topped out measures o STK-06: Discharged on statin medication o STK-08: Stroke education o VTE-1: Venous thromboembolism (VTE) prophylaxis o VTE-2: Intensive care unit VTE o VTE-3: VTE patients with anticoagulation overlap therapy

• Measure lacking sufficient volume in most hospitals

o AMI-7a: Fibrinolytic therapy received within 30 minutes of hospital arrival Proposed for Permanent Removal from the IQR:

• Topped out o STK-1: VTE prophylaxis

• No longer feasible to collect (and previously suspended)

o IMM-1: Pneumococcal immunization o SCIP-INF-4: Cardiac surgery patients with controlled postoperative blood

glucose Proposed New Measures for FY 2018. CMS proposes eight new measures for the FY 2018 IQR program, one of which would require hospitals to submit data, and seven of which would be calculated using Medicare claims data. The AHA is disappointed that none of these proposed measures is NQF-endorsed. Indeed, the MAP only conditionally supported these measures, and urged that they receive NQF endorsement before being placed into the IQR. The proposed measures are summarized below:

• Hospital Survey on Patient Safety Culture. This measure would require

hospitals to submit information once per year about their use of patient safety culture surveys that would be reported on Hospital Compare. The measure does not mandate the use of patient safety culture surveys, nor does it require the use of a specific survey tool. Rather, hospitals would be asked to report whether they conduct surveys. If yes, then hospitals also would be asked to provide the name of the survey tool, the frequency of survey administration and the survey response rate.

• Clinical Episode-based Payment Measures. CMS proposes four new measures intended to reflect Medicare “resource use” during episodes of care. In contrast to the similar MSPB measure, which is intended to reflect overall

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Medicare resource use, the proposed measures are specific to four clinical conditions and procedures – kidney/urinary tract infection, cellulitis, gastrointestinal hemorrhage, and lumbar spine fusion/refusion. The detailed methodology for the measures is available on CMS’s QualityNet website. The measures capture Medicare FFS payments during episodes of care that span the three days before an initial (or “trigger”) hospital admission to 30 days after hospital discharge. An episode is attributed to the hospital from which the patient was discharged for his/her trigger stay, and the measure excludes episodes that involve transfers between hospitals. Payment for the initial hospitalization is included in an episode, as well as payments for a broad range of subsequent care, including inpatient, outpatient, physician, laboratory and post-acute care services. The payment amounts are “standardized” by removing geographic payment adjustments and other payment factors. The measures use “grouping rules” intended to ensure the measures include those payments that are “clinically related” to the given condition or procedure. The measure also includes a risk adjustment methodology to account for certain patient characteristics, such as age, prior procedures and co-morbid conditions, which influence resource use and, therefore, payment.

• Elective THA/TKA 90-day Episode of Care Payment Measure. The proposed measure calculates standardized, risk-adjusted payments for Medicare FFS patients undergoing elective THA or TKA procedures. The construction of this measure differs somewhat from the proposed clinical episode measures as well as the other episode payment measures already in the IQR. The care episode is a 90-day period beginning with the initial hospital admission, rather than the 30-day period used in other measures. Moreover, the measure includes all FFS payments for the first 30 days after admission, but only includes THA/TKA-related payments for days 31-90, such as durable medical equipment (DME), inpatient and outpatient rehabilitation services, SNF care and home health care. A detailed measure methodology is available on CMS’s website. CMS indicates that the measure, when paired with the THA/TKA complication measure already in the IQR, can provide insight into the “value” of the care that hospitals deliver.

• Excess Acute Care Days after AMI and HF Hospitalization. CMS proposes two measures intended to assess excess “all-cause acute care utilization” in the 30-days after discharge for AMI and HF. In contrast to the existing all-cause readmissions measures, the proposed measures would include both emergency department (ED) visits and observation stays, in addition to hospital readmissions. The measure would calculate a rate of excess acute care days per 100 discharges, and employ a risk-adjustment approach similar to that of the existing readmission measures. The detailed measure methodology is described in the display copy of the proposed rule on pp. 1028-1049. CMS suggests this measure improves upon the existing hospital readmissions measures because “there exists concern that the high use of observation stays

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could in some cases replace readmissions, and hospitals with high rates of observation stays may therefore have low readmission rates that do not accurately reflect the quality of care.” The AHA is concerned that these measures lack both NQF endorsement and sociodemographic adjustment. Indeed, the MAP’s support of the measures was conditional on CMS obtaining NQF endorsement and considering the appropriateness of sociodemographic adjustment.

Refinements to Existing IQR Measures. CMS proposes to significantly expand the patient population included in its PN mortality and readmissions measures. The measure change is the same for both measures, and is summarized in the HRRP section of this advisory. As with the HRRP, the AHA believes CMS should seek NQF endorsement of the measure change before including the revised measure in the IQR. Validation. Hospitals must meet all IQR data submission deadlines, as well as validation requirements, in order to receive a full annual payment update. CMS adopted a number of updates to the validation process in the FY 2015 inpatient PPS final rule, which are summarized in the AHA’s Regulatory Advisory on that rule. In light of the agency’s proposal to remove the influenza vaccination measure (IMM-2) from the hospital VBP program, CMS suggests it is no longer necessary to include a separate validation sample for the measure. As a result, the agency proposes to include IMM-2 in its general process of care validation sample, and to revise the validation score weights so that process of care measures count toward 33.3 percent of a hospital’s validation score. The proposed weights are summarized in Table 3.

Table 3: FY 2018 Proposed IQR Measure Validation Score Weights

Topic Area Weight Healthcare Associated Infections (HAIs) 66.7 % Process of Care 33.3 % Total 100 %

Electronic Clinical Quality Measures (eCQMs) in Hospital IQR. Required Submission of eCQMs in Hospital IQR. CMS proposes to require electronic reporting of clinical quality measures in hospital IQR beginning with the FY 2018 IQR program. The eCQM measure data would be submitted by hospitals beginning in CY 2016. CMS proposes to require hospitals to report on at least 16 of the 28 eCQMs available in the Hospital IQR Program. The selected measures must span at least three different National Quality Strategy (NQS) domains. The available measures and their NQS domains are outlined below in Table 4. The available eCQMs also align with those in the Medicare EHR Incentive Program. As a result, it is possible for hospitals to fulfill Medicare EHR Incentive Program eCQM reporting requirements by submitting eCQMs for the IQR. CMS states that the benefits of retaining and reporting the electronic versions of these measures allows CMS to monitor the effectiveness of measure

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reporting by EHRs and familiarizes hospitals with reporting electronically specified measures to CMS under the Hospital IQR Program.

Table 4: Electronic Clinical Quality Measures Included in the Hospital IQR Program by National Quality Strategy Domain

NQF

Number Electronic Clinical Quality Measures (eCQMs)

Patient and Family Engagement

495 * ED-1: Emergency Department – Median time from ED arrival to ED departure for admitted ED patients

497 *ED-2: Emergency Department Throughput – Admit decision time to ED departure time for admitted patients

440 STK-8: Stroke – education

375 *VTE-5: Venous Thromboembolism – Discharge Instructions

338 HMPC: Home Management Plan of Care document given to patient/caregiver

Clinical Process/Effectiveness 435 STK-2: Stroke – Discharged on anti-thrombotic therapy 436 STK-3 :Stroke – Anticoagulation therapy for Atrial Fibrillation/Flutter 437 *STK-4: Stroke – Thrombolytic Therapy 438 STK -5: Stroke – Antithrombotic therapy by end of hospital day two 439 STK -6: Stroke – Discharged on Statin Medication 373 VTE -3: VTE Patients with Anticoagulation Overlap Therapy

374 VTE- 4: VTE Patients receiving unfractionated heparin (UFH) with dosages/platelet count by Protocol (or Nomogram)

142 AMI-2: Acute myocardial infarction (AMI) – Aspirin prescribed at discharge for AMI 469 *PC -01: Elective delivery prior to 39 completed weeks gestation

164 AMI-7a: AMI – Fibrinolytic Therapy received within 30 minutes of hospital arrival

163 AMI-8a: Primary PCI received within 90 minutes of hospital arrival 639 AMI -10: Statin prescribed at discharge 480 PC-05: Exclusive Breast Milk Feeding 1354 EHDI -1a: Hearing screening prior to hospital discharge

Care Coordination

441 STK-10: STK Stroke – Ischemic or hemorrhagic stroke – assessed for rehabilitation

Patient Safety 371 VTE -1: VTE prophylaxis 372 VTE -2: VTE Intensive Care Unit (ICU) VTE prophylaxis 376 *VTE –-6: VTE Incidence of potentially preventable VTE

527 SCIP-INF -1: Prophylactic antibiotic received within 1 hour prior to surgical incision

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*Measures ED-1, ED-2, STK-04, VTE-5, VTE-6, and PC-01 may be reported either via chart-abstraction or as electronic clinical quality measures. If reported via chart-abstraction, hospitals must report a full year of data (Q1 through Q4 of CY 2016) Submission Period for eCQMs reported to Hospital IQR Program. As outlined below in Table 5, CMS proposes to change its submission period for eCQMs from annual to quarterly submission, and to change the submission deadline from Nov. 30, 2015 to a date that is two calendar months after the close of the reporting quarter.

Table 5: CY 2016 eCQM Electronic Reporting for FY 2018 IQR Program Payment

Determination Data Reporting Periods and Proposed Data Submission Deadlines

CY 2016 Quarter

CY 2016 Data Reporting Period

CY 2016 Proposed Data Submission Deadline

1 N/A N/A 2 N/A N/A 3 July 1 – Sept. 30, 2015 Nov. 30, 2016 4 Oct. 1 – Dec. 31, 2015 Feb. 28, 2017

Public Reporting of eCQMs. CMS proposes to delay public reporting of eCQM data submitted by hospitals in CY 2016 in order to allow time to evaluate the effectiveness of electronically reported clinical quality measure data. A validation pilot test for electronically specified measures is currently underway and results are not yet available. CMS will footnote on Hospital Compare that a hospital submitted data via a certified EHR and data are being processed and analyzed. A hospital would not fail FY 2018 IQR Program validation requirements based on eCQM data submitted in CY 2016 because validation for electronic measures is currently under development. In future rulemaking, CMS will continue to address the intent to ensure that measures meet the reliability and validity requirements set for public reporting and that the measures are accurate and understandable before the measures are publicly reported on Hospital Compare. eCQM Reporting for Eligible Hospitals (EH) and Critical Access Hospitals (CAHs) Participating in the EHR Incentive Program in CY 2016. CMS proposes to continue the existing policy that, in CY 2016, EHs and CAHs participating in the Medicare EHR Incentive Program must report on 16 eCQMs covering at least three NQS domains. EHs and CAHs may report eCQMs by attestation through the EHR Registration & Attestation

453 SCIP-INF –-9 : Urinary catheter removed on Postoperative Day 1 (POD1) or Postoperative Day 2 (POD2)

716 Healthy Term Newborn Efficient Use of Healthcare Resources

147 PN -6 : PN Initial antibiotic selection for community-acquired pneumonia in immunocompetent patients

528 SCIP-INF -2: Prophylactic antibiotic selection for surgical patients

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System or electronically report eCQMs through the QualityNet Portal in CY 2016. If an EH or CAH chooses to electronically report eCQMs to receive credit for both the Medicare EHR Incentive Program and the Hospital IQR program, they must electronically report the eCQMs through the QualityNet Portal. To align the reporting period of the Medicare EHR Incentive Program with that of the Hospital IQR Program, CMS proposes to require EHs and CAHs to report quarterly and electronically submit eCQMs in the third and fourth quarters of CY 2016. This proposal is outlined below in Table 6.

Table 6: CY2016 eCQM Reporting for Meaningful Use Program Participants Data Submission Method, Data Reporting Periods and Data Submission

Deadlines

Submission Method

Data Reporting Period Data Submission Deadline

Attestation: available for any EH or CAH in the first year of MU in

2016

Any continuous 90-day reporting period during

CY 2016; or one full calendar year reporting

period for CY 2016.

Feb. 28, 2017

Attestation: available for an

EH or CAH beyond the first year of MU in

2016

One full calendar year reporting period for CY

2016 Feb. 28, 2017

Electronic: available for any EH or CAH that

selects the electronic

reporting option in 2016

Two full quarters of data for Q3 (July 1, 2016 –

Sept. 30, 2016) and Q4 (Oct. 1, 2016 – Dec. 31,

2016) of CY 2016)

Submitted via electronic reporting within two months after each quarter ends

Q3 Data: Nov. 30, 2016 Q4 Data: Feb. 28, 2017

CY 2017 eCQM Reporting in the EHR Incentive Program. CMS states an intention to expand the set of eCQMs available for reporting under the EHR Incentive Program in CY 2017 and subsequent years and will engage stakeholders for input on future proposals for eCQMs. In the Stage 3 proposed rule, CMS proposes to require a reporting period of one full calendar year for eCQM reporting for all providers participating in the EHR Incentive Program in CY 2017, with a limited exception for Medicaid providers demonstrating meaningful use for the first time.

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Version of Electronic Specifications Supporting Electronic Reporting of eCQMs. CMS proposes to continue the policy that requires eligible hospitals and CAHs to use the most recent release of the eCQMs’ specifications for which the EHR is certified if they choose to report eCQMs electronically for meaningful use. CMS notes that EHRs certified for eCQMs under the 2014 Edition certification criteria are not required to be recertified each time the eCQM specifications are updated. However, CMS encourages EHR developers to test any updates, including changes to the eCQMs and changes to CMS reporting requirements based on the CMS Quality Reporting Document Architecture (QRDA) implementation guide, on an annual basis. CMS seeks comment on an appropriate frequency for requiring retesting and recertification to the most updated versions of CQMs and most recent “form and manner” reporting required for the Hospital IQR and EHR Incentive Programs. The AHA supports proposals to require vendor products support the regulatory requirements on hospitals linked to the intended use of the product. ONC 2015 Edition Certification Proposed Rule: Certification Criteria Electronic eCQM Reporting. The Office of the National Coordinator for Health IT (ONC), in its 2015 Edition proposed rule (80 FR 16844), indicated an intention to propose certification policy for the reporting of CQMs for eligible hospitals In the inpatient PPS FY 2016 proposed rule. Solicitation of Comments on Expanding the BPCI Initiative CMS started the BPCI initiative in 2011 and is currently testing four models of care that aggregate payments for multiple services during a single episode of care into a discounted bundled payment (as opposed to multiple traditional Medicare FFS payments). As provided in the ACA, CMS has the authority to expand through rulemaking the duration and scope of a model being tested by the Center for Medicare and Medicaid Innovation – such as the BPCI – if the agency asserts the following:

• Expansion of the model would either reduce Medicare spending without reducing the quality of care or improve the quality of patient care without increasing spending;

• The CMS Chief Actuary certifies that the expansion would reduce (or not increase) net Medicare program spending; and

• The Secretary determines the expansion would not deny or limit the coverage or provision of Medicare benefits.

In this proposed rule, CMS states that it intends to evaluate the BPCI program based on a number of qualitative and quantitative sources in order to determine the program’s impact on Medicare cost and quality of care. The agency does not propose any changes to, or expansion of, any models within the BPCI initiative at this time. However, it does solicit public comment on issues surrounding potential expansion of the BPCI initiative in order to be prepared if the Secretary determines the program meets the criteria for, and warrants, expansion.

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Specifically, CMS solicits comment on the following issues:

• Breadth and scope of an expansion, such as whether an expansion should focus on one or more of the four existing models or one or more specific episodes, or should target geographic regions of the country. In addition, the agency solicits feedback on whether the model would best be expanded with voluntary participation or be most effective if participation were required within chosen models, episodes or regions.

• How an expansion might incorporate or refine current BPCI episode definitions. • Whether one or more of the current BPCI models should be the first candidate for

expansion. • The roles organizations, including health care providers and suppliers and other

entities, should play under an expanded model, and what types of relationships and arrangements – financial or otherwise – would assist BPCI participants with care transformation.

• How to set bundled payments under an expansion, including whether to base payments on regional episode experience or set all payments prospectively.

• Mitigating risk of high-cost cases, such as through creation of an outlier pool. • The feasibility of different payment approaches under the various BPCI models,

including the capacity of some organizations to pay other providers for care during episodes or to share payments at reconciliation.

• The types of data and functionality needed in the marketplace in order to expand the BPCI models.

• How information technology can be used and encouraged in coordinating across care settings, including post-acute care.

• Which quality measures could be applied to episodes and approaches to incorporate value-based payment into the BPCI initiative.

• The need for a transition period from Medicare FFS payment to bundled payment under an expanded model, including the length of any transition and how it should be made.

• Other issues important for the agency to consider. Outlier Payments CMS proposes that cases would qualify for outlier payments in FY 2016 if their costs exceed the hospital’s inpatient PPS rate for the MS-DRG, including IME, DSH and new technology payments, plus a fixed-loss threshold of $24,485. This proposed threshold is slightly lower than the final FY 2015 outlier fixed-loss threshold of $24,626. For FY 2016, CMS projects this threshold will result in outlier payments that will equal 5.1 percent of operating DRG payments and 6.43 percent of capital payments based on the federal rate. Capital PPS Rate Update CMS is required to pay for a portion of the capital-related costs of inpatient hospital services. These costs include depreciation, interest, taxes, insurance and similar expenses for new facilities, renovations, clinical information systems and high-tech equipment (e.g., MRIs and CAT scanners). This is done through a separate capital

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PPS, which is structured similarly to the operating PPS. Under the capital PPS, there is a standard federal payment rate that is adjusted by the MS-DRG relative weight for each discharge, with additional payment adjustments for teaching and disproportionate share hospitals. CMS proposes a FY 2016 update of 1.3 percent to the capital federal rate (after accounting for budget neutrality and the outlier adjustment factor, this update has the effect of increasing the capital federal rate by 0.8 percent). As a result, CMS proposes that the capital standard federal payment rate for FY 2016 would be $438.40. Capital payments to hospitals in Puerto Rico are based on a blend of 25 percent of the Puerto Rico capital rate and 75 percent of the federal capital rate. The agency proposes that the FY 2016 capital rate for Puerto Rico would be $213.77.3 Changes to MS-DRG Classifications ICD-10-CM is scheduled to take effect for the inpatient PPS on Oct. 1, 2015. CMS proposes to adopt ICD-10-CM and ICD-10-PCS as the base code set for MS-DRGs, replacing ICD-9-CM. The agency seeks comment on how well the most recent version of the ICD-10 MS-DRGs, Version 32, replicates the logic of the MS-DRGs Version 32 based on the ICD-9-CM code set, and will incorporate changes, based on comments the agency receives, into the final version, MS-DRG Version 33. The complete documentation of the ICD-10 MS-DRG Version 32 GROUPER logic is available via the Internet on the CMS website. The complete documentation of the ICD-10 MS-DRG Version 33 GROUPER logic will be available on the CMS Acute Inpatient PPS website after the issuance of the final rule in late July. FY 2016 MS-DRG Updates. CMS proposes the following changes to the MS-DRGs. CMS’s analysis is based on claims data from the December 2014 update of the FY 2014 MedPAR file. • Major Diagnostic Category (MDC) 5 (Diseases and Disorders of the Circulatory

System).

o Percutaneous Intracardiac Procedures. CMS is proposing to create new MS-DRG 273, entitled “Percutaneous Intracardiac Procedures with MCC,” and new MS-DRG 274, entitled “Percutaneous Intracardiac Procedures without MCC,” and to assign the procedures performed within the heart chambers using intracardiac techniques to the two proposed new MS-DRGs.

o Percutaneous Mitral Valve Repair System – Proposed Revision of ICD-10-PCS

Version 32 Logic. CMS proposes for FY 2016 ICD-10 MS-DRGs Version 33, to assign ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with

3 There are discrepancies in the text of the proposed rule and the associated tables related to the capital PPS rates. However, AHA has confirmed with CMS that the figures included in this Advisory are the capital PPS rates the agency is proposing for FY 2016 and that the discrepancies do not affect the impact estimates throughout the proposed rule.

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synthetic substitute, percutaneous approach) to MS-DRGs 231 and 232 and MS-DRGs 246 through 251 to accurately replicate the ICD-9-CM MS-DRGs Version 32 logic.

o Major Cardiovascular Procedures. CMS proposes to delete MS-DRG 237 (Major

Cardiovascular Procedures with MCC) and MS-DRG 238 (Major Cardiovascular Procedures without MCC) and replace them with five new MS-DRGs: • MS-DRG 268 (Aortic and Heart Assist Procedures Except Pulsation Balloon

with MCC); • MS-DRG 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon

without MCC); • MS-DRG 270 (Other Major Cardiovascular Procedures with MCC); • MS-DRG 271 (Other Major Cardiovascular Procedures with CC); and • MS-DRG 272 (Other Major Cardiovascular Procedures without CC/MCC).

CMS proposes to assign the more complex, more invasive aortic and heart assist procedures to MS-DRGs 268 and 269. The remaining cardiovascular procedures would be assigned to MS-DRGs 270, 271 and 272.

• Major Diagnostic Category MDC 8 (Diseases and Disorders of the

Musculoskeletal System and Connective Tissue).

o Revision of Hip or Knee Replacements: Proposed Revision of ICD-10-PCS Version 32 Logic. CMS examined joint revision combination codes that are not currently assigned to MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 32 and proposes to add ICD-10-PCS code combinations that also should be included so that the joint revision ICD-10 MS-DRGs would have the same logic as the ICD-9-CM MS-DRGs.

o Spinal Fusion. CMS is proposing to revise the titles of MS-DRGs 456, 457, and

458 (Spinal Fusion Except Cervical with Spinal Curvature/Malignancy/Infection or 9+ Fusion with MCC, with CC, and without CC/MCC, respectively) for the ICD-10 MS-DRGs so that they more appropriately identify the procedures classified under these groupings. The proposed new titles would change the reference of “9+ Fusions” to “Extensive Fusions.” The proposed title revisions are as follows: • MS-DRG 456 (Spinal Fusion Except Cervical with Spinal

Curvature/Malignancy/Infection or Extensive Fusion with MCC) • MS-DRG 457 (Spinal Fusion Except Cervical with Spinal

Curvature/Malignancy/Infection or Extensive Fusion with CC) • MS-DRG 458 (Spinal Fusion Except Cervical with Spinal

Curvature/Malignancy/Infection or Extensive Fusion without CC/MCC).

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• Major Diagnostic Category MDC 14 (Pregnancy, Childbirth and the Puerperium), MS-DRG 775 (Vaginal Delivery Without Complicating Diagnosis). CMS received a request to modify the logic for ICD-10 MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis) so that the ICD-10-PCS procedure code 3E0P7GC (Introduction of other therapeutic substance into female reproductive, via natural or artificial opening) for the induction of labor with a cervical ripening gel would not group to the incorrect MS-DRG when a normal delivery has occurred. CMS is therefore proposing to make ICD-10-PCS procedure code 3E0P7GC a non-O.R. code so that cases reporting this procedure code will group to the appropriate MS-DRG assignment. CMS proposes to designate eight additional similar ICD-10-PCS codes that describe the introduction of a substance as non-OR codes to ensure that these codes will group to the appropriate MS-DRG assignment.

Medicare Code Editor (MCE) Changes. For FY 2016, CMS is proposing to add a number of codes to the ICD-10 MCE Version 33 of the “Manifestation codes not allowed as principal diagnosis” edit. Under the MCE, manifestation codes do not describe the disease itself, and therefore should not be used as principal diagnoses. CMS also proposes to revise the language describing the “Procedure inconsistent with LOS (Length of stay)” edit for ICD-10-PCS code 5A1955Z (Respiratory ventilation, greater than 96 consecutive hours) to read: “The following procedure code should only be coded on claims with a length of stay greater than 4 days.” Surgical Hierarchies. The surgical hierarchy is a decision rule within the GROUPER, which orders surgical classes from most resource intensive to least resource intensive. This rule is used to assign a single DRG when an inpatient stay entails multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different DRG within the MDC to which the principal diagnosis is assigned. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the DRG associated with the most resource intensive surgical class. CMS proposes to revise the surgical hierarchy for MDC 5 (Diseases and Disorders of the Circulatory System) based on the MS-DRG changes proposed for FY 2016. Major Complications or Comorbidities (MCCs) and Complications or Comorbidities (CC) Severity Levels for FY 2016. A complete updated MCC, CC and Non-CC Exclusion List is available via the Internet on the CMS website as follows:

o Table 6I (Complete MCC list); o Table 6J (Complete CC list); and o Table 6K (Complete list of CC Exclusions).

In ICD-9-CM, code 591 (Hydronephrosis) is classified as a CC. In ICD-10-CM, hydronephrosis is reported with a combination code if the hydronephrosis is due to a ureteral stricture or urinary stone obstruction of N13.1 (Hydronephrosis with ureteral stricture, not elsewhere classified) and N13.2 (Hydronephrosis with renal and ureteral

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calculous obstruction). CMS is proposing to add the ICD-10-CM combination codes N13.1 and N13.2 to the list of principal diagnoses that can act as their own CC for MS-DRG grouping purposes.

CC Exclusion List. For FY 2016, there are no proposed changes to the CC Exclusion List. Therefore, CMS is not developing or publishing Tables 6G (Additions to the CC Exclusion List) or Table 6H (Deletions from the CC Exclusion List). It has developed Table 6K (Complete List of CC Exclusions), which is available only via the Internet on the CMS website. Changes to the ICD-10-CM and ICD-10-PCS Coding System. For FY 2016, there are no proposed new, revised or deleted ICD-10-CM diagnosis codes and, therefore, CMS has not developed Table 6A (New Diagnosis Codes), Table 6C (Invalid Diagnosis Codes) or Table 6E (Revised Diagnosis Code Titles), for this proposed rule. CMS has developed Table 6B (New Procedure Codes) for 38 new ICD-10-PCS codes which will be implemented on October 1, 2015. Because there are no proposed revisions or deletions of procedure codes for FY 2016, CMS has not developed Table 6D (Invalid Procedure Codes) or Table 6F (Revised Procedure Codes). Replaced Devices Offered without Cost or With a Credit. CMS proposes to add MS-DRGs 266 and 267 (Endovascular Cardiac Valve Replacement with MCC and without MCC, respectively) to the list of “device dependent” MS-DRGs subject to the policy for payment under the inpatient PPS for replaced devices offered without cost or with a credit. This refers to devices replaced under warranty, or in which there was a full or partial credit for the price of the recalled or failed device. In addition, if the proposed MS-DRG changes in this rule to delete existing MS-DRGs 237 and 238 and create new MS-DRGs 268 through 272 are finalized, CMS is proposing to remove existing MS-DRGs 237 and 238 and add proposed new MS-DRGs 268 through 272 to the list of MS-DRGs subject to the policy for payment under the inpatient PPS for replaced devices offered without cost or with a credit. New Technology Payments The inpatient PPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies. New technology add-on payments are not subject to budget neutrality and, therefore, do not reduce payments for all other inpatient services. To gain approval for such payments, a technology must be considered new, be inadequately paid otherwise and represent a substantial clinical improvement over previously available technologies. The cost threshold for new technologies to qualify for add-on payments is the lesser of either 75 percent of the standardized amount (increased to reflect the difference between costs and charges) or 75 percent of one standard deviation above mean charges for the MS-DRG involved. Proposed FY 2016 Status of Technologies Approved for FY 2015 Add-On Payments. In the proposed rule, CMS proposes to continue new technology add-on payments for the following products:

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• KcentraTM – a replacement therapy for fresh frozen plasma for patients with an

acquired coagulation factor deficiency due to warfarin and who are experiencing a severe bleed.

• Argus® II Retinal Prosthesis System – an active implantable medical device that is intended to provide electrical stimulation of the retina to induce visual perception in patients who are profoundly blind due to retinitis pigmentosa.

• CardioMEMSTM HF (Heart Failure) System – an implantable hemodynamic monitoring system comprised of an implantable sensor/monitor placed in the distal pulmonary arterm to monitor and manage the condition of heart failure patients.

• MitraClip® System – a transcatheter mitral valve repair system that is designed to perform reconstruction of the insufficient mitral valve for high-risk patients who are not candidates for conventional open mitral valve repair surgery.

• Responsive Neurostimulator (RNS®) System – an implantable device for treating patients diagnosed with epilepsy whose partial onset seizures have not been adequately controlled with antiepileptic medications.

CMS also proposes to discontinue new technology add-on payments for the following products because the three-year anniversary of the product’s entry on the U.S. market occurs prior to the beginning of FY 2016:

• Glucarpidase (Voraxaze®) – a drug used in the treatment of patients who have been diagnosed with toxic methotrexate concentrations as a result of renal impairment.

• Zenith® Fenestrated Abdominal Aortic Aneurysm Endovascular Graft – an implantable device designed to treat patients who have an abdominal aortic aneurysm and who are anatomically unsuitable for existing treatments.

• Zilver® PTX® Drug Eluting Stent – a stent used for the treatment of peripheral artery disease of superficial femoral arteries.

FY 2016 Applications for New Technology Add-On Payments. CMS received nine applications for new technology add-on payments for FY 2016 and the agency solicits comments whether they meet the criteria for additional payments:

• Angel Medical Guardian® Ischemia Monitoring Device – an implantable ischemia detection system designed to provide early detection and patient alerts for ischemic and other cardiac events experienced by ambulatory patients.

• Binatumomab (BLINCYTO™) – a bi-specific T-cell engager used for treatment of Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute-lymphoblastic leukemia.

• Ceftazidime Avibactam (AVYCAZ) – a drug used for treatment of adult patients who have been diagnosed with complicated urinary tract infections for which there are limited or no available treatment options.

• DIAMONDBACK® 360 Coronary Orbital Atherectomy System – a percutaneous orbital atherectomy system used to facilitate stent delivery in patients who have

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been diagnosed with coronary artery disease and severely calcified coronary artery lesions.

• CRESEMBA® (Isavuconazonium) – an intravenous and oral broad-spectrum antifungal used for the treatment of adults who have severe invasive and life-threatening fungal infections.

• Idarucizumab – a product developed as an antidote to reverse the effects of PRADAXA®.

• LUTONIX® Drug Coated Balloon Percutaneous Transluminal Angioplasty and IN.PACT™ Admiral™ Pacliaxel Coated Percutaneous Transluminal Angioplasty Balloon Catheter – drug coated balloon angioplasty treatments for patients diagnosed with peripheral artery disease.

• VERASENSE™ Knee Balancer System – a sterile, single patient use device to provide intraoperatively a means to dynamically balance the patient’s knee during TKA surgery.

• WATCHMAN® Left Atrial Appendage Closure Technology – an implant that acts as a physical barrier to prevent blood clots, thereby reducing the risk of stroke and potentially eliminating the need for Warfarin therapy for those patients diagnosed with atrial fibrillation.

Implementation of ICD-10-PCS Section “X” Codes for Certain New Medical Services and Technologies for FY 2016. For FY 2016 CMS has created a new component within the ICD-10-PCS codes, labeled Section “X” codes, to identify and describe new technologies and services that might not align appropriately with the current structure of the ICD-10-PCS codes and that are not usually captured by coders. Examples of these types of services and technologies include specific drugs, biologicals, and newer medical devices being tested in clinical trials. The new Section “X” codes within the ICD-10-PCS structure will be implemented on Oct. 1, 2015, and will be used to identify new technologies and medical services approved under the new technology add-on payment policy for payment purposes beginning Oct. 1, 2015. Further information regarding the new Section “X” codes and their use within the ICD-10-PCS can be found on the CMS website through the “CMS Coordination and Maintenance Committee Maintenance Committee Meeting” link. Penalty for Failing to Meet Meaningful Use The Medicare payment penalties for failing to meet meaningful use began in FY 2015. All hospitals either must meet meaningful use or receive a hardship exception each and every year to avoid penalties. For inpatient PPS hospitals, the penalty will generally apply to hospitals that were not meaningful users of EHRs in FY 2014 and did not receive a hardship exception for that performance year. The AHA recommends that all inpatient PPS hospitals verify whether they attested to meaningful use for FY 2014 or received a hardship exception. Attestation status can be determined through CMS’s EHR Incentive Program registration and attestation website. CMS notifies hospitals about the hardship exceptions on a case-by-case basis. Under existing regulations, inpatient PPS hospitals that first participate in the meaningful use program in 2015 will also avoid penalties in FY 2016 if they successfully

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attest to a continuous 90-day period that ends at least three months before the end of the meaningful use reporting period, or July 1, 2015. However, CMS has separately proposed changes to the meaningful use reporting periods for 2015 and would not allow first-time participants to attest until the newly proposed attestation period of Jan. 1, 2016 to Feb. 29, 2016. Therefore, beginning Oct. 1, 2015, the agency proposes to apply the FY 2016 penalties to inpatient PPS hospitals that have never participated in meaningful use. CMS would then suspend the penalties, if a hospital later attests successfully. In that situation, claims subject to the penalty would be reprocessed and CMS would then reconcile any penalties previously assessed. For CAHs, the penalties are based on same-year performance. Therefore, the FY 2016 penalty will be based on whether the CAH attested to meaningful use for 2016 or received a hardship exception. For more information on the meaningful use penalties and the hardship exceptions, see the AHA Regulatory Advisory on Stage 2 Meaningful Use. Watch for a detailed regulatory advisory on proposed changes to meaningful use for 2015 through 2017 soon. Rural Referral Centers (RRC) If a hospital wants to become a RRC, but does not have 275 or more beds, it must meet two mandatory criteria – a minimum case-mix index and a minimum number of discharges – and one of three additional criteria relating to specialty composition of medical staff, source of inpatients or referral volume. CMS proposes updates to the alternative criteria for RRC designation in FY 2016 to include:

• A case-mix index that is at least equal to either the median case-mix index for urban hospitals in its census region (excluding hospitals with approved teaching programs) or the median case-mix index for urban hospitals nationally (1.6075), whichever is lower; or

• At least 5,000 discharges per year (at least 3,000 for osteopathic hospitals) or, if fewer, the median number of discharges for urban hospitals in its census region.

The median case-mix index values and number of discharges can be found on pp. 641-642 of the display copy of the proposed rule. Rural Community Hospital (RCH) Demonstration Program The Medicare Modernization Act of 2003 required CMS to conduct a demonstration program in rural areas under which up to 15 qualifying hospitals with fewer than 51 beds receive cost-based reimbursement (rather than PPS payment) for inpatient acute-care and swing-bed services for a five-year period. Hospitals located in rural areas in 10 states with low-population densities were eligible, but they could not be CAHs. The ACA extended the demonstration for five additional years. It also increased the maximum number of participating hospitals from 15 to 30 and expanded the eligible sites from rural areas in 10 states to those in 20 states with low-population densities. For hospitals that were in the original demonstration, their payment amounts were rebased. CMS implements this program in a budget-neutral manner, as required by law. For FY 2016,

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CMS proposes to offset inpatient PPS payments to all hospitals by close to $17.738 million to account for the additional spending by the participating hospitals. Hospitals and Hospital Units Excluded from the Inpatient PPS Only cancer hospitals, children’s hospitals and religious, non-medical health care institutions remain subject to the historical limits set by the Tax Equity and Fiscal Responsibility Act of 1982, with payments based on reasonable costs subject to rate-of-increase limits. CMS proposes a 2.7 percent increase in the rate-of-increase limits for FY 2016, which is based on the inpatient PPS operating market basket, excluding the ACA-mandated market-basket cuts (which do not apply to these hospitals). PPS-Exempt Cancer Hospital (PCH) Quality Reporting (PCHQR) Program The ACA mandated a quality reporting program for PCHs, beginning in FY 2014. All PCHs are required to comply with all PCHQR program requirements. For FY 2018, CMS proposes to remove six measures and add three new measures. CMS also proposes to report publicly several additional PCHQR measures. CMS proposes no other substantive changes to the program. Measure Removal for FY 2018. CMS proposes to remove the six Surgical Care Improvement Project (SCIP) measures currently in the PCHQR program. The agency states that it is no longer operationally feasible to collect the measures, and suggests their removal would reduce the data collection burden on PCHs. PCHs will still be required to submit SCIP data for discharges from the first three quarters of CY 2015 to meet PCHQR requirements for FYs 2016 and 2017. Proposed New Measures for FY 2018. CMS proposes to add three HAI measures to the PCHQR program:

• MRSA bacteremia; • C Difficile; and • Influenza vaccination coverage among health care providers.

Consistent with the other HAI measures in the PCHQR, CMS would require PCHs to submit measure data using the CDC’s NHSN. Public Reporting. The ACA requires that measures from the PCHQR program be publicly reported. CMS proposes to report publicly six additional PCHQR measures during 2016, including three oncology measures, two prostate cancer measures and HCAHPS.

NEXT STEPS Given the changes included in this year’s proposed rule, the AHA encourages hospital leaders to estimate the impact of the provisions on their facilities. To that end, the AHA has created a readmissions penalty calculator, a VBP calculator, and a DSH

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payment calculator for hospitals to assess the impact of these policies on their organizations. They are available at:

• Readmissions Penalty Calculator: www.aha.org/readmissionscalc • VBP Calculator: www.aha.org/vbpcalc • DSH Payment Calculator: www.aha.org/dshcalc

The calculators are designed so that you enter your hospital's CCN (and some additional financial information for the DSH calculator) and the calculator will then estimate the dollar amount of your potential readmissions penalty, net VBP gain or loss, and DSH payment. The AHA also encourages hospitals to verify CMS’s table listing the factor used to calculate uncompensated care payments in FY 2016 for DSH hospitals. Hospitals have until June 16 to review this table and notify CMS in writing of any inaccuracies. In addition, hospitals should verify whether they have attested to meaningful use. Attestation status can be determined through CMS’s EHR Incentive Program registration and attestation website. We also recommend that hospitals verify that their wage data are accurate. CMS will release the final wage index data public use files on May 1 and hospitals must submit a letter requesting correction of errors and supporting documentation to CMS by June 1. Members should register to attend the AHA’s member-only webinar on the proposed rule on Thursday, May 7, at 3:00 p.m. ET on AHA’s website. All comments are due to CMS by June 16 and may be submitted electronically at www.regulations.gov. Follow the instructions for “Comment or Submission” and enter the file code CMS-1632-P to submit comments on this proposed rule. You also may submit written comments (an original and two copies) to CMS. Via regular mail: Centers for Medicare & Medicaid Services Department of Health and Human Services Attention CMS-1632-P P.O. Box 8013 Baltimore, MD 21244-1850

Via overnight or express mail: Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-1632-P Mailstop: C4-26-05 7500 Security Boulevard Baltimore, MD 21244-1850

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FURTHER QUESTIONS

For additional questions, please contact Priya Bathija, AHA senior associate director, at (202) 626-2678 or pbathija@aha.org.

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Appendix A: Hospital Value-Based Purchasing (VBP) Program

Proposed VBP Measures and Domains, FYs 2018 – 2021

Measure FY 2018 FY 2019 FY 2020 FY 2021 Domain: Safety

Central Line Associated Bloodstream Infection (CLABSI) X X X X PSI 90: Complication/patient safety for selected indicators (composite)

X X X X

Surgical Site Infection X X X X Catheter-Associated Urinary Tract Infection (CAUTI) X X X X Methicillin-resistant Staphylococcus aureus (MRSA) bacteremia

X X X X

Clostridium Difficile (C Difficile) X X X X PC-01: Elective Delivery Prior to 39 Completed Weeks Gestation

X X X X

Domain: Clinical Care Acute myocardial infarction (AMI) 30-day mortality rate X X X X Heart failure (HF) 30-day mortality rate X X X X Pneumonia (PN) 30-day mortality rate X X X X Hospital-Level Risk Standardized Complication Rate following Elective Primary Total Hip Arthroplasty and Total Knee Arthroplasty (THA/TKA)

X X X

Chronic obstructive pulmonary disease (COPD) 30-day mortality rate

X*

Domain: Patient and Caregiver Centered Experience of Care / Care Coordination HCAHPS survey X X X X Three-item Care Transition Measure (CTM-3) X* X* X* X*

Domain: Efficiency and Cost Reduction Medicare spending per beneficiary (MSPB) X X X X

* Proposed in the FY 2016 inpatient PPS proposed rule

VBP Domain Weights for FYs 2015 and 2016

Measure Domain FY 2015 Final FY 2016 Final Process 20% 10%

Patient Experience 30% 25% Outcomes 30% 40% Efficiency 20% 25%

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Proposed Baseline and Performance Periods for FY 2018 VBP

Domain Measures Baseline Period Performance Period

Safety

PC-01 Jan. 1, 2014 – Dec. 31, 2014 Jan. 1, 2016 – Dec. 31, 2016 PSI-90* Jul. 1, 2010 – June 30, 2012 Jul. 1, 2014 – June 30, 2016 CLABSI Jan. 1, 2014 – Dec. 31, 2014 Jan. 1, 2016 – Dec. 31, 2016 CAUTI SSI MRSA C Difficile

Clinical Care

Mortality measures (AMI, PN, HF)*

Oct. 1, 2009 – June 30, 2012 Oct. 1, 2013 – June 30, 2016

Efficiency and Cost Reduction

MSBP Jan. 1, 2014 – Dec. 31, 2014 Jan. 1, 2016 – Dec. 31, 2016

Patient and Caregiver Experience of Care / Care Coordination

HCAHPS, CTM-3

Jan. 1, 2014 – Dec. 31, 2014 Jan. 1, 2016 – Dec. 31, 2016

*Baseline and performance periods finalized in previous rulemaking Final and Proposed Baseline and Performance Periods for VBP Mortality, PSI and

THK/TKA Complication Measures, FYs 2019 – 2021

Measure Baseline Period Performance Period FY 2019 Mortality* July 1, 2009 – June 30, 2012 July 1, 2014 – June 30, 2017 THA/TKA* Complications

July 1, 2010 – June 30, 2013 July 1, 2015 – June 30, 2017

PSI-90* July 1, 2011 – June 30, 2013 July 1, 2015 – June 30, 2017 FY 2020 Mortality* July 1, 2010 – June 30, 2013 July 1, 2015 – June 30, 2018 THK/TKA* Complications

July 1, 2010 – June 30, 2013 July 1, 2015 – June 30, 2018

PSI-90 July 1, 2012 – June 30, 2014 July 1, 2016 – June 30, 2018 FY 2021 Mortality July 1, 2011 – June 30, 2014 July 1, 2016 – June 30, 2019 THK/TKA Complications

April 1, 2011 – March 30, 2014 April 1, 2016 – March 30, 2019

PSI-90 Not Proposed Not Proposed *Baseline and performance periods finalized in previous rulemaking

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Appendix B: Inpatient Quality Reporting Program Measures for FYs 2015 through 2018

Key:

P Proposed in FY 2016 Inpatient PPS Proposed Rule

XeCQM

Chart-abstracted IQR measure, but has an electronic clinical quality measure (eCQM) version available for hospitals to use in the IQR

voluntary electronic data reporting option (through FY 2017), or the proposed mandatory IQR eCQM reporting (FY 2018 onward)

eCQM only

Measure is available only as an eCQM. Can be used in the IQR voluntary electronic data reporting option (through FY 2017), or the proposed

mandatory IQR eCQM reporting (FY 2018 onward) Measure FY 2015 FY 2016 FY 2017 FY 2018

Acute Myocardial Infarction (AMI) Measures AMI-2 Aspirin prescribed at discharge

X eCQM only

eCQM only

AMI-7a Fibrinolytic (thrombolytic) agent received within 30 minutes of hospital arrival

X X XeCQM eCQMP only

AMI-8a Timing of receipt of primary percutaneous coronary intervention (PCI)

X X eCQM only

eCQM only

AMI-10 Statin prescribed at discharge

X eCQM only

eCQM only

Heart Failure (HF) Measures HF-1 Discharge instructions X HF-2 Evaluation of left ventricular systolic function

X X

HF-3 Angiotensin converting enzyme inhibitor (ACE-I) or angiotensin II receptor blocker (ARB) for left ventricular systolic dysfunction

X

Stroke (STK) Measures STK-1 VTE prophylaxis X X X RemovalP STK-2 Antithrombotic therapy for ischemic stroke

X XeCQM eCQM only

eCQM only

STK-3 Anticoagulation therapy for Afib/flutter

X XeCQM eCQM only

eCQM only

STK-4 Thrombolytic therapy for acute ischemic stroke

X XeCQM XeCQM eCQM only

STK-5 Antithrombotic therapy by the end of hospital day 2

X XeCQM eCQM only

eCQM only

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Measure FY 2015 FY 2016 FY 2017 FY 2018 STK-6 Discharged on Statin X XeCQM XeCQM eCQM

onlyP STK-8 Stroke education X XeCQM XeCQM eCQM

onlyP STK-10 Assessed for rehabilitation services

X XeCQM eCQM only

eCQM only

Venous Thromboembolism (VTE) Measures VTE-1 VTE prophylaxis X XeCQM XeCQM eCQM

onlyP VTE-2 ICU VTE prophylaxis X XeCQM XeCQM eCQM

onlyP VTE-3 VTE patients with anticoagulation overlap therapy

X XeCQM XeCQM eCQM onlyP

VTE-4 VTE patients receiving un-fractionated Heparin with doses/labs monitored by protocol

X XeCQM eCQM only

eCQM only*

VTE-5 VTE discharge instructions X XeCQM XeCQM XeCQM VTE-6 Incidence of potentially preventable VTE

X XeCQM XeCQM XeCQ<

Pneumonia (PN) Measures PN-3b Blood culture performed before first antibiotic received in hospital

X

PN-6 Appropriate initial antibiotic selection

X X eCQM only

eCQM only

Surgical Care Improvement Project (SCIP) Measures SCIP INF-1 Prophylactic antibiotic received within 1 hour prior to surgical incision

X X eCQM only

eCQM only

SCIP-INF-2: Prophylactic antibiotic selection for surgical patients

X X eCQM only

eCQM only

SCIP-INF 3 Prophylactic antibiotics discontinued within 24 hours after surgery end time (48 hours for cardiac surgery)

X X

SCIP-INF-4: Cardiac surgery patients with controlled 6AM postoperative serum glucose

X X X RemovalP

SCIP–INF-9: Postoperative urinary catheter removal on post operative day 1 or 2 with day of surgery being day zero

X X eCQM only

eCQM only

SCIP-INF-10: Surgery patients with perioperative temperature management

X

SCIP-Cardiovascular-2: Surgery X X

American Hospital Association 37

Measure FY 2015 FY 2016 FY 2017 FY 2018 patients on a beta blocker prior to arrival who received a beta blocker during the perioperative period SCIP-VTE-2: Surgery patients who received appropriate VTE prophylaxis within 24 hours pre/post surgery

X X

Mortality Measures AMI 30-day mortality rate X X X X Heart Failure 30-day mortality rate X X X X Pneumonia 30-day mortality rate X X X X Chronic Obstructive Pulmonary Disease 30-day mortality rate

X X X

Acute Ischemic Stroke 30-day mortality

X X X

CABG surgery 30-day mortality X X HCAHPS Patients’ Experience of Care Measures

HCAHPS survey X X X X Readmission and Excess Acute Care Day Measures

Acute myocardial infarction (AMI) 30-day risk standardized readmission

X X X X

Heart failure (HF) 30-day risk standardized readmission

X X X X

Pneumonia (PN) 30-day risk standardized readmission

X X X X

Total Hip/Total Knee Arthroplasty (THA/TKA) 30-day risk standardized readmission

X X X X

Hospital-wide all cause unplanned readmission

X X X X

Chronic obstructive pulmonary disease (COPD) 30-day risk standardized readmission

X X X

Acute ischemic stroke 30-Day risk standardized readmission

X X X

Coronary artery bypass graft (CABG) 30-day risk standardized readmission

X X

Excess days in acute care after hospitalization for AMI

XP

Excess days in acute care after hospitalization for HF

XP

AHRQ Patient Safety Indicators (PSIs), Inpatient Quality Indicators (IQIs) and Composite Measures

PSI 90: Complication/patient safety for selected indicators (composite)

X X X X

American Hospital Association 38

Measure FY 2015 FY 2016 FY 2017 FY 2018 PSI 04 Death among surgical inpatients with serious, treatable complications

X X X X

Structural Measures Participation in a systematic database for cardiac surgery

X X

Participation in a systematic clinical database registry for stroke care

X

Participation in a systematic clinical database registry for nursing sensitive care

X X X X

Participation in a systematic clinical database registry for general surgery

X X X X

Safe surgery checklist use X X X Hospital survey on patient safety culture

XP

Healthcare-Associated Infection Measures Central-line associated bloodstream infection (CLABSI)

X X X X

Surgical site infection X X X X Catheter-associated urinary tract infection (CAUTI)

X X X X

Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia

X X X X

Clostridium Difficile (C Difficile) X X X X Healthcare personnel influenza vaccination

X X X X

Surgical Complications Hospital-Level risk standardized complication rate (RSCR) following elective primary total hip and/or total knee arthroplasty

X X X X

Emergency Department (ED) Throughput Measures ED-1 Median time from ED arrival to departure from the emergency room for patients admitted to the hospital

X XeCQM XeCQM XeCQM

ED-2 – Median time from admit decision to time of departure from the ED for ED patients admitted to the inpatient status

X XeCQM XeCQM XeCQM

Prevention Global influenza immunization X X X X Global pneumonia immunization X Suspended Suspended RemovalP

Cost Efficiency Medicare spending per beneficiary X X X X Acute Myocardial Infarction (AMI) payment per episode of care

X X X

American Hospital Association 39

Measure FY 2015 FY 2016 FY 2017 FY 2018 Pneumonia (PN) payment per episode of care

X X

Heart Failure (HF) payment per episode of care

X X

Hospital level risk-standardized payment associated with an episode of care for Primary Elective THA / TKA

XP

Kidney / urinary tract infection clinical episode-based payment measure

XP

Cellulitis clinical episode-based payment measure

XP

Spine fusion / refusion clinical episode-based payment measure

XP

Gastrointestinal hemorrhage clinical episode-based payment measure

XP

Perinatal Care PC-01: Elective delivery < 39 completed weeks gestation

X XeCQM XeCQM XeCQM

PC-05: Exclusive Breast Milk Feeding and the subset measure PC-05a: Exclusive Breast Milk Feeding Considering Mother’s Choice

eCQM only

eCQM only

Children’s asthma care- Home Management Plan of Care (HMPC) document given to patient/ caregiver

eCQM only

eCQM only

Healthy term newborn eCQM only

eCQM only

Hearing screening prior to hospital discharge

eCQM only

eCQM only

Sepsis Severe sepsis and septic shock: Management bundle

Suspended TBD

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