July 21, 2014

Inpatient Blessings

By

As expected, as usual – OK, as required by law – the Centers for Medicare & Medicaid Services (CMS) has published the proposed rules for all the various types of inpatient services and now is taking comments to incorporate into the final rule (which, also by law, should be available on Aug. 2).

What is changing, assuming that most of the proposed rule carries over to the final rule? Not much, really, and nothing we didn’t expect. Here are a few key points to show you what I mean:

Changes

First, consider rehabilitation and psychiatric services. The big recent announcement was that all the hospital-specific and patient-specific factors from 2014 are being retained for 2015, and maybe even longer. So, in English: Nothing is changing except the payment rates, wage indices, and outlier thresholds.

Secondly, there are the skilled nursing facilities (SNFs). You probably should be seated before reading this: Nothing changes, except rates and wage indices.

Next, we have long-term care hospitals, which – if you are a dozen or so years behind the times – you might know as long-term acute care, or LTAC. Like rehabilitation, psychiatric, and SNF services, nothing is changing in the way such services are priced except rates, wage indices, and outlier thresholds. Also, there is the “25 percent rule,” which indicates that “if more than 25 percent of your referrals come from a single provider, all claims thereafter will be paid at short-stay acute rates;” this rule has been delayed until 2016.

And finally, we come to “big daddy,” the “big Kahuna,” the “1,000-pound gorilla:” inpatient short-stay acute care, or IPPS.

The 2015 fiscal year is a modestly big year for IPPS changes; some have been mandated by the Patient Protection and Affordable Care Act (PPACA) while others are just happening for reasons one only can surmise. Consider these, for example:

  1. There has been a penalty for not participating in the QRI – Quality Reporting Initiative – for several years. It continues in 2015, but now we also have the same penalty for “not implementing a meaningful electronic health record (EHR).” So, if your hospital doesn’t report quality data and doesn’t have an EHR, you’ll be hit twice.
  2. There are minor changes to six of the post-acute care transfer MS-DRGs, and Dificid no longer will be a “new technology add-on.” Up to six new devices/drugs may be added, but we won’t know until the final rule is published.
  3. The 25 percent of hospitals with the worst rates of hospital-acquired conditions (HACs) will get a 1 percent figure, similar to the Readmissions Reduction Program (RRP), which goes to a maximum of 3 percent in 2015. Value-based purchasing (VBR) is unchanged.
  4. Finally, there is a change to the operating IME calculation for Medicare Advantage claims in sole community hospitals that are also teaching hospitals. How many of those do you suppose there are? In the grand scheme of things, this is definitely minor.

The IPPS summary: We have two new ways to reduce payments to hospitals, and pretty much nothing good is happening. This is to be expected, of course: We must pay for the PPACA, and nearly $600 billion of the first 10 years’ cost is coming from hospital reimbursements.

What is the Message?

Hospitals are an easy target for lots of reasons. Here are a few:

  1. Hospitals don’t vote. (Physicians, however, do vote.)
  2. Hospitals really don’t have a single powerful lobby. Oh yes, there is the Catholic Health Association, the American Hospital Association, the Federation of American Hospitals, and the VHA, Inc., to name a few, but they really don’t share the same agendas and they don’t cooperate all that much.
  3. There are approximately 4,000 short-stay, acute-care hospitals in the U. S., but home health agencies, DMEs, ASCs, ESRD centers, RHCs, FQHCs, CMHCs, ORFs, and CORFs number many times that figure – yet their combined payments are only a fraction of total hospital payments. Congress obviously recognized that it was easier to eviscerate the core of our healthcare system rather than apply reductions to everyone. Oh, wait…that’s exactly what they did with the sequestration reduction, so I suppose exclusively going after hospitals was their carefully considered strategy.

You get the idea.

What Now?

Now we wait. We wait for the final rules for inpatient services and then for the 2015 rules for outpatient services, and hope the damage is slight.

Think of it as healthcare purgatory: We lost out on heaven years ago, and we’re not yet in healthcare Hades, but give them time. One thing the government branches – legislative, judicial and executive – all do quite well is make life better for half of us while making it worse for the other half. That might be called “equalization” or “equity,” but it definitely is not “fair.” Perhaps the secret to survival is to be squarely at the top of the bell curve.

Maybe that’s as good as things can be.

About the Author

Billy K. Richburg, MS, FHFMA is HFMA-Certified in Accounting and Finance, Patient Accounting and Managed Care. Bill graduated from the University of Alaska, Anchorage and earned his MS in Health Care Administration from Trinity University, San Antonio, Tex. Over a career spanning more than 40 years, Bill has held positions including CEO, COO, CFO, and CIO in hospitals ranging from 75 beds to over 300 beds, and in home health agencies, DME stores, and a home infusion company. Bill is a Board Member of the Lone Star Chapter, HFMA, and is Senior Director of Government Programs for the Revenue Cycle Technologies business segment of MedAssets, Inc. His office is in Plano, Texas.

Contact the Author

To comment on this article go to

Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Billy Richburg, M.S., FHFMA

Billy K. Richburg, MS, FHFMA is HFMA-Certified in Accounting and Finance, Patient Accounting and Managed Care. Bill graduated from the University of Alaska, Anchorage and earned his MS in Health Care Administration from Trinity University, San Antonio, Tex. Over a career spanning more than 40 years, Bill has held positions including CEO, COO, CFO, and CIO in hospitals ranging from 75 beds to over 300 beds, and in home health agencies, DME stores, and a home infusion company. Bill is a Board Member of the Lone Star Chapter, HFMA, and is Senior Director of Government Programs for the Revenue Cycle Technologies business segment of MedAssets, Inc. His office is in Plano, Texas.