Centers for Medicare & Medicaid Services Seeks Comments on Prospective Payment System-Update for Inpatient Psychiatric Facilities
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Medicare Program; Inpatient Psychiatric Facilities Prospective Payment System-Update for Fiscal Year Beginning
A Proposed Rule by the
Publication Date:
Agencies:
Dates: To be assured consideration, comments must be received at one of
Entry Type: Proposed Rule
Action: Proposed rule.
Document Citation: 79 FR 26039
Page: 26039 -26090 (52 pages)
CFR: 42 CFR 412
Agency/Docket Number: CMS-1606-P
RIN: 0938-AS08
Document Number: 2014-10306
Shorter URL: https://federalregister.gov/a/2014-10306
Action
Proposed Rule.
Summary
This proposed rule would update the prospective payment rates for
DATES:
To be assured consideration, comments must be received at one of the addresses provided below, no later than
FOR FURTHER INFORMATION CONTACT:
I. Executive Summary
A. Purpose
This proposed rule would update the prospective payment rates for
B. Summary of the Major Provisions
In this proposed rule, we would update the IPF PPS, as specified in 42 CFR 412.428. The updates include the following:
The FY 2008-based Rehabilitation, Psychiatric, and
The FY 2015 per diem rate would be updated from
The electroconvulsive therapy payment would be updated from
The fixed dollar loss threshold amount would be updated from
The national urban and rural cost-to-charge ratio (CCR) ceilings for FY 2015 would be 1.7049 and 1.8823, respectively, and the national median CCR would be 0.6220 for rural IPFs and 0.4700 for urban IPFs. These amounts are used in the outlier calculation to determine if an IPF's CCR is statistically accurate and for new providers without an established CCR.
The cost of living adjustment factors for IPFs located in
In addition:
We are proposing the ICD-10-CM/PCS codes that would be eligible for the MS-DRG and comorbidity payment adjustments under the IPF PPS. The effective date of those changes would be the date when ICD-10-CM becomes the required medical data code set for use on
We are proposing the ICD-9-CM/PCS codes that would be eligible for the MS-DRG and comorbidity payment adjustments under the IPF PPS.
We would use the best available hospital wage index and establish the wage index budget-neutrality adjustment of 1.0003.
We would retain the 17 percent payment adjustment for IPFs located in rural areas, the 1.31 payment adjustment factor for IPFs with a qualifying emergency department, the coefficient value of 0.5150 for the teaching adjustment, and the MS-DRG adjustment factors and comorbidity adjustment factors currently being paid to IPFs in FY 2014.
C. Summary of Impacts
Provision description .....Total transfers
FY 2015 IPF PPS payment rate update .....The overall economic impact of this proposed rule is an estimated
Provision description .....Costs
New quality reporting program requirements .....The total costs in FY 2015 for IPFs as a result of the proposed new quality reporting requirements are estimated to be
II. Background
A. Annual Requirements for Updating the IPF PPS
In
In that final rule, we explained that we believe it is important to delay updating the adjustment factors derived from the regression analysis until we have IPF PPS data that include as much information as possible regarding the patient-level characteristics of the population that each IPF serves. Therefore, we indicated that we did not intend to update the regression analysis and the patient- and facility-level adjustments until we complete that analysis. Until that analysis is complete, we stated our intention to publish a notice in the
In the
Our most recent IPF PPS annual update occurred in an
B. Overview of the Legislative Requirements for the IPF PPS
Section 124 of the
Section 405(g)(2) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF PPS to distinct part psychiatric units of critical access hospitals (CAHs).
Section 3401(f) of the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by section 10319(e) of that Act and by section 1105(d) of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to as "the Affordable Care Act") added subsection (s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled "Reference to Establishment and Implementation of System" refers to section 124 of the BBRA, which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the IPF PPS for the RY beginning in 2012 (that is, a RY that coincides with a FY) and each subsequent RY. For the RY beginning in 2014 (that is, FY 2015), the current estimate of the productivity adjustment would be equal to 0.4 percentage point, which we are proposing in this FY 2015 proposed rule.
Section 1886(s)(2)(A)(ii) of the Act requires the application of an "other adjustment" that reduces any update to an IPF PPS base rate by percentages specified in section 1886(s)(3) of the Act for the RY beginning in 2010 through the RY beginning in 2019. For the RY beginning in 2014 (that is, FY 2015), section 1886(s)(3)(C) of the Act requires the reduction to be 0.3 percentage point. We are proposing that reduction in this FY 2015 IPF PPS proposed rule.
Section 1886(s)(4) of the Act requires the establishment of a quality data reporting program for the IPF PPS beginning in RY 2014. We proposed and finalized new requirements for quality reporting for IPFs in the "Hospital Inpatient Prospective Payment System for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Fiscal Year 2014 Rates" proposed rule published on
To implement and periodically update these provisions, we have published various proposed and final rules in the
C. General Overview of the IPF PPS
The
The IPF PPS established the Federal per diem base rate for each patient day in an IPF derived from the national average daily routine operating, ancillary, and capital costs in IPFs in FY 2002. The average per diem cost was updated to the midpoint of the first year under the IPF PPS, standardized to account for the overall positive effects of the IPF PPS payment adjustments, and adjusted for budget-neutrality.
The Federal per diem payment under the IPF PPS is comprised of the Federal per diem base rate described above and certain patient- and facility-level payment adjustments that were found in the regression analysis to be associated with statistically significant per diem cost differences.
The patient-level adjustments include age, DRG assignment, comorbidities, and variable per diem adjustments to reflect higher per diem costs in the early days of an IPF stay. Facility-level adjustments include adjustments for the IPF's wage index, rural location, teaching status, a cost-of-living adjustment for IPFs located in
The IPF PPS provides additional payment policies for: Outlier cases; interrupted stays; and a per treatment adjustment for patients who undergo electroconvulsive therapy (ECT). During the IPF PPS mandatory 3-year transition period, stop-loss payments were also provided; however, since the transition ended in 2008, these payments are no longer available.
A complete discussion of the regression analysis that established the IPF PPS adjustment factors appears in the
Section 124 of the BBRA did not specify an annual rate update strategy for the IPF PPS and was broadly written to give the Secretary discretion in establishing an update methodology. Therefore, in the
January 1, 2005 through
Use a
Allow the IPF PPS first update to be effective for discharges on or after
III. Changing the IPF PPS Payment Rate Update Period From a Rate Year to a Fiscal Year
Prior to RY 2012, the IPF PPS was updated on a
For further discussion of the 15-month market basket update for RY 2012 and changing the payment rate update period from a RY to a FY, we refer readers to the RY 2012 IPF PPS proposed rule (76 FR 4998) and the RY 2012 IPF PPS final rule (76 FR 26432).
IV. Proposed Market Basket for the IPF PPS
A. Background
The input price index (that is, the market basket) that was used to develop the IPF PPS was the
Beginning with the
We excluded cancer and children's hospitals from the RPL market basket because these hospitals are not reimbursed through a PPS; rather, their payments are based entirely on reasonable costs subject to rate-of-increase limits established under the authority of section 1886(b) of the Act, which are implemented in regulations at section 413.40. Moreover, the FY 2002 cost structures for cancer and children's hospitals are noticeably different than the cost structures of the IRFs, IPFs, and LTCHs. A complete discussion of the FY 2002-based RPL market basket appears in the
In the RY 2012 IPF PPS proposed rule (76 FR 4998) and final rule (76 FR 26432), we proposed and finalized the use of a rebased and revised FY 2008-based RPL market basket to update IPF payments.
B. Development of an IPF-Specific Market Basket
In the
Since the
Recently, we have investigated the use of regression analysis to evaluate the effect of including hospital-based IPF Medicare cost report data in the calculation of cost distributions. We created preliminary regression models to try to explain variations in costs per day across both freestanding and hospital-based IPFs. These models were intended to capture the effects of facility-level and patient-level characteristics (for example, wage index, urban/rural status, ownership status, length-of-stay, occupancy rate, case mix, and
Another concern with incorporating the hospital-based IPF data in the derivation of an IPF-specific market basket is the complexity of the
We would also note that our current preliminary data show higher labor costs for IPFs than observed for the 2008-based RPL market basket. This increase is driven primarily by higher compensation cost as a percent of total costs for IPFs. In our ongoing research, we are also evaluating the differences in salary costs as a percent of total costs for both hospital-based and freestanding IPFs. Salary costs are historically the largest component of the market baskets. Based on our review of the data reported on the applicable
Also, effective for cost reports beginning on or after
For the reasons discussed above, while we believe we have made significant progress on the development of an IPF-specific market basket, we believe that further research is required at this time. As a result, we are not proposing an IPF-specific market basket for FY 2015. We plan to complete our research during the remainder of this year and, provided that we are prepared to draw conclusions from our research, may propose an IPF-specific market basket for the FY 2016 rulemaking cycle. We welcome public comments on the preliminary findings discussed above.
C. Proposed FY 2015 Market Basket Update
The proposed FY 2015 update for the IPF PPS using the FY 2008-based RPL market basket and
As previously described in section I.B, section 1886(s)(2)(A)(i) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the IPF PPS for the RY beginning in 2012 and each subsequent RY. The statute defines the productivity adjustment to be equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable FY, year, cost reporting period, or other annual period) (the "MFP adjustment").
In summary, we propose to base the FY 2015 market basket update, which is used to determine the applicable percentage increase for the IPF payments, on the most recent estimate of the FY 2008-based RPL market basket (currently estimated to be 2.7 percent based on IGI's first quarter 2014 forecast). We propose to then reduce this percentage increase by the current estimate of the MFP adjustment for FY 2015 of 0.4 percentage point (the 10-year moving average of MFP for the period ending FY 2015 based on IGI's first quarter 2014 forecast). Following application of the MFP, we propose to further reduce the applicable percentage increase by 0.3 percentage point, as required by section 1886(s)(3) of the Act. The current estimate of the proposed FY 2015 IPF update is 2.0 percent (2.7 percent market basket update, less 0.4 percentage point MFP adjustment, less 0.3 percentage point "other" adjustment). Furthermore, we also are proposing that if more recent data are subsequently available (for example, a more recent estimate of the market basket and MFP adjustment), we would use such data, if appropriate, to determine the FY 2015 market basket update and MFP adjustment in the final rule.
D. Proposed Labor-Related Share
Due to variations in geographic wage levels and other labor-related costs, we believe that payment rates under the IPF PPS should continue to be adjusted by a geographic wage index, which would apply to the labor-related portion of the Federal per diem base rate (hereafter referred to as the labor-related share).
The labor-related share is determined by identifying the national average proportion of total costs that are related to, influenced by, or vary with the local labor market. We classify a cost category as labor-related if the costs are labor-intensive and vary with the local labor market. Based on our definition of the labor-related share, we include in the labor-related share the sum of the relative importance of Wages and Salaries, Employee Benefits, Professional Fees: Labor-related, Administrative and
Therefore, to determine the proposed labor-related share for the IPF PPS for FY 2015, we used the FY 2008-based RPL market basket cost weights relative importance to determine the labor-related share for the IPF PPS. This estimate of the FY 2015 labor-related share is based on IGI's first quarter 2014 forecast, which is the same forecast used to derive the FY 2015 market basket update.
Table 1 below shows the FY 2015 relative importance labor-related share using the FY 2008-based RPL market basket along with the FY 2014 relative importance labor-related share.
Table 1--Proposed FY 2015 Relative Importance Labor-Related Share and the FY 2014 Relative Importance Labor-Related Share Based on the FY 2008-Based RPL Market Basket
.....FY 2014 relative importance labor-related share1 .....Proposed FY 2015 relative importance labor-related share2
Wages and Salaries .....48.394 .....48.409
Employee Benefits .....12.963 .....13.016
Professional Fees: Labor-Related .....2.065 .....2.065
Administrative and
All Other: Labor-Related Services .....2.080 .....2.070
Subtotal .....65.917 .....65.977
Labor-Related Portion of Capital Costs (46%) .....3.577 .....3.561
Total Labor-Related Share .....69.494 .....69.538
1. Published in the FY 2014 IPF PPS notice (78 FR 46738) and based on
2. Based on
The proposed labor-related share for FY 2015 is the sum of the FY 2015 relative importance of each labor-related cost category, and would reflect the different rates of price change for these cost categories between the base year (FY 2008) and FY 2015. The sum of the relative importance for FY 2015 for operating costs (Wages and Salaries, Employee Benefits, Professional Fees: Labor-Related, Administrative and
V. Proposed Updates to the IPF PPS for FY 2015 (Beginning
The IPF PPS is based on a standardized Federal per diem base rate calculated from the IPF average per diem costs and adjusted for budget-neutrality in the implementation year. The Federal per diem base rate is used as the standard payment per day under the IPF PPS and is adjusted by the patient-level and facility-level adjustments that are applicable to the IPF stay. A detailed explanation of how we calculated the average per diem cost appears in the
A. Determining the Standardized Budget-Neutral Federal Per Diem Base Rate
Section 124(a)(1) of the BBRA required that we implement the IPF PPS in a budget-neutral manner. In other words, the amount of total payments under the IPF PPS, including any payment adjustments, must be projected to be equal to the amount of total payments that would have been made if the IPF PPS were not implemented. Therefore, we calculated the budget-neutrality factor by setting the total estimated IPF PPS payments to be equal to the total estimated payments that would have been made under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (97) methodology had the IPF PPS not been implemented. A step-by-step description of the methodology used to estimate payments under the TEFRA payment system appears in the
Under the IPF PPS methodology, we calculated the final Federal per diem base rate to be budget-neutral during the IPF PPS implementation period (that is, the 18-month period from
Next, we standardized the IPF PPS Federal per diem base rate to account for the overall positive effects of the IPF PPS payment adjustment factors by dividing total estimated payments under the TEFRA payment system by estimated payments under the IPF PPS. Additional information concerning this standardization can be found in the
The Federal per diem base rate has been updated in accordance with applicable statutory requirements and 42 CFR 412.428 through publication of annual notices or proposed and final rules. These documents are available on the CMS Web site at http://www.cms.hhs.gov/InpatientPsychFacilPPS/. A detailed discussion on the standardized budget-neutral Federal per diem base rate and the electroconvulsive therapy (ECT) rate appears in the
B. Proposed FY 2015 Update of the Federal Per Diem Base Rate and Electroconvulsive Therapy (ECT) Rate
In accordance with section 1886(s)(2)(A)(ii) of the Act, which requires the application of an "other adjustment," described in section 1886(s)(3) of the Act (specifically, section 1886(s)(3)(C)) for RY 2014 that reduces the update to the IPF PPS base rate for the FY beginning in Calendar Year (CY) 2014, we are proposing to adjust the IPF PPS update by a 0.3 percentage point reduction for FY 2015. In addition, in accordance with section 1886(s)(2)(A)(i) of the Act, which requires the application of the productivity adjustment that reduces the update to the IPF PPS base rate for the FY beginning in CY 2014, we are proposing to adjust the IPF PPS update by a 0.4 percentage point reduction for FY 2015.
The current (that is, FY 2014) Federal per diem base rate is
As noted above, section 1886(s)(4) of the Act requires the establishment of a quality data reporting program for the IPF PPS beginning in RY 2014. We finalized new requirements for quality reporting for IPFs in the "Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Fiscal Year 2014 Rates" proposed rule published on
For IPFs that fail to submit quality reporting data under the IPFQR program, we are applying a 0 percent annual update (that is 2 percent reduced by 2 percentage points in accordance with section 1886(s)(4)(A)(ii) of the Act) and the wage index budget-neutrality factor of 1.0003 to the FY 2014 Federal per diem base rate of
Similarly, we are applying the 0 percent annual update and the 1.0003 wage index budget-neutrality factor to the FY 2014 ECT base rate of
In the FY 2014 IPPS/LTCH PPS final rule (78 FR50496), we adopted two new measures for the FY 2016 payment determination and subsequent years for the IPFQR Program. We also finalized a request for voluntary information whereby IPFs will be asked to provide information on the patient experience of care survey. For the FY 2016 payment determination and subsequent years, we are proposing to add two new measures to those already adopted for the FY 2016 payment determination and subsequent years. For the FY 2017 payment determination and subsequent years, we are proposing to adopt four new measures.
[*Federal RegisterVJ 2014-05-06]
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