CMS Releases Proposed IPPS Rule

by Baker Ober Health Law

On April 17, 2015, CMS released a copy of its proposed changes and updates to the Medicare inpatient prospective payment system (IPPS) for fiscal year 2016. The official version appears in the April 30th Federal Register [PDF], and comments are due by June 16th. Below is a summary of the highlights of the proposed rule.

  • Proposed Changes to Payment Rates. The rule proposes a market basket increase of 2.7%. This increase is offset against statutorily-mandated adjustments totaling 1.6%, for a total increase of 1.1%.
  • Possible Expansion of Bundled Payments for Care Improvement (BPCI) Initiative. The agency seeks comments on varying aspects of the BPCI program related to its potential expansion.
  • Reduction of Hospital Payments for Excess Readmissions. The Hospital Readmissions Reduction Program requires reductions in a hospital’s base DRG payment to account for excess readmissions for specific conditions, including acute myocardial infarction, heart failure, and pneumonia, among others. The rule proposes refining the pneumonia readmissions measure and expanding the measure cohort for the FY 2017 payment year. The rule also proposes an extraordinary circumstances exception policy that would allow a hospital to request a waiver for use of data from the affected period.
  • Value-based Purchasing Program. The total amount available for value-based incentive payments in FY 2016 is $1,489,397,095. Two measures were removed — IMM-2 Influenza Immunization and AMI-7a Fibrinolytic Therapy Received. A new measure was proposed for implementation in FY 2018 relating to care transition management (CTM) and a measure related to 30-day all-cause mortality from chronic obstructive pulmonary disease to be effective in FY 2021. The rule also proposed removing the Clinical Care—Process subdomain and moving its sole measure (PC-01 Elective Delivery) to the Safety subdomain. The Clinical Care—Outcomes subdomain would be designated as the Clinical Care domain.
  • Hospital-Acquired Condition (HAC) Reduction Program Policies. The rule expands the eligible population for central line-associated blood infections (CLABSI) and catheter-associated urinary tract infections (CAUTI) to non-ICU patients. It adjusts the relative contribution of each domain to the Total HAC Score used to determine whether a HAC adjustment will be made. Finally, it allows for an extraordinary circumstances waiver.
  • Disproportionate share hospital (DSH) Payment Adjustment. Decreases to DSH payments continue. Hospitals receive 75% of the amount that would have been paid under the prior formula, aggregated nationally and adjusted to reflect decreases in the number of uninsured. This year, approximately $6.4 billion will be distributed.
  • Electronic Health Record (EHR) Incentive Programs and Quality Reporting. The rule aligns the quality reporting timelines for acute care hospitals and critical access hospitals. It also proposes creating a certification criterion for EHR in the 2015 edition of certification criteria that would require a Health IT Module to enable the creation of a clinical quality measurement data file.
  • Hospital Inpatient Quality Reporting (IQR). The rule adds eight new measures and removes nine (two of which are suspended) and refines two others to expand measure cohorts. In addition, it aligns the IQR program with the EHR Incentive Program by requiring submission of 16 electronic clinical quality measurements covering three National Quality Strategy domains.
  • Long Term Care Hospital Quality Reporting Program. The rule continues the implementation of quality reporting measures as required by the IMPACT Act. It proposes beginning public reporting of quality data on a site such as Hospital Compare.
  • PPS-Exempt Cancer Hospital Quality Reporting Program. The rule adds two and removes six quality measures. The removed measures, related to the Surgical Care Improvement Project, are removed for feasibility reasons.
  • Two Midnight Rule. The prohibition against recovery audit contractor (RAC) audits of patient status between Oct. 1, 2013 and April 30, 2015, has been extended to Sept. 15, 2015. RACs will be limited, once this prohibition expires, to six months to review a claim for patient status when the hospital bills within 3 months of the date of service to ensure that hospitals can rebill for medically necessary Part B services as appropriate.

Further discussion of the rule is expected in the 2016 OPPS rule.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Baker Ober Health Law | Attorney Advertising

Written by:

Baker Ober Health Law

Baker Ober Health Law on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.