CMS Proposed 2011 Policies and Payment Rates for Inpatient Services

On Monday, April 19, 2010, The Centers for Medicare & Medicaid Services (CMS) released a display copy of its proposed fiscal year 2011 policies and payment rates for inpatient services furnished to Medicare in the acute care as well as long-term care hospital setting. The updates would apply beginning with discharges occurring on or after October 1, 2010. This proposed rule would affect about 3,500 acute care hospitals paid under the Inpatient Prospective Payment System (IPPS), and about 420 long-term care hospitals paid under the Long-Term Care Hospital prospective Payment System (LTCH PPS).

Some major topics discussed in the proposed rule include:

Payment Update

While CMS is proposing to update acute care hospital payment rates by 2.4 percent for inflation, payments are also proposed to decrease by 2.9 percentage points due to estimated excess spending in FY 2008 and 2009 payments that were not reflective of increase in patients and severity of illness
Overall CMS estimates that operating expense payments to hospitals may decrease by 0.1 percent compared to FY2010

MS-DRG Code System

There are no proposed additions or deletions of codes to the Medical Severity – Diagnosis Related Grouping (MS-DRG) classification system for FY 2011

ICD-9-CM Coding System

Due to the implementation of the ICD-10-CM coding system on October 1, 2013, CMS is considering a partial freeze to ICD-9-CM and ICD-10-CM code updates, with the exception of certain new technologies and diseases
Final decision regarding this freeze is expected to be made at the September 2010 ICD-9-CM Coordination and Maintenance Committee meeting

Outlier Threshold

CMS is proposing to increase the outlier threshold in fiscal year 2011 to $23,970

Hospital Acquired Conditions (HACs)

For FY 2011, CMS is proposing to continue the list of hospital acquired conditions that has been finalized through FY 2010, with the exception of the modification to the blood incompatibility
The blood incompatibility ICD-9-CM code will be removed, and in place will be a new blood incompatibility category composed of five separate diagnosis codes

Quality Data Reporting Measures

For FY2011, CMS has proposed to add 45 additional quality measures for reporting
Ten of the proposed measures will only be considered for the FY 2012 update, while the remaining 35 may be considered for the FY 2013 update
Hospitals that do not successfully participate in the Reporting Hospital Quality Data for Annual Payment Update program would not receive the full payment update, receiving 2.0 less percentage points

Healthcare Reform

The Patient Protection and Affordable Care Act, and the Health Care and Education Reconciliation Act of 2010 pieces of healthcare reform legislation that have recently passed, address issues mentioned in this proposed rule making
However, this proposed rule does not reflect any of the passed legislation due to the timing issues
CMS has plans in the future to issue separate documents in the Federal Register to address the updates in the new legislation

Exclusion from IPPS

Note that critical access hospitals (CAH), acute care hospitals located in Maryland, children’s hospitals, cancer hospitals continue to be excluded from the inpatient prospective payment system for FY 2011

CMS will be accepting comments on the proposed rule until June 18, and publish responses to these comments in a final rule that will be published no later than August 1, 2010. This proposed rule will be published in the Federal Register shortly, but is available as a display copy at the following link: http://www.federalregister.gov/OFRUpload/OFRData/2010-09163_PI.pdf.

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