CMS releases 2017 IPPS proposed rule

CMS issued the fiscal year (FY) 2017 IPPS proposed rule yesterday with updates to several quality initiatives and a reversal of the agency’s 0.2% payment reduction instituted along with the 2-midnight rule in the FY 2014 rule. 

Payment rates will increase by 0.9% in FY 2017 compared to FY 2016, after inflation and other adjustments required by law, for hospitals participating in the Inpatient Quality Reporting (IQR) Program and meaningful EHR use, according to the rule.

In the rule, CMS proposes two adjustments to reverse the effects of the 0.2% cut it instituted along with the 2-midnight rule, which has been the source of an ongoing legal challenge by the American Hospital Association and other parties. CMS proposes a permanent adjustment of approximately 0.2% to remove the cut for FYs 2017 and onward, and a temporary adjustment of 0.6% to address the retroactive impacts of this cut for FYs 2014, 2015 and 2016, CMS states.

As part of the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act, CMS is proposing the Medicare Outpatient Observation Notice (MOON). 

The MOON would be a CMS-developed standardized notice hospitals would be required to give to Medicare patients receiving observation services as an outpatient for more than 24 hours no later than 36 hours after observation services are initiated. Hospitals must give an oral explanation of the MOON to patients and obtain a signature to acknowledge receipt and understanding of the notice.

CMS additionally proposed five changes to the Hospital-Acquired Conditions (HAC) Reduction Program, as well as updates to the IQR program, changes to the Hospital Readmissions Reduction Program, and updates to the Hospital Value-Based Purchasing Program.

CMS also announced the expected changes to MS-DRGs 469 and 470 and their relative weights related to the Bundled Payments for Care Improvement Initiative.

For more information on the rule, see CMS’ fact sheet. Comments are due to CMS by June 16, and the agency expects to issue a final rule by August 1. Once finalized, changes will become effective October 1.

Medicare Compliance Watch will take a more in-depth look at aspects of the proposed rule throughout the week.