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  • Inpatient Payment Proposed Rule Eliminates '2 Midnight' Reductions, Delivers 1-Time Increase to Hospitals

    The Centers for Medicare and Medicaid (CMS) will not only back away from payment cuts associated with the "2 midnight" rule in 2017, but will actually award hospitals a .6% increase, according to a proposed inpatient prospective payment system (IPPS) and long- term care hospital rule released recently. In addition to the shift away from the penalties, the proposed rule continues the agency's push for more quality reporting and value-based purchasing.

    The biggest news from the proposed rule is that CMS will not implement a .2% reduction for inpatient services—a cut designed to offset what it had anticipated would be increased spending associated with the 2-midnight rule. The 2-midnight rule was intended to reduce costly admissions in cases better suited to outpatient treatment by stipulating that auditors can presume that an admission is reasonable and necessary if the patient spent at least 2 days as an inpatient, defined as 2 midnights in a hospital bed.

    The rule was challenged in a lawsuit filed by the American Hospital Association (AHA) and other groups. In September, a judge partially sided with the AHA and ordered the US Department of Health and Human Services to justify the cut. While CMS maintains that the assumptions it used to establish the cut were reasonable, it has announced in a fact sheet that the penalty will be permanently removed "in light of recent review and the unique circumstances."

    Additionally, to account for the effects of the penalty in the years since the rule's adoption in 2013, CMS has announced that hospitals will receive a 1-time .6% increase in 2017. According to an article in Modern Healthcare, the combined effects of the adjustment and other additional payments in the rule amount to a $539 increase for the IPPS.

    Other notable provisions in the new rule:

    • CMS will implement a standardized process for ensuring that Medicare beneficiaries who have been receiving outpatient observation status for more than 24 hours are well-informed of how observation status affects cost-sharing and eligibility for Medicare coverage of skilled nursing facility services. A form, called MOON (Medicare Outpatient Observation Notice), must be accompanied by an oral explanation. The patient (or designee) must also sign the MOON to verify that he or she understands the implications of observation status.
    • The Value-Based Purchasing Program will expand to include not only more units but more measures used to evaluate those units—over time. The additional units won't be added until 2019, and the additional measures—which include 30-day pneumonia mortality, acute myocardial infarction, heart failure, and coronary artery bypass grafting mortality rates—will be added in 2021 and 2022.
    • In order to satisfy the requirements of the Improving Post-Acute Care Transformation (IMPACT) Act, CMS is proposing 3 claims-based measures and 1 new assessment-based quality measure to be included in the LTCH quality reporting program (QRP). The 3 claims based measures are discharge to community, Medicare spending per beneficiary, and the potentially preventable 30-day post-discharge readmission measure. The assessment-based measure being added is a drug regimen review conducted with follow-up for identified issues.

    APTA regulatory affairs staff will continue to monitor the proposed rule, and will make a fact sheet available in the coming weeks.

    For more on how the shift in models of care affects physical therapy, don't miss the NEXT Conference and Exposition, June 8-11 in Nashville, and check out "Maximizing Physical Therapy's Value: How to Best Transition to Value-Based Care."


    • The biggest problem I have seen with the qualification for inpatient status and 2 midnight rule affects the elderly, usually female, who falls and sustains a humeral fracture. The fracture is often nonsurgical and the patient does not qualify for admission and is in observation status. However often these patients used walkers before their fall, and now with only the use of one arm cannot get out of bed, get dressed, or ambulate safely. without the two midnights they don't qualify for SNF rehab. I would like to see the APTA fight for qualified rehab stays for those who have lost the ability to live independently due to their short term medical problem regardless of their admission status.

      Posted by Allison Orofino on 4/21/2016 11:57 AM

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