CMS May Back Off Two-Midnight Rule Payment Offset

CMS has issued a proposed rule for FY 2017 that would eliminate a 0.2 percent cut implemented as part of its controversial “two-midnight” policy.

 

“CMS finally saw the light and proposed to terminate their flawed Two Midnight payment cut in the Inpatient Prospective Payment System (IPPS) rule,” said an executive from Premier in a written statement. (‘CMS Backs Off Two-Midnight Cut,” HFMA Weekly, April 22, 2016)

 

Medicare has cut inpatient prospective payment system (IPPS) rates by 0.2 percent each year since FY14 to offset the increase in IPPS expenditures that CMS estimated would result from the start of the two-midnight short-stay payment policy. Specifically, CMS estimated the policy would lead 400,000 patient stays to shift from outpatient to inpatient, while 360,000 inpatient stays would shift to outpatient. (‘CMS Backs Off Two-Midnight Cut,” HFMA Weekly, April 22, 2016)

 

Under the new proposed rule, payment rates would increase by roughly 0.8% in FY 2017 to not only eliminate the offset prospectively, but also to address retroactively its effects in FYs 2014, 2015, and 2016, CMS said in a fact sheet. (“CMS Proposed Inpatient Payment Rule Nixes Two-Midnight Offset,” AHLA Weekly, April 22, 2016)

 

The two-midnight rule has generated controversy and several lawsuits from a number of hospitals and the American Hospital Association. It isn’t clear what impact the rate decision would have on the ongoing legal challenges to the cut. Given the legal uncertainty, one law firm suggested hospitals include the 0.2 percent payment reduction and related policies as protest items on FY15 and FY16 cost reports. (‘CMS Backs Off Two-Midnight Cut,” HFMA Weekly, April 22, 2016)

 

Background on Two-Midnight Rule

 

In the FY 2014 IPPS final rule, CMS established a new policy that presumes an inpatient hospital stay expected to span at least two midnights qualifies for Medicare Part A payment. Conversely, admissions spanning less than that time period should be provided on an outpatient basis and paid under Medicare Part B.

 

In the same rule, CMS called for an across-the-board 0.2% payment cut to offset the alleged additional costs to the Medicare program for a net increase in inpatient admissions the agency believed would result from the new two-midnight policy.

 

In December 2015, CMS published a notice seeking comments on the methodology it used to calculate the 0.2% Medicare rate cut, and in mid-March, it was granted an extension of the deadline to April 27 for issuing a final notice.

 

We reported here that in November 2015 CMS changed its two-midnight policy to allow Medicare Part A payments for inpatient stays expected to last less than two midnights of hospital care “on a case-by-case basis based on the judgment of the admitting physician.” However, at that time CMS did not at that time address the Medicare rate offset.

 

CMS noted that “the assumptions underlying the -0.2 percent adjustment were reasonable at the time they were made,” the agency said in its April 18 fact sheet.” But it decided to do away with the offset, “in light of recent review and the unique circumstances surrounding this adjustment.” (Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Proposed Rule Issues for Fiscal Year (FY) 2017, CMS, April 18, 2016)

 

To read the CMS fact sheet, click here.

 

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

Our upcoming course, Population Health and Alternative Payment Models, featuring Marian Jennings and Dan Grauman, will be in your library soon. Jennings and Grauman discuss the onset of alternative payment models within the context of population health management, and the levels of risk associated with these models.

 

For a complete list of iProtean courses, click here.

 

 

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Alternative Payment Models Proliferate

A new alternative payment model featuring public-private payer partnerships was announced last week by CMS. The Comprehensive Primary Care Plus (CPC+) model features Medicare-commercial-state health insurance plans partnerships to support the delivery of advanced primary care.

 

Existing alternative payment models range from pay-for-performance, to bundled payments, to accountable care organizations, to global payments.

 

The first model to move from voluntary to mandatory participation is the bundled payment program for joint replacements. The Comprehensive Care for Joint Replacement (CJR) model launched April 1 and includes about 800 hospitals.

 

Patrick Conway, principal deputy administrator for innovation and quality and chief medical officer at CMS, said April 11 at a Capitol Hill update on the alternative payment models, noted that CMS is monitoring CJR participants to minimize or eliminate unintended consequences. Possible responses to adverse outcomes include CMS’s ability to pull people out of models. (“Public-Private Payer Partnerships to Proliferate Under CMS,” HFMA Weekly News, April 15, 2016)

 

“We’re trying to structure this in a step-wise progress that picks up an increasing number of states, communities, and providers across the country, including ones that historically weren’t high performers but want to be high performers in a population health construct,” Conway said. (“Public-Private Payer Partnerships to Proliferate Under CMS,” HFMA Weekly News, April 15, 2016)

 

The U.S. healthcare system has been steadily moving toward alternative payment models in recent years. For example, Medicare announced in March that it achieved its year-end goal of making 30 percent of provider payments through value-based alternative payment models and tying 85 percent of fee-for-service payments to quality and value.

 

The shift has come from a broad realization that the transition to alternative payment models is ongoing, and every organization needs to learn how to participate.

 

Along with progress toward alternative payment models comes concern about how much traction the new models have gained, however. For example, a recent CFO survey shows that the average revenue generated by hospital-employed physicians increased 8 percent in 2015 from two years earlier. This finding seems to contradict what was expected from value-based and capitated payment models; that is, a reduction in the overall volume of physician services and hence the revenue physicians generate, one industry source noted. (“Public-Private Payer Partnerships to Proliferate Under CMS,” HFMA Weekly News, April 15, 2016)

 

The CPC+ Model

 

CPC+ is an advanced primary care medical home model that rewards value and quality by offering an innovative payment structure to support delivery of comprehensive primary care. The model will offer two tracks with different care delivery requirements and payment methodologies to meet the diverse needs of primary care practices. The model will contribute to the goals set by the Administration of having 50 percent of all Medicare fee-for-service payments made via alternative payment models by 2018. (Comprehensive Primary Care Plus (CPC+) Fact Sheet, CMS, April 11, 2016)

 

The CPC+ initiative will launch in January 2017, with CMS seeking proposals starting in April to begin identifying regions with high payer interest, a fact sheet said (see below for link). Practices interested in participating can submit applications between July 15 and September 1.

 

The CPC+ model include five key components:

  1. Access and Continuity
  2. Care Management
  3. Comprehensiveness and Coordination
  4. Patient and Caregiver Engagement, and
  5. Planned Care and Population Health

(“CMS Looks to Take Primary Care to the Next Level,” AHLA Weekly, April 15, 2016)

 

For the fact sheet on CPC+, please click here.

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

And watch for our upcoming course, Population Health and Alternative Payment Models, featuring Marian Jennings and Dan Grauman.

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

Calls for Robust Cyber Security Increase

A 77-bed hospital in Indiana fell victim to a ransomware attack on April 4 via an ordinary looking email sent to a clinical worker’s Outlook inbox. The worker opened the email and inadvertently released the malware. Recognizing something was wrong, the worker notified the IT department which immediately shut down all of the hospital’s computer systems, including its electronic health record system.

 

The EHR system was not affected by the malware even though it was open on the infected computer. But the attack forced the hospital to go without e-mail and use paper to document patient encounters until the system’s corrupted files could be deleted and replaced. (“Ransomware scare: Will hospitals pay for protection?” Modern Healthcare, April 9, 2016)

 

The recent occurrences of ransomware attacks have hospitals trying to decide whether to pay now to fortify IT systems or risk paying criminals to unfreeze their data. In the case of the Indiana hospital, a spokesperson said the organization had a backup and had added some security software to monitor its systems. It paid no ransom.

 

What happened was the email, one of several that made it past the hospital’s firewall, unleashed a virus that encrypted files on the worker’s computer hard drive and connected to a server. A window popped up giving instructions and links to retrieve a key to unlock the files.

 

Something similar has happened in several hospitals in recent weeks, including six in the last month. MedStar, a much larger and more sophisticated organization than the hospital in Indiana, had its computer systems disabled.

 

Hospitals are seeking protection from a variety of sources including legal services, security consultants, training, systems testing, cyber insurance, security software that runs on and defends computer systems, and remote-hosted software and services that can include fully staffed security operations centers that provide computerized and human watchdogs on the lookout for cyber threats 24/7. (“Ransomware scare: Will hospitals pay for protection?” Modern Healthcare, April 9, 2016)

 

Locky and Samas—Newest Ransomware

 

Locky and Samas, the newest in ransomware, have been used this year against healthcare organizations, according to a March 30 threat alert by the U.S. Department of Homeland Security and the Canadian Cyber Incident Response Centre.

 

Locky uses e-mail as a vector. It deploys a virus hidden in a document that, when opened by an unwitting e-mail recipient, launches other software that moves through an infected computer system, scrambling computer files with near-bulletproof encryption, then posts a demand that the victim pay a ransom to the hackers.

 

Its signature, the .Locky extension, attaches to the data files it encrypts. It was Locky that struck the hospital in Indiana.

 

Samas uses vulnerabilities in an organization’s Web servers. According to the federal alert, the server of an unnamed healthcare organization was compromised this year by Samas, which uploaded ransomware that infected its network.

 

According to the Associated Press, Samas was likely the virus that attacked MedStar Health in late March. MedStar’s Georgetown University Hospital in Washington and other facilities were affected, forcing clinicians to return to paper record-keeping and knocking out at least some of its computer systems for more than a week. (MedStar has not commented about the nature of its attack.) (“Ransomware scare: Will hospitals pay for protection?” Modern Healthcare, April 9, 2016)

 

Cyber security experts cannot yet identify who is behind the latest ransomware attacks. However, they warn that these are not amateurs, but well-trained professionals. One security software developer estimated that ransomware was yielding $33,000 a day, and that amount is probably climbing significantly each day.

 

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

And watch for our upcoming course, Population Health and Alternative Payment Models, featuring Marian Jennings and Dan Grauman.

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

Rice Discusses Collaborative Governance and Boundary Spanning

Continuing our series on excerpts of interviews with iProtean experts, we feature our old friend and new iProtean expert, Jim Rice, Ph.D., FACHE., on governing in an era of population health.

 

We’re moving into an era of population health management that will have profound implications, both challenges and opportunities, for boards of directors. I think it’s going to be important to examine some of the elements of what population health management is all about, and some of the requirements for success that are going to drive the work and the decision processes of boards for the next three to five years at least.

 

Population health management will reward us with psychological, political and financial incentives to pay attention to the health and well being of large populations—not just those patients who turn to our physician clinics and to our hospitals, but the population itself. The board will have to be concerned about what happens to the people’s health before they present themselves to their health care or hospital campus, and then what happens to these individuals when they are discharged from the hospital. To manage that whole continuum of care means that the boards of directors will have to oversee some entirely new collaborative arrangements with these organizations. And it’s going to move them into the arena of social determinants of health.

 

When you examine what we know across the globe about the social and societal factors that influence the health and well-being of large populations, we know that it’s about poverty and education, food security and water. And also we know, of course, those factors that create illness or injuries that have to be managed. All of these different risk factors are going to be on the plates of boards of directors to consider how best to manage those risks, how to mitigate those risks, how to remove or reduce those risks. And that’s going to mean they have to work with completely new kinds of organizations along this continuum of care. They will have to not only work with physicians, durable medical equipment companies, skilled nursing facilities, home health agencies, but they’ll also have to work with schools, with police, with first responders, and with employers—because the underlying driver of the ability to access health services and to modify behaviors relates to poverty.

 

So, boards will have to be engaged in discussions with completely new kinds of organizations that help strengthen the fabric of the society and the community and the regions in which they’re working. These organizations are often organizations that they are not used to working with.

 

When we look at the challenge of working with new organizations and governing across these organizations, organizations we may not control or own, we’re going to have to develop some new competencies and skills. One of the clusters of these competencies is the art and science of boundary spanning. It means that board members have to have one of their feet in their own organization, but also working with other organizations. They’re going to be spanning the organizational boundaries to get at more health gain, not just health care.

 

Now, we know that old joke about people that have one foot on the dock and one foot in the boat, so that’s one of the risks of boundary spanning. If we’re not very careful with our balance, we’re going to find that we’ll take some stumbles and run into some problems in our efforts to govern inter-organizational relationships.

 

 

We will feature Dr. Rice in several courses in 2016. Stay tuned!

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

And watch for our upcoming course, Population Health and Alternative Payment Models, featuring Marian Jennings and Dan Grauman.

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.