INSIGHTS FOR HEALTH CARE 

OCTOBER 14, 2015  
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2016 Inpatient Prospective Payment System Final Rule
Effective October 1, 2015

By: Marie White 
 
Effective October, 1, 2015, the Centers for Medicare and Medicaid Services (CMS) released a new final rule that impacts Inpatient Prospective Payment System (IPPS) providers. For your convenience, we've summarized the key updates below:
 
Market Basket Update: The overall market basket increase is only 0.9% after the various reductions are applied. If a hospital has failed to qualify as a meaningful user, a -1.2% reduction is triggered, resulting in a negative market basket change. This does not include the 2% sequester reduction (which will continue until 2021).
 
Three additional programs may result in up to 5.75% reductions to IPPS payments:
 
Program
Nature of reduction
Start Date
Readmissions penalties
Penalty only,
October 1, 2012
 
3% maximum for FY 2015 onwards
 
Value Based Purchasing (VBP)
Penalty or bonus depending on performance, 1.75% at risk in FY 2016
October 1, 2012
 
 
Hospital Acquired Conditions (HAC)
Penalty only,
October 1, 2014
 
1% FY 2015 onwards 
 
 
Value Based Purchasing and Hospital Acquired Conditions Update: The FY 2016 final results for the Value Based Purchasing (VBP) and Hospital Acquired Conditions (HAC) will not be released until October 2015.
 
For Value Based purchasing, the domain weighting is changing for 2018 and will be evenly split at 25% between:
  1. Patient and Caregiver Experience/Coordination
  2. Efficiency and Cost
  3. Clinical Care - Outcomes
  4. Safety
Medicare Disproportionate Uncompensated Care Update: Medicare Disproportionate Uncompensated Care (DUC) continues to decline correlating with the increase in the population having insurance as mandated by the Affordable Care Act (ACA). For 2016, Factor 2 is $6,406,145,534 (versus $7,647,644,885 in 2015).
 
Two Midnight Rule Update: Post-payment audits for the Two Midnight rule are to resume October 1, 2015. The audits will focus on those hospitals that consistently failed to meet admission standards in the past or that fail to improve after educational intervention. The -0.2% reduction to IPPS payments was upheld.
 
Bundled Payment Care Initiative: CMS is reviewing comments on the Bundled Payment Care Initiative (BPCI). The new bundle for Hip and Knee Joint Replacement goes into effect in 2016 and runs through 2020. It is mandatory for 75 MSAs, including: Bismarck, ND; Oklahoma City, OK; and Carson City, NV.
 
Questions?
Please contact Marie White or your Eide Bailly service provider.


   
Marie White
Health Care Reimbursement Manager

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