PPS Specific

• Base Operating Rate:  The proposed base operating rate is increased by approximately 1.6% for hospitals that successfully participate in the Inpatient Quality Reporting Program (IQR) and are meaningful users of electronic health records (EHRs).
• DSH: The proposed rule makes two significant changes to “uncompensated care” (UC) Disproportionate Share (DSH) payments.

• Reversal of Two-Midnight Related Payment Increase: CMS decreased FY18 operating payments by .6% to remove the cumulative increase in payments related to its .2% payment cut for FYs 2014 - 2017 related to the two-midnight policy.
• Hospital Readmissions Reduction Penalty (HRRP): Hospitals with higher than expected readmissions rates will continue to be subject to a penalty, which for FY2018 is proposed at a maximum 3% penalty. This proposed rule estimates that in FY18 2,591 hospitals will be subject to the HRRP, resulting in $564M in savings to Medicare.
• HAC (Hospital-acquired Conditions): Approximately 771 hospitals will be penalized 1% of their IPPS payments resulting from the hospital-acquired condition (HAC) penalty. The proposed rule solicits feedback on questions related to future measures and socio-economic risk adjustment of the HAC measures.
• Value Based Purchasing (VBP) Program: The proposed FY18 IPPS rule will redistribute approximately $1.9B in operating payments through the VBP program. All hospitals will be subject to a 2% reduction in base operating diagnosis-related group payments. The rule proposes the following changes to the VBP measures:

2023. Remove the current 8 indicator PSI-90 measure from the safety domain in 2019, and replace it with the modified 10 indicator PSI-10 measure in 2023.
2024. Incorporate the 30-day pneumonia episode cost measure into the efficiency and cost reduction domain beginning in FY22.
2025. Beginning in 2021, the Medicare Spend Per Beneficiary (MSPB) measure will account for 50% of the Efficiency and Cost Reduction domain, and the other condition-specific payment measures, weighed equally, will comprise the remaining 50% of a hospital’s domain score.

CAH Specific

• 96-Hour Certification Requirement:  For inpatient CAH services to be payable under Medicare Part A, the statute requires that a physician certify that the individual may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the CAH. Based on feedback from stakeholders, CMS has reviewed the CAH 96-hour certification requirement to determine if there are ways to reduce its burden on providers. In this proposed rule, CMS is providing notice that it will direct Quality Improvement Organizations (QIOs), Medicare Administrative Contractors (MACs), the Supplemental Medical Review Contractor (SMRC), and Recovery Audit Contractors (RACs) to make the CAH 96-hour certification requirement a low priority for medical record reviews conducted on or after October 1, 2017. This means that absent concerns of probable fraud, waste or abuse of the coverage requirement, these contractors will not conduct medical record reviews.
• EHR Incentive Program: In this proposed rule, CMS is proposing two modifications to the finalized electronic clinical quality measures (eCQM) reporting policies for the CY 2017 reporting period/FY 2019 payment determination and the CY 2018 reporting period/FY 2020 payment determination. Specifically, they are proposing to:  (1) decrease the number of eCQMs for which hospitals must submit data; and (2) decrease the number of calendar quarters for which hospitals are required to submit data.  These proposals are made in conjunction with the proposals to align requirements for the Hospital IQR Program and the Medicare and Medicaid EHR Incentive Programs for hospitals and CAHs.

General

• Electronic Signatures on the Medicare Cost report: In lieu of requiring the provider to sign the certification statement with an original signature on a hard copy of the Medicare cost report’s Certification and Settlement Summary page, Medicare is proposing to revise the regulation to allow providers to use an electronic signature.  This signature would be placed on the signature line of the certification statement and may be : 1) any format of the original signature that contains the first and last name of the provider’s administrator or chief financial officer (for example, photocopy or stamp) or 2) an electronic signature that must be the first and last name of the provider’s administrator or chief financial officer entered it the provider’s electronic program.  CMS believes that allowing providers to utilize an electronic signature would afford providers greater flexibility in signing the certification (WE AGREE!!).  This rule has a proposed implementation date for cost reporting periods beginning on or after October 1, 2017.
• Sale or scrapping of assets on/after December 1, 1997: In this section of this proposed rule, CMS is proposing revisions to the Medicare provider reimbursement regulations to clarify their  longstanding policy pertaining to allowable costs and the limits on the valuation of a depreciable asset that may be recognized in establishing an appropriate allowance for depreciation for assets disposed of on or after December 1, 1997. Questions have arisen with regard to whether this limitation on the valuation of depreciable assets depends on the manner in which a provider disposes of an asset. In this proposed rule, CMS is clarifying that the elimination of the gain or loss for depreciable assets applies to assets a provider disposes of by sale or scrapping on or after December 1, 1997, regardless of whether the asset is scrapped, sold as an individual asset of a Medicare participating provider, or sold incident to a provider’s change of ownership.