The Latest CMS Proposed Rule and its Impact on Hospitals’ Cardiovascular Business

News | Published: Monday, April 25, 2016


By Ryan Graver

Each year the CMS Rule process is an important milestone for hospitals to inform their annual planning processes. In recent years the rules have contained significant reporting requirements, penalties which shift risk to hospitals as well as projected volumes and payment changes.

Last week CMS released the Fiscal Year 2017 (FY17) Proposed Inpatient Rule, which outlines the proposed requirements and payment changes that will go into effect October 1, 2016. Cardiovascular related services continue to play a significant role in terms of inpatient volumes, with Heart Failure continuing to lead the way. Additionally, these services represent an area of important focus as clinical quality and outcome requirements impacting payment penalties continue to grow.

Cardiovascular Service Line - Proposed Payment and Forecasted Volume Changes for FY17

Overall payment changes for CVSL related DRG will see an increase for FY17 with Electrophysiology services representing the largest relative proposed change. CMS forecasted inpatient volumes are largely flat to declining, with Interventional services forecasting the largest relative decline reflecting the continued shift of services into the outpatient setting.  The following table summarizes these changes by department within cardiovascular related services:

In addition to payment and forecasted volume changes, CMS outlined numerous changes impacting hospitals’ requirements under the Affordable Care Act related to quality, cost and outcomes. The following summarize several key policy changes hospital executives should pay close attention to as the relative impact on revenues continue to increase.

Hospital Readmissions Program

  • CMS is adding CABG to the existing conditions for the program (AMI, Heart Failure, Pneumonia, COPD, TKA, THA)
  • Estimated impact to be $532 million, an increase of ~$100 million from 2016
  • CMS is updating public reporting policy so excess readmission rates are posted on Hospital Compare

Value-Based Purchasing

  • Percentage in play for hospitals rises to 2%
  • CMS estimates that $1.7 billion will be redistributed among hospitals through this program
  • CMS proposed adding two condition-specific payment measures (acute myocardial infarction and heart failure) for FY 2021 program year, along with a 30-day mortality measure following CABG surgery beginning FY 2022 program year.

Observation Services

  • CMS is implementing written (to be signed by the patient) and oral notice be provided to patients that are receiving observation services longer than 24 hours. The notice must be given no later than 36 hours after observation services are provided.

Two Midnight Rule

  • This policy is still in effect – generally, services for Medicare patients are expected to span two midnights to be considered an inpatient admission, however, CMS did eliminate the 0.2% reduction to DRG payments that was associated with this policy
  • For FY 2017, CMS is proposing a positive 0.8% adjustment to account for negative adjustments in prior years (note: the positive 0.8% is reflected in the overall 0.9% increase proposed for DRG payments)

Leadless Pacemakers and more

  • Also included are: ICD-10 coding changes, Disproportionate Share reductions, the creation of new DRG assignments for CV related procedures such as Leadless Pacemakers and the Hospital IQR program technical eCQM submissions requirements

The FY17 proposed rule contains significant changes requiring the attention and focus of cardiovascular leaders. These proposed changes, as well as strategies to successfully navigate these new requirements, will be discussed at the 2016 CVSL Symposium, June 9-11, in Washington, D.C. With the 60-day comment period on the proposed rule currently scheduled to close on June 16, 2016, I urge you to make plans to participate in this important meeting. Join colleagues from across the country and members of the Cardiology Advocacy Alliance to share experiences and explore ideas on successfully responding to the new normal of health care.

Ryan Graver is President of MedAxiom Ventures.