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Fact sheets: CMS final rule to improve quality of care during hospital inpatient stays

CMS final rule to improve quality of care during hospital inpatient stays

OVERVIEW:  On August 2, 2013 the Centers for Medicare & Medicaid Services (CMS) issued a final rule [CMS-1599-F] updating Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospitals Prospective Payment System (LTCH PPS) in fiscal year (FY) 2014.

The final rule, which will apply to approximately 3,400 acute care hospitals and approximately 440 LTCHs, will affect discharges occurring on or after October 1, 2013.

In addition to setting the standards for payments for Medicare-covered inpatient services, the FY 2014 hospital payment rule describes the process for implementing the new Hospital-Acquired Conditions (HAC) Reduction Program, which will begin in FY 2015.  The rule updates measures and financial incentives in the Hospital Value-Based Purchasing (VBP) and Readmissions Reduction programs.  It also revises measures for the Hospital Inpatient Quality Reporting (IQR) program, Inpatient Psychiatric Facility Quality Reporting and Long-Term Care Hospital (LTCH) Quality Reporting programs, and the PPS-Exempt Cancer Hospital Quality Reporting program.

This fact sheet discusses major quality-related provisions of the final rule.  A separate fact sheet on payment changes is available on the CMS Web page at: https://www.cms.gov/Newsroom/Newsroom-Center.html


The FY 2014 hospital payment rule finalizes the general framework for the Hospital-Acquired Condition (HAC) Reduction Program for the FY 2015 implementation.  Section 3008 of the Affordable Care Act requires CMS to establish a program for IPPS hospitals to improve patient safety, by imposing financial penalties on hospitals that perform poorly with regard to hospital-acquired conditions.  HACs are conditions that patients did not have when they were admitted to the hospital, but which developed during the hospital stay.

Under the HAC Reduction Program, hospitals that rank in the lowest-performing quartile of hospital-acquired conditions will be paid 99 percent of what otherwise would have been paid under IPPS, beginning in FY 2015.  The rule finalizes the quality measures and the scoring methodology to determine this quartile, as well as the process hospitals will use to review and correct their data.

In the first year of the program, FY 2015, CMS will use measures that are part of the IQR program. The HAC measures will consist of two domains of measure sets.

Domain 1 will include the Agency for Health Care Research and Quality (AHRQ) composite PSI #90. This measure includes the following indicators:  Pressure ulcer rate (PSI 3); Iatrogenic pneumothorax rate (PSI 6); Central venous catheter-related blood stream infection rate (PSI 7); Postoperative hip fracture rate (PSI 8); Postoperative pulmonary embolism (PE) or deep vein thrombosis rate (DVT) (PSI 12); Postoperative sepsis rate (PSI 13); Wound dehiscence rate (PSI 14); and Accidental puncture and laceration rate (PSI 15).

Domain 2 measures consist of two healthcare-associated infection measures developed by the Centers for Disease Control and Prevention’s (CDC) National Health Safety Network:  Central Line-Associated Blood Stream Infection and Catheter-Associated Urinary Tract Infection.

Hospitals will be given a score for each measure within the two domains.  A domain score will be calculated—with Domain 1 weighted at 35 percent and Domain 2 weighted at 65 percent—to determine a total score under the program.  Risk factors such as the patient’s age, gender, and comorbidities will be considered in the calculation of the measure rates so that hospitals serving a large proportion of sicker patients will not be penalized unfairly.  Hospitals will be able to review and correct their information.


The Hospital Readmissions Reduction program began on October 1, 2012. The maximum reduction to hospitals with excess readmissions will increase from one percent of base operating payments in FY 2013 to two percent of payment amounts in FY 2014, as specified by law.

CMS currently assesses hospitals’ readmission payment adjustments using three readmissions measures endorsed by the National Quality Forum (NQF): heart attack, heart failure, and pneumonia. CMS has increased the number and types of planned readmissions that no longer count against a hospital’s readmission rate.  CMS also is finalizing its proposal to add two new readmission measures, which will be used to calculate readmission penalties beginning for FY 2015: readmissions for hip/knee arthroplasty and chronic obstructive pulmonary disease.


The Hospital IQR Program grew out of the Hospital Quality Initiative developed by CMS in consultation with hospital groups.  By statute, annual payment updates for hospitals that do not participate successfully in the Hospital IQR program are reduced by 2.0 percentage points.  Beginning with fiscal year 2015, hospitals that do not participate will lose one-quarter of the percentage increase in their payment updates.  Since the implementation of this financial penalty, hospital participation has increased to well over 99 percent.

Measures reported under the Hospital IQR Program are published on the Hospital Compare Web site (https://www.hospitalcompare.hhs.gov/), and may later be adopted for use in the Hospital VBP Program, mandated by the Affordable Care Act, which began to affect hospital payment rates in FY 2013.

The Hospital IQR Program measure set includes chart-abstracted measures, such as measures related to heart attack, heart failure, pneumonia, and surgical care improvement measures; claims-based measures, such as mortality and readmissions; healthcare-associated infections measures; a surgical complications measure; a patient experience of care survey-based measure; immunization measures, and structural measures to assess hospitals’ capacity to improve quality of care.

For the FY 2016 payment determination and subsequent years, CMS will remove six chart abstracted measures and one structural measure.  We will suspend one chart-abstracted measure and adopt five new claims-based measures:  (1) 30-day risk-standardized COPD Readmission; (2) 30‑day risk standardized COPD mortality; (3) 30-day risk standardized stroke readmission; (4) 30-day risk standardized stroke mortality; and (5) AMI payment per episode of care.

In the final rule, CMS finalizes a policy to validate two new chart- abstracted Healthcare Associated Infections measures: hospital-onset methicillin-resistant staphylococcus aureas (MRSA) bacteremia, and clostridium difficile.  CMS is also finalizing a proposal to reduce the number of records used for HAI validation from 48 records per year to 36 records per year beginning with the FY 2015 payment determination and to provide hospitals with the option to transmit secure electronic versions of medical information to meet validation requirements.

The final rule also includes changes to the Medicare Electronic Health Record (EHR) Incentive Program, such as expanding the submission period for reporting clinical quality measures electronically; giving eligible hospitals and critical access hospitals the option of submitting aggregate clinical quality measure data for meaningful use by attestation; and streamlining the process for submitting aggregate population data under the case number threshold exemption policy.

Under the final rule, hospitals participating in the Hospital IQR program will have the option to submit data electronically, through Certified Electronic Health Record Technology (CEHRT), for up to 16 selected measures across four measure sets:  Stroke (STK), Venous Thromboembolism (VTE), Emergency Department (ED), and Perinatal Care (PC). A hospital that chooses this option might be able to meet both the reporting requirements for clinical quality measures under the Medicare EHR Incentive Program and the reporting requirement for these measures under the IQR program simultaneously.  Hospitals that do not submit electronically will continue to report a full year’s worth of data via chart-abstraction for the IQR program.

CMS believes the use of CEHRTs will greatly simplify and streamline reporting, in particular for Hospital IQR Program quality data now manually abstracted from charts. Our intent is to harmonize measures across hospital quality reporting programs, improve care, and minimize the reporting burden on hospitals through a single voluntary submission to comply with multiple programs.


The rule finalizes new quality reporting measures for LTCHs, PPS-Exempt Cancer Hospitals, and Inpatient Psychiatric Facilities in 2015 and beyond.

LTCH Quality Reporting.   CMS is continuing to expand the LTCH Quality Reporting Program and is finalizing four new LTCH quality measures that will affect the FY 2017 and FY 2018 payment updates:  an all-cause unplanned readmission measure for 30 days post-discharge from long-term care hospitals; the Centers for Disease Control and Prevention’s National Healthcare Safety Network (NHSN) facility-wide inpatient hospital-onset MRSA bacteremia outcome measure; and the NHSN facility-wide inpatient hospital-onset clostridium difficile infection (CDI) outcome measure.  CMS is also finalizing the National Quality Forum measure of the percent of residents experiencing one or more falls with major injury (long stay) for the FY 2018 payment determination.

PPS-Exempt Cancer Hospital Quality Reporting Program. The final rule adopts new quality measures for the PPS-Exempt Cancer Hospital Quality Reporting Program.  A total of 11 PPS-Exempt Cancer Hospitals are covered under this program.  In this final rule, CMS is adding one new measure of surgical site infection for the FY 2015 program, and adopting 12 new measures covering surgical processes of care, patient experience of care, and oncology care for the FY 2016 program.

Inpatient Psychiatric Facility Quality Reporting Program. CMS is finalizing our proposal to add two new measures to the Inpatient Psychiatric Facility (IPF) Quality Reporting Program: alcohol-use screening and follow-up after hospitalization for mental illness. CMS also requests voluntary information on IPFs’ efforts to assess the patient experience of care for the FY 2016 payment determination. Submission of this information will be completely voluntary and will not in any way affect a facility’s FY 2016 payment determination.


Program Requirements for FY 2014.   The final rule describes operational details for FY 2014, including an increase in the applicable percent reduction to base operating Diagnosis Related Group (DRG) payment amounts (1.25 percent), which is required by law to fund this program.  The rule also includes the total estimated amount available for value-based incentive payments to hospitals as a result of this reduction (approximately $1.1 billion).

Program Requirements for FY 2016.  The final rule readopts all finalized FY 2015 Clinical Process of Care measures for the FY 2016 measure set, except AMI-8A, primary percutaneous coronary intervention received within 90 minutes of hospital arrival; PN-3b, blood cultures performed in the emergency department prior to initial antibiotic received in hospital; HF-1, discharge instructions for heart failure patients; and SCIP-Inf-1, prophylactic antibiotic received within one hour prior to surgical incision.  The final rule also readopts a patient experience survey measure, a Medicare spending per beneficiary measure, three 30-day mortality measures, an outcome measure that assesses patient safety, and Central-Line Associated Blood Stream Infection (CLABSI), a healthcare-associated infection measure.

CMS also is adopting new measures for FY 2016, including one new clinical process measure, IMM-2 influenza immunization, and two new healthcare-associated infection measures, Catheter-Associated Urinary Tract Infection (CAUTI) and Surgical Site Infection (SSI), the latter of which is stratified into two separate surgery sites.

The final rule includes the performance and baseline periods for the FY 2016 program and for certain measures for FY 2017 through FY 2019, and finalizes re-classification of the Hospital VBP program domains to more closely align with the National Quality Strategy in FY 2017.  It also finalizes domain weighting for the reclassified domains for the FY 2017 program, as well as domain weighting under the current domain structure for FY 2016.

The final rule adopts performance standards, including achievement thresholds and benchmarks for the FY 2016 program, including the “floors” for all eight Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) dimensions, as well as performance standards for certain measures for FY 2017 and FY 2019.

Additional Policies.  The final rule also finalizes a disaster/extraordinary circumstance exception process under the Hospital VBP program for hospitals struck by a natural disaster or experiencing extraordinary circumstances.  Under this policy, CMS will allow a hospital to request a Hospital VBP program exception within 90 days of the natural disaster or other extraordinary circumstance.

More information about the Hospital VBP program is available online at: https://www.cms.gov/hospital-value-based-purchasing.

The final IPPS/LTCH PPS rule can be downloaded from the Federal Register at: https://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1.