Thursday, August 4, 2011

CMS Announces Quality of Care Initiatives

The Centers for Medicare and Medicaid Services has had a busy seven days, releasing information on four new initiatives since July 29th. Three of these focus on accuracy and payment changes for Medicare in fiscal year 2012, and the last describes policy changes for inpatient rehabilitation facilities.

A spike in payment levels inspired this policy, which will align Medicare payments with costs, reducing Medicare skilled nursing facility Prospective Payment System payments by $3.87 billion. This reduction is a drop of 11.1% from FY 2011. In the press release, CMS Administrator Donald M. Berwick, M.D. says, “CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care…The adjustments to the payment rates for next year reflect that policy.”

The 2011 spike was caused by a miscalculation when CMS attempted to restrict damage caused by the Resource Utilization Groups Version 4 (RUG-IV) classification system.

In an effort to improve the quality of care in hospices, CMS is increasing payments to hospices treating Medicare patients by 2.5%. The increase will come at the cost of required quality of care reporting for those patients. In further detail, the release explains that, “CMS calculates each hospice’s aggregate cap by multiplying the number of patients served by the hospice in a cap year by a cap amount. Medicare payments made to a hospice during the cap year that exceed the hospice’s aggregate cap must be refunded to Medicare.”

CMS has also approved a similar rule, geared to improve inpatient care in general acute-care and long-term-care hospitals. The final rule continues a payment approach that encourages hospitals to adopt practices that reduce errors and prevent patients from acquiring new illnesses or injuries during a hospital stay,” said CMS Administrator Donald M. Berwick, M.D.   “This approach is part of a comprehensive strategy being implemented across Medicare’s payment systems that is intended to reduce overall costs by improving how care is delivered.”

This rule meshes with an ACA requirement that reduces Medicare pay-outs to hospitals with high readmission levels for certain conditions.

Another CMS ruling is set to increase “IRF payment rates under the IRF Prospective Payment System (PPS) by 2.2 percent and establishes a new quality reporting system authorized by the Affordable Care Act.” The rule will take effect in FY 2012, and will provide further motivation for hospitals and other health facilities to improve inpatient care practices.

In addition, the final rule will update the case-mix group relative weights using FY 2010 IRF claims and FY 2009 IRF cost report data, freeze the facility-level adjustment factors for FY 2012 at FY 2011 levels for one additional year while the agency explores ways to improve upon the accuracy and consistency of the current methodology used to calculate the facility-level adjustment factors, and allow IRF and inpatient psychiatric facility units to expand in the middle of a cost reporting period, rather than restricting such expansions to the start of a cost reporting period.


Pam Argeris is a thought leader in the Healthcare Industry and possesses extensive, hands-on experience with CMS compliance, and multiple regulatory bodies such as NCQA, JACHO, and DOI. In her role at Merrill Corp., Pam focuses on developing solutions for compliance and quality assurance, delivered in a cost effective manner to improve beneficiary and prospect communications. You can contact Pam at

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