Medicare program; prospective payment system for long-term care hospitals: annual payment rate updates and policy changes. Final rule

This final rule establishes the annual update of the payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). It also changes the annual period for which the rates are effective. The rates will be effective from July 1 to June 30 instead of from October 1 through September 30, establishing a "long-term care hospital rate year" (LTCH PPS rate year). We also change the publication schedule for these updates to allow for an effective date of July 1. The payment amounts and factors used to determine the updated Federal rates that are described in this final rule have been determined based on this revised LTCH PPS rate year. The annual update of the long-term care diagnosis-related groups (LTC-DRG) classifications and relative weights remains linked to the annual adjustments of the acute care hospital inpatient diagnosis-related group system, and will continue to be effective each October 1. The outlier threshold for July 1, 2003, through June 30, 2004, is also derived from the LTCH PPS rate year calculations. In addition, we are making an adjustment to the short-stay outlier policy for certain LTCHs and a policy change eliminating bed-number restrictions for pre-1997 LTCHs that have established satellite facilities and elect to be paid 100 percent of the Federal rate or when the LTCH is fully phased-in to 100 percent of the Federal prospective rate after the transition period.     

Medicare program; prospective payment system for long-term care hospitals RY 2007: annual payment rate updates, policy changes, and clarification. Final rule

This final rule updates the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). The payment amounts and factors used to determine the updated Federal rates that are described in this final rule have been determined for the LTCH PPS rate year July 1, 2006 through June 30, 2007. The annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights remains linked to the annual adjustments of the acute care hospital inpatient diagnosis-related group system, and will continue to be effective each October 1. The outlier threshold for July 1, 2006, through June 30, 2007, is also derived from the LTCH PPS rate year calculations. We are also finalizing policy changes and making clarifications.     

Medicare program; prospective payment system for long-term care hospitals: annual payment rate updates, policy changes, and clarification. Final rule

This final rule updates the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). The payment amounts and factors used to determine the updated Federal rates that are described in this final rule have been determined based on the LTCH PPS rate year July 1, 2005 through June 30, 2006. The annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights remains linked to the annual adjustments of the acute care hospital inpatient diagnosis-related group system, and will continue to be effective each October 1. The outlier threshold for July 1, 2005 through June 30, 2006 is also derived from the LTCH PPS rate year calculations. We are adopting new labor market area definitions for the purpose of geographic classification and the wage index. We are also making policy changes and clarifications.     

Medicare program; prospective payment system for long-term care hospitals: annual payment rate updates and policy changes. Final rule

This final rule updates the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). The payment amounts and factors used to determine the updated Federal rates that are described in this final rule have been determined based on the LTCH PPS rate year. The annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights remains linked to the annual adjustments of the acute care hospital inpatient diagnosis-related group system, and will continue to be effective each October 1. The outlier threshold for July 1, 2004 through June 30, 2005 is also derived from the LTCH PPS rate year calculations. In this final rule, we also are making clarifications to the existing policy regarding the designation of a satellite of a LTCH as an independent LTCH. In addition, we are expanding the existing interrupted stay policy and changing the procedure for counting days in the average length of stay calculation for Medicare patients for hospitals qualifying as LTCHs.     

Medicare program; prospective payment system for long-term care hospitals RY 2008: annual payment rate updates, and policy changes; and hospital direct and indirect graduate medical education policy changes. Final rule

This final rule updates the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs). The final payment amounts and factors used to determine the updated Federal rates that are described in this final rule were determined based on the LTCH PPS rate year July 1, 2007 through June 30, 2008. The annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights remains linked to the annual adjustments of the acute care hospital inpatient diagnosis-related group system, and continue to be effective each October 1. The final outlier threshold for July 1, 2007, through June 30, 2008, is derived from the LTCH PPS rate year calculations. We are also finalizing policy changes which include revisions to the GME and IME policies. In addition, we are adding a technical amendment correcting the regulations text at Sec. 412.22.     

Medicare program; photocopying reimbursement methodology. Final rule

This final rule increases the rate of reimbursement for expenses incurred by prospective payment system PPS) hospitals for photocopying medical records requested by Quality Improvement Organizations (QIOs), formerly known as Utilization and Quality Control Peer Review Organizations (PROs). We are increasing the rate from 7 cents per page to 12 cents per page to reflect inflationary changes in the labor and supply cost components of the formula. This final rule also provides for the periodic review and adjustment of the per-page reimbursement rate to account for inflation and changes in technology. The methodology for calculating the per-page reimbursement rate will remain unchanged. We are also providing for the payment of the expenses of furnishing photocopies to QIOs, to other providers subject to a PPS (for example, skilled nursing facilities and home health agencies), in accordance with the rules established for reimbursing PPS hospitals for these expenses.     

Medicare program; change in methodology for determining payment for extraordinarily high-cost cases (cost outliers) under the acute care hospital inpatient and long-term care hospital prospective payment systems. Final rule

In this final rule, we are revising the methodology for determining payments for extraordinarily high-cost cases (cost outliers) made to Medicare-participating hospitals under the acute care hospital inpatient prospective payment system (IPPS). Under the existing outlier methodology, the cost-to-charge ratios from hospitals' latest settled cost reports are used in determining a fixed-loss amount cost outlier threshold. We have become aware that, in some cases, hospitals' recent rate-of-charge increases greatly exceed their rate-of-cost increases. Because there is a time lag between the cost-to-charge ratios from the latest settled cost report and current charges, this disparity in the rate-of-increases for charges and costs results in cost-to-charge ratios that are too high, which in turn results in an overestimation of hospitals' current costs per case. Therefore, we are revising our outlier payment methodology to ensure that outlier payments are made only for truly expensive cases. We also are revising the methodology used to determine payment for high-cost outlier and short-stay outlier cases that are made to Medicare-participating long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). The policies for determining outlier payment under the LTCH PPS are modeled after the outlier payment policies under the IPPS.     

Medicare programs: changes to the end-stage renal disease prospective payment system transition budget-neutrality adjustment. Interim final rule with comment period

This interim final rule with comment will revise the end-stage renal disease (ESRD) transition budget-neutrality adjustment finalized in the CY 2011 ESRD Prospective Payment System (PPS) final rule for renal dialysis services provided on April 1, 2011 through December 31, 2011. We are revising the transition budget-neutrality adjustment to reflect the actual election decision to receive payment under the ESRD PPS for renal dialysis services furnished on or after January 1, 2011 made by ESRD facilities, rather than projected elections using the same methodology as described in the ESRD PPS proposed and final rules. This results in a zero percent adjustment for renal dialysis services furnished April 1, 2011 through December 31, 2011.     

Medicare program; home health prospective payment system rate update for calendar year 2011; changes in certification requirements for home health agencies and hospices. Final rule

This final rule sets forth an update to the Home Health Prospective Payment System (HH PPS) rates, including: the national standardized 60-day episode rates, the national per-visit rates, the nonroutine medical supply (NRS) conversion factors, and the low utilization payment amount (LUPA) add-on payment amounts, under the Medicare prospective payment system for HHAs effective January 1, 2011. This rule also updates the wage index used under the HH PPS and, in accordance with the Patient Protection and Affordable Care Act of 2010 (Affordable Care Act), updates the HH PPS outlier policy. In addition, this rule revises the home health agency (HHA) capitalization requirements. This rule further adds clarifying language to the "skilled services" section. The rule finalizes a 3.79 percent reduction to rates for CY 2011 to account for changes in case-mix, which are unrelated to real changes in patient acuity. Finally, this rule incorporates new legislative requirements regarding face-to-face encounters with providers related to home health and hospice care.     

Medicare program; inpatient psychiatric facilities prospective payment system--update for rate year beginning July 1, 2011 (RY 2012). Final rule

This final rule updates the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs) for discharges occurring during the rate year (RY) beginning July 1, 2011 through September 30, 2012. The final rule also changes the IPF prospective payment system (PPS) payment rate update period to a RY that coincides with a fiscal year (FY). In addition, the rule implements policy changes affecting the IPF PPS teaching adjustment. It also rebases and revises the Rehabilitation, Psychiatric, and Long-Term Care (RPL) market basket, and makes some clarifications and corrections to terminology and regulations text.     

Medicare program; home health prospective payment system rate update for calendar year 2012. Final rule

This final rule sets forth updates to the home health prospective payment system (HH PPS) rates, including: the national standardized 60-day episode rates; the national per-visit rates; and the low utilization payment amount (LUPA) under the Medicare PPS for home health agencies effective January 1, 2012. This rule applies a 1.4 percent update factor to the episode rates, which reflects a 1 percent reduction applied to the 2.4 percent market basket update factor, as mandated by the Affordable Care Act. This rule also updates the wage index used under the HH PPS, and further reduces home health payments to account for continued nominal growth in case-mix which is unrelated to changes in patient health status. This rule removes two hypertension codes from the HH PPS case-mix system, thereby requiring recalibration of the case-mix weights. In addition, the rule implements two structural changes designed to decrease incentives to upcode and provide unneeded therapy services. Finally, this rule incorporates additional flexibility regarding face-to-face encounters with providers related to home health care.     

Per case prospective payment for psychiatric inpatients: an assessment and alternatives

Psychiatric hospitals and clinics are exempted from the Medicare prospective payment system. In this paper we examine the appropriateness of the DRG classification system for psychiatric patients and argue that, using this system as the basis of payment, two types of problems are likely to arise. We categorize these problems as "risks to hospitals" and "risks to patients" and examine the existing literature to determine whether these risks are likely to be significant. We propose a different approach to paying prospectively for psychiatric care, and suggest modifications that could be made to the structure of PPS to mitigate negative incentives embedded in the current system. Although the main focus of the paper is on the unit of payment, we also make some observations about issues arising in connection with the level of payment.     

Medicare program; prospective payment system and consolidated billing for skilled nursing facilities--update. Health Care Financing Administration (HCFA), HHS. Final rule

This final rule sets forth updates to the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs), for fiscal year 2001. Annual updates to the PPS rates are required by section 1888(e) of the Social Security Act, as amended by the Medicare, Medicaid and State Child Health Insurance Program Balanced Budget Refinement Act of 1999, related to Medicare payments and consolidated billing for SNFs. In addition, this rule sets forth certain conforming revisions to the regulations that are necessary in order to implement amendments made to the Act by section 103 of the Medicare, Medicaid and State Child Health Insurance Program Balanced Budget Refinement Act of 1999.     

Reimbursement schemes for hospitals, malpractice liability, and intrinsic motivation

We develop a simple multi-task principal-agent model to analyze the interplay between optimal reimbursement schemes for hospitals and liability rules (basic model). We then extend our model and assume that the hospital is intrinsically motivated to exert positive effort for quality and cost reduction. This effort, however, is biased towards quality. Moreover, the intrinsic motivation may be crowded out by monetary incentives. In such a setting, we find that a pure prospective payment system (PPS) that has become widespread in recent years can only be optimal in the unlikely case where malpractice liability holds hospitals fully responsible for expected harm. For other cases, we confirm the prejudice that PPS may lead to inefficiently low quality. Then, the traditional fee-for-service (FFS) system is superior if the intrinsic motivation is high and relatively little biased towards quality, whereas mixed systems should be chosen otherwise. Our model sheds light on why countries like the USA with a tough liability system haven been less reluctant to switch from FFS to PPS than Germany, for instance.     

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); FY97 DRG updates--DoD. Notice of DRG revised rates

This notice provides the updated adjusted standardized amounts, DRG relative weights, outlier thresholds, and beneficiary cost-share per diem rates to be used for FY 1997 under the CHAMPUS DRG-based payment system. It also describes the changes made to the CHAMPUS DRG-based payment system in order to conform to changes made to the Medicare Prospective Payment System (PPS).     

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); FY96 DRG updates--DoD. Notice of DRG revised rates

This notice provides the updated adjusted standardized amounts, DRG relative weights, outlier thresholds, and beneficiary cost-share per diem rates to be used for FY 1996 under the CHAMPUS DRG-based payment system. It also describes the changes made to the CHAMPUS DRG-based payment system in order to conform to changes made to the Medicare Prospective Payment System (PPS).