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Medicare program, fiscal year 1990; mid-year changes to the inpatient hospital prospective payment system--HCFA. Final rule with comment period.

This final rule with comment implements several provisions of the Omnibus Budget Reconciliation Act of 1989 that affect Medicare payment for inpatient hospitals and that, in general, take effect on April 1, 1990. This final rule also responds to comments received concerning the changes we made in 1989 in implementing provisions of the Medicare Catastrophic Coverage Act of 1988 concerning adjustments applicable to prospective payment hospitals and to the target amounts of hospitals and units excluded from the prospective payment system due to the elimination of the day limitation on covered inpatient hospital days. We are making additional changes in these provisions to take into account the Medicare Catastrophic Coverage Repeal Act of 1989, and changes in the law made by the Family Support Act of 1988, which clarified the criteria for adjusting target amounts and changed the date for implementing that provision.

Hospitals↗

Medicare program; prospective payment system and consolidated billing for skilled nursing facilities; reopening of comment period--HCFA. Notice of reopening of comment period for interim final rule.

We published an interim final rule with comment period in the Federal Register on May 12, 1998 (63 FR 26252). That interim final rule implements provisions in section 4432 of the Balanced Budget Act of 1997 related to Medicare payment for skilled nursing facility services. Those include the implementation of a Medicare prospective payment system for skilled nursing facilities, consolidated billing, and a number of related changes. A document published on July 13, 1998 extended the comment period for the May 12, 1998 interim final rule until September 11, 1998. This document reopens and extends the comment period for an additional 30 days after the date of publication of this notice. The document also clarifies the explanation of the Federal rates.

Centers for Medicare and Medicaid Services, U.S.↗

Changes in sickness at admission following the introduction of the prospective payment system.

We developed disease-specific measures of sickness at admission based on medical record data to study mortality of Medicare patients with one of five conditions (congestive heart failure, acute myocardial infarction, cerebrovascular accident, pneumonia, and hip fracture). We collected an average of 73 sickness variables per disease, but our final sickness-at-admission scales use, on average, 19 variables. These scales are publicly available, and explain 25% of the variance in 30-day postadmission mortality for patients with acute myocardial infarction, pneumonia, or cerebrovascular accident. Sickness at admission increased following the introduction of the prospective payment system (PPS). For our five diseases combined, the 30-day mortality to be expected because of sickness at admission was 1.0% higher in the 1985-1986 period than in the 1981-1982 period (16.4% vs 15.4%), and the expected 180-day mortality was 1.6% higher (30.1% vs 28.5%). Studies of the effects of PPS on mortality must take this increase in sickness at admission into account.

Aged↗

The Payment Error Prevention Program (PEPP): reducing Medicare payment errors in prospective payment system hospitals.

Peer Review Organizations (PROs) are charged by the Health Care Financing Administration (HCFA) to assist in protecting the integrity and solvency of the Medicare program. Recent audits of the Medicare program from the Office of Inspector General (OIG) revealed that more than $12 billion Medicare dollars in 1998 were spent in improper payments, with more than 25% attributed to prospective payment system (PPS) hospitals. The Payment Error Prevention Program (PEPP) is an initiative designed by HCFA in 1999 to assist PROs in meeting the goal of reducing payment errors in PPS hospitals. PEPP is implemented through the development of quality improvement (QI) methodologies. These projects are designed to achieve measurable improvements in processes and outcomes of payment errors. PEPP works to reduce payment errors at PPS hospitals through cooperative efforts with Ohio agencies and licensing boards, federal law enforcement organizations, HCFA contractors, hospital medical staffs, and medical and osteopathic associations.

Centers for Medicare and Medicaid Services, U.S.↗

Medicare program; prospective payment system for hospital outpatient services: revisions to criteria to define new or innovative medical devices, drugs, and biologicals eligible for pass-through payments and corrections to the criteria for the grandfather provision for certain Federally Qualified Health Centers. Health Care Financing Administration (HCFA), HHS. Interim final rule with comment period.

This interim final rule with comment period changes one criterion and postpones the effective date for two other criteria that a new device, drug, or biological must meet in order for its cost to be considered "not significant" for purposes of determining its eligibility for transitional pass-through payments. It also changes the transitional pass-through payment policy to include new single use medical devices that come in contact with human tissue and that are surgically implanted or inserted in a patient whether or not the devices remain with the patient after the patient is released from the hospital outpatient department. These policies represent a departure from those presented in the April 7, 2000 Federal Register final rule with comment period entitled, "Prospective Payment System for Hospital Outpatient Services." This interim final rule with comment period also corrects a trigger date for grandfathering of provider-based Federally Qualified Health Centers (FQHCs) to conform with the intent not to disrupt existing FQHCs with longstanding provider-based treatment that we discussed in the April 2000 final rule. Under the criteria in the April 2000 final rule with comment period, FQHCs are treated as departments of a provider without regard to the criteria for provider-based status in that document if they meet other criteria and were designated as FQHCs before 1995. Under this correction, facilities that meet those other criteria and were designated as FQHCs or "look-alikes" on or before April 7, 2000 would continue to be treated as provider-based. In addition, we are clarifying how the requirement for prior notice to beneficiaries is to be applied in emergency situations. Also, we are clarifying the protocols for off-campus departments in emergency situations.

Ambulatory Care↗

A risk-based prospective payment system that integrates patient, hospital and national costs.

We suggest that a desirable form for prospective payment for inpatient care is hospital average cost plus a linear combination of individual patient and national average cost. When the coefficients are chosen to minimize mean squared error loss between payment and costs, the payment has efficiency and access incentives. The coefficient multiplying patient costs is a hospital specific measure of financial risk of the patient. Access is promoted since providers receive higher reimbursements for risky, high cost patients. Historical cost data can be used to obtain estimates of payment parameters. The method is applied to Medicare data on psychiatric inpatients.

Costs and Cost Analysis↗

Medicare program; prospective payment system for hospital inpatient services; redesignation of rules--HCFA. Final rule.

This rule redesignates the prospective payment regulations under a new Part 412. The purpose is to provide more adequate space for the complex policies and procedures that currently are compressed into eight section (42 CFR 405.470 through 405.477). Locating these rules in a separate part makes them easier to use and facilitates amendment or expansion.

Centers for Medicare and Medicaid Services, U.S.↗

Changes in follow-up care for Medicare surgical patients under the prospective payment system.

In this study, changes in the number, site, and source of follow-up visits and allowed charges were examined for follow-up visits provided to Medicare surgical patients between 1984 and 1986. Among the 21 surgical procedures studied, follow-up visits decreased by 5.2%, after adjusting for case mix. Despite the physician fee freeze during the most of the study period, total allowed charges increased by 8.1%, indicating that the average intensity of visits increased by 14.0%. Inpatient visits decreased 6.7%, while outpatient visits increased 3.9%. Thus, while some substitution of outpatient for inpatient visits occurred, prospective payment system-related reductions in inpatient length of stay were associated with reductions in both the total visits and total allowed charges. Holding other factors constant, the 9.5% overall reduction in length of stay produced a 6.4% reduction in total allowed charges. The authors concluded, then, that prospective payment system had a significant effect in reducing the growth of Medicare expenditures for physician visits. The reduction in submitted claims for inpatient follow-up visits and the absence of a strong substitution effect suggest that some inpatient visits may not have been necessary. These results also raise several issues concerning Medicare's global fee for surgical procedures, and provide additional evidence in support of a uniform global fee policy under the new Medicare fee schedule.

Aftercare↗

Medicare program; changes to the inpatient rehabilitation facility prospective payment system and fiscal year 2004 rates. Final rule.

In this final rule, we are establishing the prospective payment rates for inpatient hospital services furnished under Medicare by inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2004, as required under section 1886(j)(3)(C) of the Social Security Act (the Act). As required by law and regulations, we are specifying the classification and weighting factors for the IRF case- mix groups and providing a description of the methodology and data used in computing the prospective payment rates for FY 2004. These rates are applicable to discharges occurring on or after October 1, 2003 and before October 1, 2004. In addition, we are revising and clarifying policies governing the payment for inpatient hospital services furnished by IRFs under the IRF PPS.

Diagnosis-Related Groups↗