On April 14, 2008, the Centers for Medicare & Medicaid Services (CMS) released for public display the Inpatient Prospective Payment System (IPPS) proposed rule for fiscal year (FY) 2009. The changes would apply to more than 3,500 hospitals paid under the IPPS effective for discharges on or after October 1, 2008 through September 30, 2009. The proposed rule will be published in the Federal Register on April 30, 2008. CMS will accept public comments on the proposed changes through June 13, 2008. The final rule will be issued on or before August 1, 2008.

Highlights of the Proposed Rule

• CMS is proposing to reduce the payment rates by -0.9% for FY 2009 in order to maintain budget neutrality and account for changes in documentation and coding practices as hospitals continue to gain experience with the MS-DRGs. The -0.9% documentation and coding adjustment in FY 2009 is in addition to the -0.6% adjustment in FY 2008, yielding a combined effect of -1.5%.
• CMS is proposing to address charge compression issues in the calculation of MS-DRG relative weights for devices and implants by setting up a separate cost center to distinguish devices and implants from other medical supplies.
• CMS is proposing to subdivide current MS-DRG 245 (AICD Lead and Generator Procedures) and create a new MS-DRG to separate the implantation or replacement of leads from the implantation or replacement of pulse generators, and revised the current title for MS-DRG 245 to “AICD Generator Procedures,” which would include procedure codes for pulse generators (37.96, 37.98 and 00.54). The proposed new MS-DRG would be titled “MS-DRG 265 AICD Lead Procedures” and include procedure codes for the leads (37.95, 37.97 and 00.52).
• CMS is proposing a revision of the surgical hierarchy for Major Diagnostic Category 5 (Diseases and Disorders of the Circulatory System) by placing MS-DRG 245 (AICD Generator Procedures) above proposed new MS-DRG 265 (AICD Lead Procedures).
• CMS is declining to reassign procedure code 37.90 exclusively to the higher paying MS-DRG 251 for insertion of a left atrial appendage device for treatment of atrial fibrillation, or create a specific new MS-DRG that would reimburse hospitals for the cost of the device. Procedure code 37.90 is currently assigned to both MS-DRG 250 and 251.
• CMS is proposing to set the outlier threshold at $21,025 in FY 2009, down from $22,185 in FY 2008. This number may change in the final rule to reflect more recent information.
• Beginning in FY 2009, CMS is proposing to base 100% of relative weights on costs, which completes the third year of the transition from weights based on charges to  weights based on cost.
• CMS projects that the market basket update used to adjust hospital payments will be 3.0%. Hospitals that have successfully reported quality measures in FY 2008 will receive the full update in FY 2009. Hospitals that do not successfully report the quality measures will receive an update of 1.0%.
• For FY 2009, CMS proposes to expand the current list of 8 Hospital Acquired Conditions (HAC) to 17 total and include the following 9 additional conditions (Staphylococcus aureus associated disease, Clostridium difficile associated disease, Surgical site infections following certain elective procedures, Legionnaires’ disease, Extreme blood sugar derangement, Iatrogenic pneumothorax , Delirium, Ventilator-associated pneumonia and Deep vein thrombosis/Pulmonary embolism).
• CMS also proposes to add 43 new quality measures to the existing 30 for FY 2009, bringing the total number of measures to 73. The new measures include the following:
  • Stroke measures (five new measures)
  • Cardiac surgery measures (15 new measures)
  • Surgical Care Improvement Project (one new measure)
  • Hospital readmissions (three new measures)
  • Nursing care (four new measures)
  • Patient safety indicators developed by the Agency for Healthcare
  • Research and Quality (AHRQ) (five new measures)
  • Inpatient quality indicators developed by AHRQ (four new measures)
  • Venous thromboembolism (six new measures)

Other Issues of Interest

• CMS is proposing revisions to the physician Self-Referral rules and hospital conditions of participation.
• CMS is soliciting public comment on gainsharing arrangements and whether they should establish an exception, specifically the types of requirements and safeguards to use and whether certain services, clinical protocols or other arrangements should not qualify for the exception.
• CMS is soliciting public comment on physician-owned implant companies and the extent to which these arrangements pose a risk for program abuse.
• CMS is soliciting public comments on financial relationships between hospitals and physicians and the creation of a mandatory “Disclosure of Financial Relationships Report” (DFRR) to collect information.

Heart Rhythm Society staff will continue to review the proposed rule and provide a more extensive summary and analysis in the weeks to come. In the mean time, you can dowload the entire proposed rule.