FY 2021 IPPS Proposed Rule: CMS Defers Discussion on Hospital Star Ratings but Provides Updates on Other Hospital Quality Programs - McDermott+Consulting

FY 2021 IPPS Proposed Rule: CMS Defers Discussion on Hospital Star Ratings but Provides Updates on Other Hospital Quality Programs

The Centers for Medicare and Medicaid Services (CMS) released proposed updates to the Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2021, including updates to the various hospital quality programs.

CMS is not providing an update to the overall Hospital Quality Star Rating methodology as was expected. CMS has indicated that they will address the issue in future rulemaking.

CMS is presenting a limited set of proposals for the IPPS quality programs, which are summarized below.

Hospital Readmissions Reduction Program

The Hospital Readmission Reduction Program (HRRP) reduces payments to hospitals with excess readmissions. A hospital’s performance is based on six unplanned readmission measures. The annual payment reduction is capped at 3% (i.e., payment adjustment factor of 0.97).

Proposal (FY 2023 Applicable Period): CMS uses a three-year data collection period referred to as an “applicable period” for HRRP measures. For FY 2023, CMS is proposing an applicable period from July 1, 2018 through June 30, 2021. To streamline this policy, CMS proposes to automatically update the applicable period annually by 1 year for all subsequent years, unless otherwise specified by the Secretary.

Hospital Value-Based Purchasing Program

The Hospital Value-Based Purchasing (VBP) Program withholds participating hospitals’ Medicare payments by two percent and uses these reductions to fund incentive payments based on a hospital’s performance on a set of outcome measures.

Proposal (Performance Standards): CMS assesses each hospital’s performance under this program by comparing its Achievement and Improvement scores for each applicable measure. CMS uses a threshold and a benchmark to establish performance standards that are used in scoring a hospital’s performance. In this rule, CMS is providing estimated and newly established performance standards for certain measures for the FY 2023 – FY 2026 program years.

Hospital-Acquired Condition Reduction Program

Under the Hospital-Acquired Condition (HAC) Program, hospital report on a set of measures on hospital-acquired conditions. Hospitals with scores in the worst performing quartile will be subject to a 1 percent payment reduction.

Proposal (FY 2023 applicable period): CMS uses a 24-month data collection period referred to as an “applicable period” for the HAC program. CMS proposes that for FY 2023, the applicable period for two HAC measures (CMS PSI 90 and CDC NHSN HAI) will be the 24-month period beginning 1 year advanced from the previous program year’s start of the applicable period. To streamline this policy, CMS proposes an automatic advance of this this 24-month period by 1 year for all subsequent years, unless otherwise specified by the Secretary.

Proposal (Validation of HAC Reduction Program Measure Data): CMS is proposing a number of technical changes to the validation process for the HAC Reduction Program to better align it with the Hospital Inpatient Quality Reporting (IQR) Program

Proposal (Digital Submissions for Medical Records Requests): CMS is proposing to require hospitals to submit digital files when submitting medical records for validation of HAC Reduction Program measures, for the FY 2024 program year and subsequent years.

Hospital IQR Program

Under the Hospital IQR Program, hospitals are required to report data on measures in order to receive the full annual percentage increase for IPPS services that would otherwise apply.

Proposal (Data submission): CMS is proposing to require the use of electronic file submissions via a CMS-approved secure file transmission process and will no longer allow the submission of paper copies of medical records or copies on digital portable media (e.g. flashdrive).

Proposal (Electronic Clinical Quality Measures (ECQMs)): CMS is proposing a number of technical changes related to the validation, analysis, scoring, validation and educational reviews of ECQMs.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

The PCHQR is a quality reporting program for PPS-exempt cancer hospitals.

Proposal (Measure Refinement): CMS is proposing to refine two existing program measures: Catheter-associated Urinary Tract infection (CAUTI) (NQF #0138) and Central Line-associated Bloodstream Infection (CLABSI) (NQF #0139). CMS is also proposing to publicly display the refined versions of the measures beginning in the fall of CY 2022.

Medicare and Medicaid Promoting Interoperability Programs

The Medicare and Medicaid Electronic Health Reporting (EHR) Incentive Programs (now known as the Promoting Interoperability Programs) were established in 2011.

CMS includes a number of policies related to these programs in the 2021 proposed rule. The more significant policies include:

  • an EHR reporting period of a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs);
  • maintaining the Electronic Prescribing Objective’s Query of PDMP measure as optional and worth 5 bonus points in CY 2021;
  • progressively increasing the number of quarters for which hospitals are required to report eCQM data, from the current requirement of one self-selected calendar quarter of data, to four calendar quarters of data, over a 3-year period; and
  • begin publicly reporting eCQM performance data beginning with the eCQM data reported by eligible hospitals and critical access hospitals for the reporting period in CY 2021 on the Hospital Compare and/or data.medicare.gov websites or successor websites.


For more information visit the McDermottPlus Payment Innovation Resource Center or contact Sheila Madhani at 202-204-1459 or smadhani@mcdermottplus.com.