The 2019 Inpatient Prospective Payment System final rule: An overview of provisions affecting surgical practices

The Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2019 Inpatient Prospective Payment System (IPPS) final rule August 2. The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospital expenses, including the patient’s condition and the cost of clinical labor in the hospital’s geographic area. This rule establishes policies for Medicare payments to hospitals for inpatient stays occurring between October 1, 2018, and September 30, 2019.

On June 25, the American College of Surgeons (ACS) submitted comments to CMS on the IPPS proposed rule released earlier in the year, which the agency took into consideration when drafting the final regulation. Because the IPPS outlines coverage and reimbursement criteria for Medicare Part A inpatient hospital claims and a large proportion of surgical care is provided in the inpatient setting, the provisions in this rule are likely to affect many surgical practices. This article describes some of the policy changes that CMS finalized for FY 2019.

Inpatient admission orders

CMS revised its documentation policies for hospital inpatient admissions to no longer require inclusion of a written physician admission in a patient’s medical record. The agency acknowledges that the intent, decision, and recommendation of a physician to admit a beneficiary as an inpatient can clearly be derived from the clinical information already present in the medical record, and the agency states that its admission order policy may have added additional and unnecessary administrative burden for providers. Before this revision was made, reimbursement for medically necessary and reasonable inpatient admissions was frequently denied because of technical discrepancies or minor documentation errors related to the admission order (for example, missing physician admission signatures, signatures occurring after discharge, and so on) in beneficiaries’ records.

Physician certification and recertification

CMS eliminated its requirement that a physician statement certifying or recertifying the medical necessity of a service provided to a Medicare beneficiary must specifically indicate where supporting information for the certification or recertification statement is located in the patient’s medical record (for example, in the physician’s progress notes). The agency noted that, as previously worded, its policy requiring that the location of supporting information be included in the physician’s certification or recertification statement often resulted in claim denials because the statement technically failed to identify the exact location of such information in the medical record, even when the information nevertheless was readily apparent to the reviewer.

OR and non-OR procedure designations

For FY 2019, CMS reclassified 10 International Classification of Diseases, 10th Revision (ICD-10)-procedure coding system (PCS) codes describing the open insertion of totally implantable vascular access devices (TIVADs) as operating room (OR), rather than non-OR, procedures, indicating that the provision of these services often necessitates the specialized setting that an OR provides. Following the 10th revision of ICD-10 code set in 2015, CMS began conducting annual reviews of the designation of specific ICD-10-PCS codes as non-OR or OR procedures. Services assigned OR status are typically expected to require the resources available in an OR, such as sterile technique and anesthesia, whereas non-OR procedures generally can be performed in less resource-intensive settings. The newly designated OR TIVAD codes are listed in Table 1.

Table 1. FY 2019 ICD-10-PCS OR TIVAD codes designated as OR procedures

Table 1. FY 2019 ICD-10-PCS OR TIVAD codes designated as OR procedures

Medicare GME-affiliated groups for new urban teaching hospitals

In the IPPS final rule, CMS clarified the criteria facilities must meet to enter a Medicare graduate medical education (GME) affiliation agreement to allow new urban teaching hospitals to loan slots to other teaching hospitals. A teaching hospital’s full-time equivalent (FTE) cap dictates the maximum number of resident slots for which the hospital may receive reimbursement under the Medicare program to cover associated GME costs. Within a Medicare GME-affiliated group, one hospital that has unused residency slots may share its extra slots with an affiliate hospital that has exceeded its FTE cap for GME reimbursement. However, under present CMS policy, certain hospitals are prohibited from sharing their unused slots; new urban teaching hospitals (that is, hospitals that began training residents after 1996) are only permitted to join a Medicare GME-affiliated group to receive residency slots, not to lend slots to other, more established hospitals (that is, hospitals that began training residents before 1996).

CMS noted in the FY 2019 IPPS proposed rule that the agency received questions about whether two or more new urban teaching hospitals can form their own Medicare GME-affiliated groups, considering that the current policy only addresses groups composed of established and new teaching hospitals. In recognizing that its existing rules preclude affiliations that are designed to facilitate additional training at new hospitals, including smaller, community-based facilities, CMS finalized its proposal to allow new urban teaching hospitals to loan slots to other new teaching hospitals through a Medicare GME affiliation agreement starting July 1, 2019. The agency also will permit new teaching hospitals to loan slots to established hospitals beginning five years after the new hospital’s FTE caps are set.

Quality reporting program requirements

According to the 2019 IPPS final rule, CMS is evaluating its quality reporting programs through a new lens that focuses on the meaningfulness of measures and the reduction of burden for clinicians. The Meaningful Measures initiative aims to promote improved patient health outcomes while minimizing several different types of costs, including costs of collection and reporting burden, costs to comply with multiple quality programs, costs associated with reporting duplicative quality measures, and the costs associated with program oversight and other federal/state regulations. In the 2019 IPPS final rule, CMS cited three main factors for removing measures: the measures were duplicative, “topped-out” (performance on the measure is at or close to 100 percent across most reporters), or the costs to report the measure outweigh the benefits.

The ACS supports the concept of this initiative but does not agree that the Meaningful Measures framework captures what it means for a measure to be “meaningful” from the surgical perspective. The College’s objection is based on the fact that CMS continues to use population-based measures designed for a payment program, rather than measures that can directly assess surgical quality across an episode of care, such as those metrics used in true quality improvement programs.

The ACS does support certain aspects of the initiative, including the de-duplication of measures (removing the measure from one program but retaining it in another). De-duplication is intended to help reduce reporting burden, streamline the program, make it easier for patients and providers to understand, and prevent hospitals from being penalized or rewarded for the same measure across multiple programs.

The ACS does not support the general elimination of measures based on the topped-out criterion. Instead, the ACS has recommended that measures that meet the “topped-out” criterion but that key stakeholders still considered meaningful be maintained through consolidation into a composite measure. The ACS has concerns that eliminating measures solely based on topped-out status will have the unintended consequence of removing high-value surgical process measures, which are meant to attain 100 percent performance, that are proven to improve surgical care. Another unintended consequence of removing these measures is that it may signal to clinicians that these measures are no longer worthwhile or important to monitor.

The ACS also has stated general support for removing measures if the cost to report the measure is extremely resource-intensive and yields little benefit, but emphasized the importance of including the perspective of stakeholders when making these determinations. For example, CMS may deem a measure too costly to implement, but providers may find it clinically meaningful for improving the quality of care. The ACS recommended that CMS work in consultation with a multidisciplinary team of experts to better understand what is meaningful from their perspective and to accurately determine the true costs of reporting measures.

As a result of analyzing the measures through the lens of the Meaningful Measures initiative, CMS finalized the removal of 18 measures across all of the inpatient quality reporting programs and will de-duplicate 25 measures.

Hospital IQR Program

The Hospital Inpatient Quality Reporting (IQR) Program is a pay-for-reporting program that requires hospitals to report specific quality measures to CMS. Successful participation is simply determined based on whether hospitals report the Hospital IQR measures; however, the payments made to hospitals under this program are unrelated to a hospital’s performance on those measures. The Hospital IQR Program primarily functions to publicly report hospital quality performance on Hospital Compare. Under the Hospital IQR Program, hospitals must meet the requirements for reporting specific quality information to receive the full market basket update for that year.

In this final rule, CMS finalized the removal of 39 measures from the Hospital IQR Program. In all, 21 measures are being removed due to de-duplication, and will be maintained in the Hospital Value-Based Purchasing (VBP) Program and Hospital-Acquired Condition (HAC) Reduction Program. A total of 18 measures are being removed from all inpatient quality reporting programs because CMS determined the measures are either topped-out or the costs to report them outweigh the benefits. Notably, CMS will remove the six health care-associated infection (HAIs) measures in reporting year 2020.

Hospital VBP Program

Under the Hospital VBP Program, CMS calculates incentive payments to hospitals based on their performance and improvement on specified measures. As part of CMS’ effort to remove duplicative measures and align measurement priorities more specifically to the intent of the individual incentive programs, CMS finalized the removal of four measures from the Hospital VBP Program. These measures will be retained in the Hospital IQR Program. The 2019 reporting year measure set of the Hospital VBP will now comprise 12 measures.

As a reminder, the Hospital VBP and Hospital IQR programs assess performance in the calendar year two years prior to the payment year. So, performance in calendar year 2019 will be reflected in your hospital’s 2021 payment adjustment.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) program

The PCHQR Program began in 2014 as a pay-for-reporting program for cancer hospitals. The initial program included five quality measures, and subsequent rulemaking has modified the measure set. A total of 15 measures are required in 2019.

CMS finalized the removal of the following measures beginning with the FY 2021 program year:

  • Oncology: Radiation Dose Limits to Normal Tissues
  • Oncology: Medical and Radiation—Pain Intensity Quantified
  • Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk Patients
  • Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Patients

Hospital Readmission Reduction Program (HRRP) and HAC Reduction Program

The HRRP is a pay-for-performance program in which facilities are assessed on their performance in six clinical domains and may receive a negative payment adjustment if they experience more readmissions than CMS expected to occur based on their patient population. The HAC Reduction Program is a pay-for-performance program in which facilities must report certain measures related to hospital-acquired conditions and may receive a negative payment adjustment if their performance ranks in the lower 25 percent of eligible facilities. CMS did not remove any measures from the HRRP or the HAC Reduction Program.

EHR meaningful use and the PI Program

The Electronic Health Record (EHR) Incentive Program, also known as Meaningful Use, originally established in 2011, is a CMS program that requires participating hospitals and clinicians to demonstrate “meaningful use” of certified EHR technology (CEHRT) by reporting certain measures related to the use of CEHRT. These measures are grouped together based on topical domains, referred to as objectives. In the 2018 reporting period, facilities are required to report 16 measures across six objectives to avoid a penalty. These six objectives are: protection of patient health information, e-prescribing, coordination of care, patient electronic access, health information exchange, and public health and clinical data exchange.

In this final rule, CMS finalized substantial changes to the EHR Incentive Program. Under the rule, the EHR Incentive Program will shift its focus to promote interoperability and improve patient access to health information. To align with the focus of its new initiatives, CMS renamed the EHR Incentive Program to the Promoting Interoperability (PI) Program. This name change also will be reflected in the Merit-based Incentive Payment System (MIPS) where the Advancing Care Information program category will be renamed, once again, to the PI category.

The ACS supported CMS’ increased focus on interoperability and patient access to their digital health information and recommended that CMS define interoperability to include the spectrum of health information technology across the digital ecosystem in future policy proposals. Incorporating the full health data ecosystem allows the wider aggregation of information relevant to the surgical patient and also spurs development of clinical tools that can contribute to advancements in the field of surgery.

Requirement to use 2015 Edition CEHRT

Beginning in FY 2019, CMS finalized that the 2015 Edition CEHRT will be required to meet the requirement of the hospital Medicare Performance Improvement Program. To avoid a penalty, the facility must use 2015 Edition CEHRT. The ACS did not support the mandated use of 2015 Edition CEHRT, commenting that the PI program should offer incentives (not penalties) that reward the uptake of health information technology that advances the interoperable exchange of health information including, but not limited to, EHRs. EHRs are a critical component of documenting a patient’s care but provide an incomplete picture of that care. EHRs do not incorporate information about a patient from multiple sources and contexts inside and outside the office setting, such as information from remote monitoring devices or patient-generated data.

New performance-based scoring methodology

In addition, CMS finalized significant changes to the scoring methodology, the measures and objectives in the program, and the definition of what determines a facility to be a meaningful user. Beginning with the 2019 reporting period (2021 payment year), CMS will transition to a performance-based scoring methodology instead of the current pass/fail threshold-based scoring methodology. Under the current 2018 threshold-based methodology, facilities must report 16 measures across six domains to avoid a penalty. In the threshold-based methodology, clinicians must report a certain proportion (for example, 15 percent of cases that apply to the measure denominator) to fulfill the reporting requirements of the measure. However, the newly finalized performance-based scoring methodology for 2019 will evaluate performance on each measure, then calculate a weighted-average score based on performance and objective weight.

CMS also reduced the number of objectives from six to four by eliminating the electronic protected health information and coordination of care objectives and reduced the total measures in the program from 16 to six.

Also new for FY 2019, facilities will be considered meaningful users and avoid a penalty if they achieve 50 out of 100 points in the program. In addition to using 2015 Edition CEHRT, to successfully participate in the PI program, facilities must report every measure. This all or nothing approach means facilities must report, attest to, or claim exclusion for every measure in the PI program or receive a penalty. Table 2 displays the PI objectives and required measures for the 2019 reporting year.

Table 2. Performance-based scoring methodology for PI reporting periods in 2019 (with annotated changes from 2018)

Table 2. Performance-based scoring methodology for PI reporting periods in 2019 (with annotated changes from 2018)

New opioid-related measures

CMS finalized two new measures: Query of Prescription Drug Monitoring Program (PDMP) and Verify Opioid Treatment Agreement (OTA). These measures are being introduced as part of CMS efforts to address the opioid epidemic through the incorporation and advancement of existing health information systems into EHRs. Both measures will be voluntary and eligible for bonus points during the 2019 reporting period (2021 payment year). In the 2020 reporting period, providers will be required to report Query of PDMP, while Verify OTA will remain voluntary and eligible for bonus points.

The ACS supported CMS’ efforts to address the opioid epidemic and the intent of both measures. However, we raised concerns about the operational barriers these new measures present to surgeons, including the present lack of functionality in EHRs to capture and report the measures, the disruption the measures could cause to clinical workflow, and the differing quality and requirements of state PDMPs. The ACS suggested a first step to address existing barriers would be for CMS and the Office of the National Coordinator for Health Information Technology (ONC) to identify and designate a national standard that allows EHRs to view information from PDMPs, as well as to easily query the EHR for an OTA.

Table 3 displays the descriptions, numerators, and denominators of the new measures.

Table 3. Measure specifications of the new promoting interoperability measures eligible for bonus points in 2019

Table 3. Measure specifications of the new promoting interoperability measures eligible for bonus points in 2019

The full text of the FY 2019 IPPS final rule is available for public review in the Federal Register.

Additional IPPS resources are available on the ACS website. If you have questions regarding the rule, contact the ACS Division of Advocacy and Health Policy at

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