The Centers for Medicare and Medicaid Service (CMS) announced on April 18, 2016, that it will no longer impose an inpatient payment cut to hospitals under the two-midnight rule as part of proposed changes to its hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2017. The rule would increase rates by 0.85% in FY 2017 after accounting for inflation and other adjustments. The agency also proposed an adjustment of 0.2% moving forward to account for the 0.2% it cut when the two-midnight policy was implemented in 2014. A temporary adjustment of 0.6% would be instituted in FY 2017 in order to retroactively adjust the cuts made in 2014, 2015, and 2016. Additionally, the proposed rule would include an initial market-basket update of 2.8% for hospitals that were meaningful users of electronic health records in 2015 and submitted data on quality measures. Looking ahead to FY 2018, CMS proposed a new scoring methodology for the Hospital-Acquired Condition Reduction Program, in which hospitals would be scored based on how their measured performance compares with the national mean, not on their decile of performance. In FY 2019, as part of expansion of the Inpatient Quality Reporting Program, CMS would require hospitals to report a full year's worth of data on 16 electronic Clinical Quality Measures (eCQM). The proposed rule will be published in the April 27 Federal Register and comments will be accepted through June 17.

HRC Recommends: As CMS continues to align Medicare reimbursement and healthcare quality, risk managers and quality improvement professionals must keep tabs on the agency's regulatory initiatives and their impact on the organization's approach to healthcare delivery. CMS's proposed rule to update its IPPS contains numerous measures that affect healthcare quality and patient safety. Risk managers can demonstrate their value to an organization by staying abreast of regulatory developments and serving as facilitators to help their organizations identify and manage the risks that arise from CMS's regulatory initiatives.