Preparing for Changes to Medicare Reimbursement—The Latest CMS Proposed Measures

As healthcare progresses towards a value-based reimbursement system, the Center for Medicare and Medicaid Services (CMS) is establishing measures aimed at improving patient care and lowering cost for healthcare organizations. For healthcare leaders, understanding CMS measures is critical to their health systems’ success.

Under a value-based structure, healthcare organizations can’t assume that they’ll get reimbursed for simply performing a service (as they did with a fee-for-service structure). As part of this process, CMS publishes an annual Measures Under Consideration List—measures proposed to affect Medicare quality and value-based purchasing programs.

Moving forward, payers will determine reimbursement based on the quality of a system’s services, as determined by the CMS measures. Healthcare organizations focused on improvement and success are therefore wise to follow developments in the annual CMS measures process closely.

CMS Proposes 97 New Measures to Influence Medicare Reimbursement

In December 2016, CMS released the List of Measures Under Consideration for December 1, 2016, in compliance with the Social Security Act. The Act requires the Department of Health and Human Services to make publicly available a list of quality and efficiency measures it is considering for adoption through rulemaking for the Medicare program.

The proposed list includes 97 new measures that could be approved and potentially incorporated into numerous Medicare programs. The 2016 list is adds to a catalog of measures that have been approved in prior years.

Each of these measures won’t necessarily be used by CMS. The list, CMS states in the overview of the 2016 proposal, is “larger than what will ultimately be adopted by CMS for optional or mandatory reporting.”

The table below lists major areas of measurement, by program, included in the 2016 proposal. A single measure may be under consideration for more than one program:

CMS Measures Under Consideration (by Program)

CMS Program Number of Measures Under Consideration
Ambulatory Surgical Center Quality Reporting Program 3
End-Stage Renal Disease Quality Incentive Program 3
Home Health Quality Reporting Program 5
Hospice Quality Reporting Program 8
Hospital-Acquired Condition Reduction Program 0
Hospital Inpatient Quality Reporting Program 19
Hospital Outpatient Quality Reporting Program 3
Hospital Readmissions Reduction Program 0
Hospital Value-Based Purchasing Program 2
Inpatient Psychiatric Facility Quality Reporting Program 3
Inpatient Rehabilitation Facility Quality Reporting Program 3
Long-Term Care Hospital Quality Reporting Program 3
Medicaid and Medicare EHR Incentive Program for Eligible Hospitals and Critical Access Hospitals 6
Medicare Shared Savings Program 1
Merit-based Incentive Payment System 35
Prospective Payment System-Exempt Cancer Hospital Quality Reporting Program 10
Skilled Nursing Facility Quality Reporting Program 3
Skilled Nursing Facility Value-Based Purchasing Program 0


Measures Focus on Three Key Areas: Improving Post-Acute Care, MACRA, and Quality Reporting

CMS revises the list with several intentions:

  1. Give multi-stakeholder groups the opportunity to provide input on the selection of quality and efficiency measures.
  2. Consider the multi-stakeholder groups’ input in selecting quality and efficiency measures.
  3. Publish in the Federal Register the rationale for the use of any quality and efficiency measures that are not endorsed by the National Quality Forum (NQF).
  4. Assess the quality and efficiency impact of the use of endorsed measures and make that assessment available to the public at least every three years.

Although the measures touch on a diverse set of Medicare programs, CMS gave special attention to measures that support the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act)—with a focus on Rehabilitation Facilities, Skilled Nursing Facilities, and Home Health Agencies.

A second area of focus is the Merit-based Incentive Program System (MIPS), which the Medicare Access and CHIP Reauthorization Act  (MACRA) of 2015 established to replace the unpopular Medicare sustainable growth rate methodology for the physician fee schedule. Thirty-five of the proposed December 2016 measures could potentially be used in the MIPS program.

Nineteen of the measures also focus on Hospital Inpatient Quality Reporting, a section of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 that authorized CMS to pay hospitals that successfully report designated quality measures a higher annual update to their payment rates.

Understanding CMS Measures Helps Ready Health Systems for Value-Based Care

The proposed measures were open to public comment until February 1, 2017. Not all items will survive, but the current proposed measures help health systems understand the areas of care delivery that Medicare will hold them accountable for.

A best practice in the industry is to build the capacity to collect and analyze new measures that directly impact a health system’s core services. Most of these measures lag by a year or more when publicly reported. Many health systems will not become aware of the new measures until their certified vendors or local Medicare Quality Improvement Organization (QIO) brings them to their attention—such as on the eve of the first data collection period—at which point an organization doesn’t have time to improve performance before the data reaches the public.

Health systems only stand to benefit by preparing in advance for CMS measures. Because CMS selects measures that are already nationally recognized as priority areas for improvement, health systems can take preemptive action to improve care now. This will not only better serve patients, but also better prepare organizations to perform well on publicly reported measures and minimize or eliminate the risk of quality penalties that will reduce Medicare reimbursement.

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