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How Will Proposed New Quality Improvement Program (QIP) Requirements Impact Dialysis Provider Reimbursement?

Posted in Healthcare Services Investing

On July 23rd, at the same time that it released the final rule relating to the new bundled payment methodology for renal dialysis providers, CMS issued a proposed rule that would create a new Quality Incentive Program (QIP) for dialysis services, tying a facility’s payment to how well it meets the QIP performance standards.   The QIP, which is the first pay-for-performance program in a Medicare fee-for-service payment system, is scheduled to begin on January 1, 2012. 
 
The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) required CMS to develop the QIP to improve the quality of care facilities provide to dialysis patients.  The proposed rule utilizes just three dialysis quality measures, all of which are measured on a facility-wide basis by looking at the total patient population of the facility as compared to national averages: Hemoglobin above 12 grams per deciliter (g/dL), Hemoglobin below 10 g/dL and URR (urea reduction ratio) above 65%.  These common measures of dialysis quality are what most industry experts expected to be included in the rule and are consistent with CMS’s own QIP outline released in September 2009.  However, in light of comments received during the bundled payment rule-making process, CMS proposes to weight Hgb <10 as the most important of the three measures, accounting for 50% of a facility’s score, while the other two measures would each count for 25%. Each of the three measures would factor into the Total Performance Score, a 30 point scale which measures performance against 2008 national averages (or 2007 performance, if it is lower). The proposed rule includes a sliding scale of payment reductions for 2012, where the minimum Total Performance Score (TPS) that facilities would need to achieve in order to avoid a payment reduction would be 26. If a particular facility does not achieve a TPS of at least 26, the reimbursement withhold would be in .5% increments. 

If this methodology becomes final law, CMS estimates that 3,205 facilities would achieve a TPS of at least 26 and thus see no payment reduction in 2012. On the other hand, CMS estimates 709 facilities would see a 0.5% payment reduction due to TPS of 21 to 25; 183 facilities would see a 1.0% payment reduction for TPS between 16 and 20; 184 facilities would see a 1.5% payment reduction for TPS between 10 and 15; and only 30 facilities would see a 2.0% payment reduction for TPS 10 or below.  Thus 1,106 (or 27%) of all dialysis facilities would receive some payment reduction. However, viewed in terms of dollars only, for an industry estimated to receive $8.5 billion in Medicare payments in 2012, CMS’s estimate of approximately $17.5 million withheld in 2012 appears much less significant at roughly just 0.2%.

In addition to using the quality measures in determining the TPS for reimbursement, CMS proposes to continue publishing facilities’ results online (as has been the practice of CMS for many years on its own Dialysis Facility Compare website) as well on a certificate that would be displayed in the facility and likely tied to the facility in other CMS-mandated manners.  Comments on the proposed rule are due by September 24, 2010 and use of the certificates is one topic about which CMS is actively soliciting commentary.  CMS anticipates releasing a final rule on the QIP later this year.

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