PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:
Proposed Action:
Addition of section 86-1.37 to Title 10 NYCRR.
Statutory authority:
Public Health Law, section 2807-c(35)(b)(v)
Subject:
Potentially Preventable Readmissions.
Purpose:
Implements a revised reimbursement policy related to hospital readmissions that are determined to be potentially preventable.
Text of proposed rule:
Pursuant to the authority vested in the Commissioner of Health by section 2807-c(35) of the Public Health Law, Subpart 86-1 of Title 10 of the Official Compilation of Codes, Rules and Regulations of the State of New York, is amended by adding a new Section 86-1.37, to be effective upon publication of the Notice of Adoption in the New York State Register, to read as follows:
Part 86-1.37 Readmissions
(a) For discharges occurring on and after July 1, 2010, Medicaid rates of payment to hospitals that have an excess number of readmissions as defined in accordance with the criteria set forth in subdivision (c), as determined by a risk adjusted comparison of the actual and expected number of readmissions in a hospital as described by subdivision (d), shall be reduced in accordance with subdivision (e).
(b) Definitions. For purposes applicable to this section the following terms shall be defined as follows:
(1) Potentially Preventable Readmission (PPR) shall mean a readmission to a hospital that follows a prior discharge from a hospital within 14 days, and that is clinically-related to the prior hospital admission.
(2) Hospital shall mean a general hospital as defined pursuant to section 2801 of the Public Health Law.
(3) Observed Rate of Readmission shall mean the number of admissions in each hospital that were actually followed by at least one PPR divided by the total number of admissions.
(4) Expected Rate of Readmission shall mean a risk adjusted rate for each hospital that accounts for the severity of illness, APR-DRG, and age of patients at the time of discharge preceding the readmission.
(5) Excess Rate of Readmission shall mean the difference between the observed rates of potentially preventable readmissions and the expected rate of potentially preventable readmissions for each hospital.
(6) Behavioral Health shall mean an admission that includes a primary or secondary diagnosis of a major mental health related condition, including, but not limited to, chemical dependency and substance abuse.
(7) Managed Care Encounter Data shall mean claims-like data that describes services provided by managed care plans to their enrollees.
(c) Readmission Criteria.
(1) A readmission is a return hospitalization following a prior discharge that meets all of the following criteria:
(i) The readmission could reasonably have been prevented by the provision of appropriate care consistent with accepted standards in the prior discharge or during the post discharge follow-up period.
(ii) The readmission is for a condition or procedure related to the care during the prior discharge or the care during the period immediately following the prior discharge and including, but not limited to:
(a) The same or closely related condition or procedure as the prior discharge.
(b) An infection or other complication of care.
(c) A condition or procedure indicative of a failed surgical intervention.
(d) An acute decompensation of a coexisting chronic disease.
(iii) The readmission is back to the same or to any other hospital.
(2) Readmissions, for the purposes of determining PPRs, excludes the following circumstances:
(i) The original discharge was a patient initiated discharge and was Against Medical Advice (AMA) and the circumstances of such discharge and readmission are documented in the patient's medical record.
(ii) The original discharge was for the purpose of securing treatment of a major or metastatic malignancy, multiple trauma, burns, neonatal and obstetrical admissions.
(iii) The readmission was a planned readmission or one that occurred on or after 15 days following an initial admission.
(iv) For readmissions occurring during the period up through March 31, 2012, the readmission involves an original discharge determined to be behavioral health related.
(d) Methodology.
(1) Rate adjustments for each hospital shall be based on such hospital's 2007 Medicaid paid claims data and managed care encounter data for discharges that occurred between January 1, 2007 and December 31, 2007.
(2) The expected rate of readmissions shall be reduced by 24% for each hospital for periods prior to September 30, 2010, and 38.5% for the periods on and after October 1, 2010.
(3) Excess readmission rates are calculated based on the difference between the observed rate of PPRs and the expected rate of PPRs for each hospital.
(4) In the event the observed rate of PPRs for a hospital is lower than the expected rate of PPRs, the excess number of readmissions shall be set at zero.
(e) Payment Calculation.
(1) For the excess readmissions identified in paragraph (3) of subdivision (d) of this section, each hospital's projected payment rate for the 2010 rate period, as otherwise computed in accordance with this subpart, will be used to compute the relative aggregate payments, excluding behavioral health, associated with the risk adjusted excess readmissions in each hospital.
(2) For each hospital, a hospital specific readmission adjustment factor shall be computed as one minus the ratio of the hospital's relative aggregate payments associated with the excess readmissions from paragraph (3) of subdivision (d) of this section and the hospital's relative aggregate payments for all non-behavioral health Medicaid discharges as determined pursuant to this subdivision.
(3) Non-behavioral health related payments to hospitals shall be reduced by applying the hospital readmission adjustment factor from paragraph (2) of this subdivision to the applicable case payment or per-diem payment amount for all non-behavioral health related Medicaid discharges to the hospital.
Text of proposed rule and any required statements and analyses may be obtained from:
Katherine Ceroalo, DOH, Bureau of House Counsel, Regulatory Affairs Unit, Room 2438, ESP, Tower Building, Albany, NY 12237, (518) 473-7488, email: regsqna@health.state.ny.us
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
45 days after publication of this notice.
Regulatory Impact Statement
Statutory Authority:
The requirement to implement a rate adjustment to hospitals to address potentially preventable readmissions (PPRs) using a methodology that is based on a comparison of the actual and the expected number of PPRs in a given hospital pursuant to regulations is set forth in section 2807-c(35)(b)(v) of the Public Health Law.
Legislative Objectives:
After discussions between the Executive, Legislature, and hospital associations, the Legislature chose to address the issue of a high rate of readmissions in hospitals that could have been avoided. Pursuant to statute, the PPR methodology was chosen as the vehicle to address this through a rate adjustment that would reduce reimbursement to hospitals that had a historically (based on 2007 data) high rate of clinically related readmissions.
Needs and Benefits:
The proposed regulations implement the provisions of Public Health Law section 2807-c(35)(b)(v) which requires a rate adjustment related to PPRs. Hospital readmissions are increasingly viewed as indicative of quality of care issues, ranging from complications during the hospital stay or immediately afterward, incomplete treatment of the underlying medical problem during the hospitalization, or poor or no outpatient care. Readmissions are also costly; thereby fueling the interest in linking payment to quality of care, especially when these readmissions might have been avoided.
This regulation, in concert with enacted statute, implements an adjustment to hospital rates to incentivize these providers to become more accountable to the individuals that they are discharging. Better quality of care, upfront, will likely reduce the rate of readmissions thereby saving funds that would have otherwise been expensed simultaneously resulting in better patient outcomes. It is anticipated that this payment adjustment is the first step into addressing the policy issue of readmission rates in hospitals and will likely be refined in future regulation amendments to address a broader Medicaid population and more recent data sources.
COSTS:
Costs to State Government:
Section 2807-c(35)(b)(v) of the Public Health Law requires that the rates of payment for hospital inpatient services be reduced to result in a net statewide decrease in aggregate Medicaid payments of no less than $35 million for the period July 1, 2010 through March 31, 2011 and no less than $47 million for the period April 1, 2011 through March 31, 2012.
Costs of Local Government:
There will be no additional cost to local governments as a result of these amendments because local districts' share of Medicaid costs is statutorily capped.
Costs to the Department of Health:
There will be no additional costs to the Department of Health as a result of these amendments.
Local Government Mandates:
The proposed regulations do not impose any new programs, services, duties or responsibilities upon any county, city, town, village, school district, fire district or other special district.
Paperwork:
There is no additional paperwork required of providers as a result of these amendments.
Duplication:
These regulations do not duplicate existing State and Federal regulations.
Alternatives:
No significant alternatives are available. The Department is required by the Public Health Law sections 2807-c(35)(b)(v) to promulgate implementing regulations. However, alternatives may be available at a later date as a result of the requirement that the Department enters into consultations with representatives of the health care facilities regarding potential prospective revisions to the methodologies and benchmarks set forth in this amendment by no later than April 1, 2011.
Federal Standards:
This amendment does not exceed any minimum standards of the federal government for the same or similar subject areas.
Compliance Schedule:
The proposed amendment establishes a new rate adjustment to address potentially preventable readmissions (PPRs) in hospitals for discharges on or after July 1, 2010; there is no period of time necessary for regulated parties to achieve compliance.
Regulatory Flexibility Analysis
Effect on Small Business and Local Governments:
For the purpose of this regulatory flexibility analysis, small businesses were considered to be general hospitals with 100 or fewer full time equivalents. Based on recent financial and statistical data extracted from the Institutional Cost Report, seven hospitals were identified as employing fewer than 100 employees.
In aggregate, health care providers subject to this regulation will see a decrease in average per discharge Medicaid funding, but this is not anticipated for all affected providers.
This rule will have no direct effect on Local Governments.
Compliance Requirements:
No new reporting, record keeping or other compliance requirements are being imposed as a result of these rules. Affected health care providers will bill Medicaid using procedure codes and ICD-9 codes approved by the American Medical Association, as is currently required. The rule should have no direct effect on Local Governments.
Professional Services:
No new or additional professional services are required in order to comply with the proposed amendments.
Compliance Costs:
No initial capital costs will be imposed as a result of this rule, nor will there be an annual cost of compliance. As a result of the amendment to 86-1.37 there will be an anticipated decrease in statewide aggregate hospital Medicaid revenues for hospital inpatient services.
Economic and Technological Feasibility:
Small businesses will be able to comply with the economic and technological aspects of this rule. The proposed amendments are technologically feasible because it requires the use of existing technology. The overall economic impact to comply with the requirements of this regulation is expected to be minimal.
Minimizing Adverse Impact:
The proposed amendment reflects statutory intent and requirements. This amendment is the result of ongoing discussions with industry associations regarding the appropriate implementation of a risk adjusted PPR methodology. The Department is required by Public Health Law sections 2807-c(35)(b)(v) to enter into consultations with representatives of health care facilities regarding potential prospective revisions to the applicable methodologies and benchmarks set forth in this amendment by no later than April 1, 2011.
Small Business and Local Government Participation:
Draft regulations, prior to filing with the Secretary of State, were shared with industry associations representing hospitals and comments were solicited from all affected parties. Informational briefings were held with such associations.
Rural Area Flexibility Analysis
Effect on Rural Areas:
Rural areas are defined as counties with a population less than 200,000 and, for counties with a population greater than 200,000, includes towns with population densities of 150 persons or less per square mile. The following 44 counties have a population less than 200,000:
Allegany
Hamilton
Schenectady
Cattaraugus
Herkimer
Schoharie
Cayuga
Jefferson
Schuyler
Chautauqua
Lewis
Seneca
Chemung
Livingston
Steuben
Chenango
Madison
Sullivan
Clinton
Montgomery
Tioga
Columbia
Ontario
Tompkins
Cortland
Orleans
Ulster
Delaware
Oswego
Warren
Essex
Otsego
Washington
Franklin
Putnam
Wayne
Fulton
Rensselaer
Wyoming
Genesee
St. Lawrence
Yates
Greene
Saratoga
The following 9 counties have certain townships with population densities of 150 persons or less per square mile:
Albany
Erie
Oneida
Broome
Monroe
Onondaga
Dutchess
Niagara
Orange
Compliance Requirements:
No new reporting, record keeping, or other compliance requirements are being imposed as a result of this proposal.
Professional Services:
No new additional professional services are required in order for providers in rural areas to comply with the proposed amendments.
Compliance Costs:
No initial capital costs will be imposed as a result of this rule, nor is there an annual cost of compliance.
Minimizing Adverse Impact:
The proposed amendments reflect statutory intent and requirements. The Legislature considered various alternatives for addressing hospital readmissions that are determined to be clinically related to an initial discharge; however, the enacted budget adopted the risk adjusted PPR methodology.
Rural Area Participation:
Draft regulations, prior to filing with the Secretary of State, were shared with the industry associations representing hospitals and comments were solicited from all affected parties. Such associations include members from rural areas.
Job Impact Statement
A Job Impact Statement is not required pursuant to Section 201-a(2)(a) of the State Administrative Procedure Act. It is apparent, from the nature and purpose of the proposed rules, that they will not have a substantial adverse impact on jobs or employment opportunities. The proposed regulations revise the reimbursement system for inpatient hospital services. The proposed regulations have no implications for job opportunities.
