2027 IPPS Final Rule: Quality Programs – Part II

For the last couple of weeks, we have brought to our readers the major highlights of Medicare’s Inpatient Prospective Payment System (IPPS) final rule for fiscal year (FY) 2027. Last week, we introduced the IPPS provisions related to quality programs. Today’s article continues the focus on IPPS programs that directly or tangentially tie in with quality (where the potential for penalties are often in play). The following summary is taken, in part, from the 2027 IPPS final rule fact sheet published by the Centers for Medicare & Medicaid Services (CMS).

Hospital Readmissions Reduction Program

The Hospital Readmissions Reduction Program is a value-based purchasing program that reduces payments to hospitals with excess readmissions. The program supports improving quality of care and care coordination for patients. In the FY 2027 IPPS final rule, CMS is finalizing the proposal to adopt the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate Following Sepsis Hospitalization measure, with modifications. Hospitals will have two years of confidential early look reports that will include estimated Hospital Readmissions Reduction Program payment adjustments with the sepsis readmission measure added during the FY 2028 and FY 2029 program years. The measure will be used in payment reduction calculations beginning with the FY 2030 program year.

Hospital-Acquired Condition Reduction Program

The Hospital-Acquired Condition Reduction Program creates an incentive for hospitals to improve patient safety and reduce the rate of hospital-acquired conditions. Hospitals in the worst-performing quartile receive a payment reduction of 1% on overall Medicare fee-for-service payments. Medicare is not making any changes to this program in the FY 2027 IPPS final rule.

Hospital Value-Based Purchasing Program

The Hospital Value-Based Purchasing Program is a budget-neutral program funded by reducing participating hospitals’ base operating DRG payments each fiscal year by 2% and redistributing the entire amount back to the hospitals as value-based incentive payments. In the FY 2027 IPPS final rule, CMS is finalizing modifications to five condition-specific and procedure-specific mortality measures beginning with the FY 2032 program year. Modifications include adding Medicare Advantage patients and shortening the performance period:

• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Acute Myocardial Infarction Hospitalization measure.
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Heart Failure Hospitalization measure.
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia Hospitalization measure.
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Chronic Obstructive Pulmonary Disease Hospitalization measure.
• Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate Following Coronary Artery Bypass Graft Surgery Acute Ischemic Stroke measure.

The authors of the final rule note that several proposals across our Quality Reporting and Value-Based Purchasing Programs include the addition of Medicare Advantage data for purposes of calculating claims-based measures. With the increase in Medicare Advantage beneficiaries to more than half of all Medicare beneficiaries, these modifications will better reflect overall patient care coordination among a broader population of patients, improving measure reliability. Shortening the reporting period will also allow measure results to reflect more recent hospital performance and provide more actionable insights for quality improvement.

PPS-Exempt Cancer Hospital (PCH) Quality Reporting Program

The PCH Quality Reporting Program is a quality reporting program for eleven cancer hospitals that are statutorily exempt from the IPPS. CMS collects and publishes data from PCHs on applicable quality measures. In the FY 2027 IPPS final rule, CMS is adopting the Advance Care Planning eCQM and the Malnutrition Care Score eCQM, with a modification to offer an initial voluntary reporting period for the FY 2030 program year and mandatory reporting beginning with the FY 2031 program year. CMS is also finalizing removal of the COVID–19 Vaccination Coverage Among Healthcare Personnel measure beginning with the FY 2028 program year. Finally, CMS is finalizing the reporting and submission requirements for eCQMs in the PCH setting.

For a more detailed information on the 2027 IPPS final rule provisions, please click on the following link: FY 2027 IPPS Final Rule Home Page | CMS.