The Centers for Medicare & Medicaid Services (CMS) has released its final rule updating the Medicare inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2019.  The following are highlights of the lengthy rule, which is scheduled to be published August 17, 2018.

IPPS Payments to

CMS has published its final rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2018.

Acute Hospital Rate & Policy Updates

CMS projects that the rate and policy changes in the rule will increase total IPPS payments by about $2.4 billion in FY 2018 compared to FY 2017 levels. Rate adjustments in the rule include:  a 2.7 market basket update reduced by a -0.6% multifactor productivity adjustment and a 0.75% cut mandated by the Affordable Care Act (ACA); a -0.6% adjustment related to the 2017 two midnight policy; and a +0.4588% documentation and coding adjustment under the 21st Century Cures Act.  CMS also made changes to uncompensated care payments that are expected to increase IPPS operating payments by another 0.8%.

Actual updates to a hospital depend on several quality-related adjustments. The potential updates to standardized amounts for FY 2018 range from a high of 1.35% for a hospital that submits quality data under the Hospital Inpatient Quality Reporting (IQR) Program and is a meaningful Electronic Health Record (EHR) user, to a low of -1.35% for a hospital that does not submit quality data and is not a meaningful EHR user.  Specific hospital payments also can be impacted by other factors, including penalties for excess readmissions under the Hospital Readmissions Reduction Program (HRRP), poor performance under the Hospital-Acquired Condition Reduction Program, and bonuses and penalties under the Hospital Value-Based Purchasing Program.  For instance, CMS estimates that 2,577 hospitals will have their base operating MS-DRG payments reduced under the HRRP program in FY 2018, saving approximately $556 million in FY 2018.  The final rule also updates these hospital quality programs, including revisions to HRRP policies to account for a hospital’s proportion of patients who are dually eligible for Medicare and Medicaid (as a proxy for socio-economic status), applicable to discharges beginning in FY 2019.
Continue Reading CMS Finalizes IPPS/LTCH Payment and Policy Changes for FY 2018

The CMS Office of Minority Health has released a “Guide to Preventing Readmissions among Racially and Ethnically Diverse Medicare Beneficiaries.”   The guide highlights data indicating that racial and ethnic minority populations have higher rates of potentially avoidable readmissions for certain chronic conditions, such as heart failure, heart attack, and pneumonia, and identifies social,

According to a recent Government Accountability Office (GAO) report, bonuses and penalties triggered by the Medicare Hospital Value-based Purchasing (HVBP) program have had no apparent impact on quality measure performance trends to date. The HVBP program, which was established by the Affordable Care Act, adjusts inpatient hospital payments based on individual hospital performance on designated

On May 12, 2015, CMS is hosting a call that will provide an overview of all Medicare hospital inpatient quality reporting and value-based purchasing programs. Specifically, the call will cover: the Hospital Inpatient Quality Reporting (IQR) Program; the Hospital Value-Based Purchasing (HVBP) Program; the Hospital Acquired Condition Reduction Program (HACRP); the Hospital Readmission Reduction Program

A recent OIG report, "Medicare Nursing Home Resident Hospitalization Rates Merit Additional Monitoring,” examines the extent to which Medicare nursing home residents are hospitalized. The OIG found that in FY 2011, nursing homes transferred one quarter of their Medicare residents to hospitals for inpatient admissions in FY 2011, and Medicare spent $14.3 billion on these

On August 19, 2013, the Centers for Medicare & Medicaid Services (CMS) published a final rule updating FY 2014 Medicare payment policies and rates under the acute inpatient prospective payment system (IPPS) and the long-term care hospital (LTCH) prospective payment system (PPS). The following are highlights of the lengthy rule:
Continue Reading CMS Finalizes FY 2014 Medicare IPPS, LTCH Rates

The House Ways and Means Committee is inviting comments on draft legislation to reform Medicare post-acute care (PAC) policy, based on reforms included in President Obama’s fiscal year 2014 budget. The legislation would: 1. Reduce market basket updates for home health agencies, skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs) and long-term care hospitals; 2.

CMS’s proposed Medicare home health PPS (HH PPS) rule for CY 2014 would cut payment by 1.5% ($290 million) compared to 2013 levels. This proposed reduction reflects a 2.4% home health payment update, which is more than offset by an ICD–9 grouper refinement and an ACA-mandated rebasing adjustment to the national, standardized 60-day episode payment

On June 19, 2013, the leaders of the House Ways and Means Committee and Senate Finance Committee issued an open call for Medicare post-acute care payment (PAC) reform recommendations. The lawmakers cited their concerns about “the substantial variation in Medicare spending, utilization, quality, and Medicare profit margins within the post-acute sector,” and request information on

The Medicare Payment Advisory Commission (MedPAC) has released its June 2013 Report to the Congress on Medicare and the Health Care Delivery System. The report examines a number of potential ways to reform Medicare, including the following:

  • Redesigning the Medicare benefit. MedPAC continues to discuss the concept of competitively determined plan contributions (CPC), under which

On May 10, 2013, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule updating Medicare inpatient prospective payment system (IPPS) and long-term acute care hospital prospective payment system (LTCH PPS) rates and policies for fiscal year (FY) 2014, which begins October 1, 2013. Comments on the proposed rule will be accepted until June 25, 2013. Highlights of the sweeping rule include the following: Continue Reading CMS Proposes Medicare IPPS and LTCH PPS Rates/Policies for FY 2014

On April 26, 2013, the Centers for Medicare & Medicaid Services (“CMS”) released the proposed update to the Medicare long-term acute care hospital prospective payment system (“LTCH PPS”) policies and payment rates for fiscal year (“FY”) 2014. The proposed changes would apply to discharges occurring on or after October 1, 2013 through September 30, 2014. CMS will accept comments on the proposed rule until June 25, 2013, and will respond to comments in a final rule to be issued by August 1, 2013. Reed Smith has prepared a Client Alert that provides a summary of the most significant proposed changes to the LTCH PPS in the proposed rule.
Continue Reading CMS Proposed Changes to Medicare LTCH Payment Rates and Policies for FY 2014

CMS published a notice on March 13, 2013 correcting previous technical errors to the Medicare inpatient prospective payment systems (IPPS) final rulemaking for FY 2013. Among other things, CMS is correcting statistics on the Hospital Readmissions Reduction Program with regard to (1) the amount by which payments to hospitals would be reduced; and (2)

On August 31, 2012, the Centers for Medicare & Medicaid Services (CMS) is publishing its final rule to update Medicare inpatient prospective payment system (IPPS) hospital and long-term care hospital prospective payment system (LTCH-PPS) payment and other policies for FY 2013. Overall, CMS estimates that FY 2013 payments to general acute care hospitals for operating expenses will increase by $2 billion under the rule considering all policy changes, the expiration of certain temporary payment increases, and projected utilization. CMS addresses a wide variety of policies in the extensive rule, including the following:
Continue Reading CMS Issues Final Medicare Inpatient Hospital Rates/Policies for FY 2013

A new Medicare payment policy on readmissions may place more pressure on post-acute providers to coordinate care with the general acute-care hospitals in their community. The Centers for Medicare & Medicaid Services (“CMS”) is in the process of adopting a new policy for reducing payments under the inpatient prospective payment system (“IPPS”) to those hospitals with high readmission rates for patients with certain conditions. As a result, hospitals paid under the IPPS may incur a payment penalty if a skilled nursing facility (“SNF”), long-term acute care hospital (“LTCH”), inpatient rehabilitation facility (“IRF”) or other post-acute care provider transfers a patient or resident back to the hospital for additional inpatient services. This policy change provides a powerful incentive to coordinate care and standardize procedures across providers.
Continue Reading Hospital Readmissions Reduction Program May Impact Post-Acute Providers

The Centers for Medicare & Medicaid Services (CMS) has launched the Bundled Payments for Care Improvement Initiative under Section 3021 of the Affordable Care Act (ACA), which authorizes the Secretary to test innovative delivery arrangements to reduce federal spending while preserving or enhancing the quality of care. Under the Bundled Payments Initiative, CMS seeks applicants who will strive to improve care coordination for Medicare beneficiaries who are hospitalized and when they leave the hospital. Very broadly, applicants will offer a discount to Medicare compared to usual Medicare spending; the applicant will be paid the Medicare savings beyond the discount level, but will assume risk for Medicare expenditures above an established risk threshold. CMS invites proposals with one of following four approaches to bundled payments:
Continue Reading CMS Seeks Applicants for ACA Bundled Payment Initiative

CMS has released its final rule to update Medicare inpatient prospective payment system (IPPS) hospital and long-term care hospital prospective payment system (LTCH-PPS) payment and other policies for FY 2012.   The official version of the rule will be published on August 18, 2011. Overall, CMS estimates that FY 2012 payments to general acute care hospitals for operating expenses would increase by $1.13 billion, or 1.1%, compared to 2012 (and compared to a projected decrease of $498 million under the proposed rule). The following are the highlights of the sweeping rule (the advance version is almost 1500 pages):
Continue Reading CMS Issues Final Medicare Inpatient Hospital PPS Rule for FY 2012