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On August 28, 2023, the Centers for Medicare and Medicaid Services (CMS) issued a final payment rule for inpatient and long-term care hospitals (“LTCH”) that builds on the Biden-Harris Administration’s priorities to provide support to historically underserved and under-resourced communities and to promote the highest quality outcomes and safest care for all individuals. 

The fiscal year 2024 Inpatient Prospective Payment System (FY 2024 IPPS) and LTCH Prospective Payment System (LTCH PPS) final rule updates Medicare payments and policies for hospitals as required by statute. The rule adopts hospital quality measures to foster safety, equity, and reduce preventable harm in the hospital setting.

Under the rule, acute care hospitals and long-term care hospitals will see total payment increases of $2.2 billion and $6 million respectively. Additionally, the rule focuses on health equity and rural hospital access by recognizing higher costs to treat underserved populations.Continue Reading CMS Updates Medicare Rates and Policies for Inpatient and LTC Hospitals, Promoting Health Equity and Patient Safety

On May 3, 2021, the Centers for Medicare & Medicaid Services (CMS) published an 81-page final rule to both extend and change the Comprehensive Care for Joint Replacement (CJR) model. We previously reported on the proposed rule here. The CJR model was initially implemented by way of notice-and-comment rulemaking in April 2016; the recent…

Fiscal year (FY) 2021 applications for Medicare inpatient prospective payment system (IPPS) new technology add-on payments will be discussed at a December 16, 2019 Centers for Medicare & Medicaid Services (CMS) town hall meeting.  Depending on the number of applications, a second day of meetings may be held on December 17.  The meetings provide an…

The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare acute inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) rates and policies for fiscal year (FY) 2020, which begins October 1, 2019.  Key provisions of the final rule are outlined below.

IPPS Payment Update

CMS projects total Medicare IPPS spending in FY 2020 will increase by about $3.8 billion under the final rule taking into account operating, capital, new technology, and low volume hospital payments.  The IPPS market basket update is 3.0%, which is reduced by a 0.4 percentage point productivity adjustment and a +0.5 percentage point statutory adjustment.  The final FY 2020 standardized amount is $6,263.74 for hospitals that submit quality data and are meaningful electronic health record (EHR) users, with reduced payment to hospitals that do not report quality data and/or are not meaningful EHR users.  Specific hospital payments can be impacted by other factors, including penalties for excess readmissions under the Hospital Readmissions Reduction Program, poor performance under the Hospital-Acquired Condition Reduction Program, and adjustments under the Hospital Value-Based Purchasing Program.

Promoting Access to Innovative Devices and Antimicrobial Products

CMS adopted several policies intended to improve beneficiary access to innovative medical technologies in the IPPS setting for FY 2020.

  • CMS adopted an alternative IPPS new technology add-on payment (NTAP) pathway for certain “transformative” medical devices beginning in FY 2021.  Specifically, if a new medical device is part of the Food and Drug Administration’s (FDA) Breakthrough Devices Program and receives FDA marketing authorization, the device would be considered new for NTAP purposes and it would not need to demonstrate substantial clinical improvement (SCI).  In other words, the device would only need to meet the NTAP cost criterion
  • In response to comments, CMS extended the alternative NTAP pathway to antimicrobial products designated by the FDA as a Qualified Infectious Disease Product (QIDP), but not to technologies approved under an FDA expedited program for drugs.
  • CMS adopted its proposed increase in NTAP payments for discharges beginning on or after October 1, 2019.  Specifically, CMS is increasing the NTAP payment to the lesser of:  (1) 65% (up from 50%) of the costs of the new medical service or technology; or (2) 65% (rather than 50%) of the amount by which the costs of the case exceed the standard DRG payment.  In the case of a QIDP, the NTAP amount rises to 75%.
  • CMS clarified the SCI criterion for evaluating NTAP applications and provided examples of information sources and outcomes that may be used to demonstrate SCI.  CMS will continue to consider comments received on the proposed rule’s solicitation of input on longer-term changes to related CMS policies.

Note that CMS also has proposed similar proposals to promote innovative medical technologies as part of the pending calendar year 2020 Medicare hospital outpatient PPS proposed rule.
Continue Reading CMS Issues Final FY 2020 Medicare IPPS/LTCH Update, Including New Medical Device Technology Policies

The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule to update the Medicare acute inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2020.  Notably, the proposed rule includes a number of provisions that aim to “unleash medical innovation” by…

The Centers for Medicare & Medicaid Services (CMS) is holding a Town Hall Meeting on December 4, 2018 to discuss fiscal year (FY) 2020 applications for add-on payments for new medical services and technologies under the Medicare inpatient prospective payment system (IPPS).  Interested parties will have an opportunity to present recommendations and data regarding whether…

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…

The Centers for Medicare & Medicaid Services (CMS) has published its proposed rule updating the Medicare acute inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2019. The proposed rule also includes a request for information (RFI) on ways CMS can enhance interoperability in the health care system, along with a comment solicitation on ways to improve price transparency.  The agency will accept comments on the proposed rule and RFI through June 25, 2018.  The following are highlights of the sweeping regulation.

1.75% Increase in Medicare Acute Hospital Rates. CMS projects that total IPPS payments will increase by about $4.1 billion in FY 2019 compared to FY 2018 levels under the proposed rule.  The IPPS national standardized amount would increase by 1.75%, based on a projected 2.8% market basket update that is reduced by a 0.8% multifactor productivity adjustment; further reduced by 0.75% as mandated by the Affordable Care Act (ACA); and increased by 0.5% as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). CMS also proposes to boost uncompensated care payments, capital payments, and low-volume hospital payments.
Continue Reading CMS Proposes FY 2019 Medicare IPPS/LTCH Rates and Policy Changes

The Medicare Payment Advisory Commission (MedPAC) has issued its annual recommendations to Congress on updates to Medicare fee-for-service payment system rates, many of which overlap recommendations made in previous years. For instance, MedPAC continues to call for implementation of a unified prospective payment system (PPS) for post-acute care (PAC) providers, including skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs), to be implemented beginning in 2021.  In the latest report, MedPAC recommends that Congress direct the Secretary of Health and Human Services to begin blending the relative weights of the setting-specific payment systems and the unified PAC PPS in 2019.  At the same time, MedPAC recommends that Congress modify the updates for the individual PAC systems by:

  • Reducing home health payment rates by 5% in 2019, rebasing payments beginning in 2020, and eliminating the use of the number of HHA therapy visits as a factor in payment determinations.
  • Reducing Medicare IRF PPS rates by 5% for FY 2019.
  • Eliminating the LTCH PPS update for FY 2019.
  • Eliminating SNF PPS market basket increases for fiscal years (FYs) 2019 and 2020, and implementing previous recommendations to reform SNF PPS payments in a way that shifts payments to medically-complex stays. MedPAC notes that it has endorsed SNF PPS reforms since 2008, and it “has grown increasingly frustrated with the lack of statutory and regulatory actions to lower the level of payments and implement a revised payment system.”

MedPAC also includes detailed discussions of Medicare payment for physician and other health professional services. MedPAC recommends increasing physician fee schedule rates in 2019 by the amount specified in current law (0.25%). MedPAC also offers extensive recommendations for revising the framework for updating Medicare physician payments established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Most notably, MedPAC recommends eliminating the Merit-based Incentive Payment System (MIPS) and adopting a new voluntary value program under which: (1) clinicians can elect to be measured as part of a voluntary group; and (2) clinicians in voluntary groups can qualify for a value payment based on their group’s performance on a set of population-based measures. Additionally, MedPAC presents the findings of its Congressionally-mandated report on coverage of telehealth services.

With regard to other Medicare fee-for-service payment systems, MedPAC recommends:
Continue Reading MedPAC Calls for Medicare Post-Acute Care and Physician Payment Reforms, Recommends Medicare Payment Updates

CMS is gearing up for the fiscal year (FY) 2019 Medicare payment system rulemaking cycle. The agency has requested that the White House Office of Management and Budget (OMB) review the FY 2019 proposed rules for the following payment systems:

  • The Hospital Inpatient Prospective Payment System for Acute Care Hospitals and the Long-Term Care Hospital

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CMS has released corrections to two major fiscal year (FY) 2018 Medicare payment rules. First, CMS has made numerous technical corrections to the FY 2018 inpatient prospective payment systems (IPPS) and long term care hospital (LTCH) prospective payment system (PPS) final rule. CMS has corrected MS-DRG and MS-LTCH-DRG relative weights, budget neutrality adjustment factors,…

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

CMS has published its proposed 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. CMS also solicits public comments on a range of policy issues related to physician-owned hospitals, inpatient and outpatient payment differentials for similar services, and ways to reduce the regulatory burden for providers and promote high quality care, as discussed below.

Acute Hospital Rate Update. With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the proposed rule would increase total IPPS payments by about $3.1 billion in FY 2018 compared to FY 2017 levels. Rate changes would result from a number of adjustments, including:  a 2.9% market basket update reduced by a -0.4% multifactor productivity adjustment and a 0.75% cut mandated by the Affordable Care Act (ACA); a -0.6% adjustment related to the two midnight policy; and a +0.4588% increase to adjust for documentation and coding under the 21st Century Cures Act. CMS also proposed changes in uncompensated care payments that are expected to increase IPPS operating payments by another 1.2%. 
Continue Reading CMS Proposes IPPS/LTCH Payment and Policy Changes for FY 2018; Requests Comments on Broader Policy Issues

The Centers for Medicare & Medicaid Services (CMS) is moving ahead on its annual Medicare hospital payment update rule – and it actually is ahead of last year’s pace.  Specifically, on March 8, 2017 CMS sent to Office of Management and Budget (OMB) for regulatory clearance its proposed rule updating the Medicare hospital inpatient prospective…

CMS has corrected a series of technical and typographical errors in its final rule updating the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) payments and policies for fiscal year (FY) 2017. Among other things, CMS is making changes to the budget neutrality factors, uncompensated care…

The Centers for Medicare & Medicaid Services (CMS) has released its final rule to update Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) payments and policies for fiscal year (FY) 2017.  With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the final rule will increase total IPPS payments by about $746 million in FY 2017 compared to FY 2016. The rule provides a 0.95% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHRs).  This update reflects a 2.7% market basket update, adjusted by a -0.3 percentage point multi-factor productivity (MFP) adjustment and an additional -0.75 percentage point adjustment (as mandated by the Affordable Care Act, or ACA), resulting in a 1.65% update.  This update is subject to an additional -1.5 percentage point documentation and coding recoupment adjustment (required by the American Taxpayer Relief Act of 2012) and a one-time increase of approximately 0.8 percentage points to permanently negate the cumulative impact of a “Two Midnight Policy” adjustment adopted in the final FY 2014 rule.
Continue Reading CMS Finalizes FY 2017 Update to Medicare IPPS, LTCH PPS Rates and Policies

CMS has published its proposed 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) 2017.

With regard to the IPPS, CMS projects that the cumulative rate and policy changes in the proposed rule would increase total IPPS payments by about $539 million in FY 2017 compared to FY 2016. The proposed rule would provide for a 0.9% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHRs).  This update reflects a 2.8% market basket update, adjusted by a -0.5 percentage point multi-factor productivity (MFP) adjustment and an additional -0.75 percentage point adjustment (as mandated by the Affordable Care Act, or ACA), resulting in a 1.55% update to standardized amounts.  This update is subject to an additional -1.5 percentage point documentation and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012, and a one-time increase of approximately 0.8 percentage points to permanently negate the cumulative impact of a controversial “Two Midnight Policy” adjustment adopted in the final FY 2014 rule.
Continue Reading CMS Proposes FY 2017 Update for Medicare IPPS, LTCH PPS Rates and Policies