Take note: What to know about five proposed rules from CMS

DATE: 06/02/2020

CMS proposed five new Medicare Prospective Payment System rules for federal fiscal year 2021 that healthcare providers should understand. In addition to the regular updates to the wage index, marketbasket and quality programs, one of the most significant items in these proposed rules is an update to the Core-Based Statistical Areas for all inpatient, skilled nursing facility, inpatient rehabilitation facility, inpatient psychiatric facility and long-term care hospital PPS providers based on delineations in the Office of Management and Budget Bulletin No. 18-04, published Sept. 14, 2018.

The OMB bulletin creates new CBSAs, changes some urban counties to rural ones (and vice versa) and splits apart or otherwise changes existing CBSAs. CMS believes that these delineations better represent current rural and urban areas. As a result, provider wage indexes may change depending on the CBSA to which the provider is assigned.

To alleviate significant revenue losses, CMS is proposing transition periods for each payment system. Adopted delineations would be effective beginning Oct. 1, 2020, for providers in these five payment settings. The transition would include a 5% cap on the reduction of a provider’s wage index for FFY 2021 compared to FFY 2020, with the full reduction of a provider’s wage index beginning in FFY 2022.

DataGen is analyzing the estimated impact on providers in these payment settings throughout the country. Highlights for the proposed rules follow.

  1. The Inpatient PPS proposed rule includes:
    • the continuation of the bottom quartile wage index increases;
    • a proposal to use the FFY 2017 Worksheet S-10 to determine uncompensated care data for the distribution of Medicare Disproportionate Share Hospital funds;
    • clarification of what kind of bad debt is considered eligible for reimbursement under Medicare;
    • the collection of hospitals’ median payer-specific negotiated inpatient services charges for Medicare Advantage organizations and third-party payers.
  2. The Inpatient Rehabilitation Facility PPS proposed rule includes the regular updates to the wage index and marketbasket as well as updates the Case Mix Group relative weights. To reduce administrative burden and improve ease of reference, CMS is proposing amendments to the comprehensive preadmission screening beginning in FFY 2021.
  3. The Inpatient Psychiatric Facility PPS includes regular wage index and marketbasket changes.
  4. The Skilled Nursing Facility PPS providers have a new case mix methodology, the Patient Driven Payment Model, which replaced RUGS-IV starting in FFY 2020. FFY 2021 is the third year for the SNF Value-Based Purchasing program, where SNFs receive incentive payments based on their performance on the Skilled Nursing Facility 30-Day All-Cause Readmission Measure.
  5. The Long Term-Care Hospital proposed rule includes a proposal to revise and rebase the LTCH marketbasket for FFY 2021 from a base year of 2013 to 2017. Specifically, the FFY 2021 marketbasket would reflect 2017 Medicare-allowable total cost data. FFY 2020 is the first year of the full adjustment for cases affected by the site-neutral payment rate.  Also, the Bipartisan Budget Act mandates an IPPS equivalent payment rate for FFY 2021 and subsequent years for ALL discharges for LTCHs when less than 50% of cases are paid at standard LTCH PPS payment in the previous year (in this case FFY 2020).

Due to the significant devotion of resources to the COVID-19 response, CMS is waiving the 60-day delay in the effective date of the IPPS/LTCH final rule and replacing it with a 30-day delay in the effective date.

Comments on these rules are due in mid-June to early July 2020, depending on the payment setting. DataGen has provided briefs on these rules and analyzed provider-specific estimated reimbursement impacts in the various payment settings.  Online versions of these rules are available on the Federal Register.

For more information, contact DataGen and follow us on LinkedIn.