CMS has proposed five new Medicare Prospective Payment System rules for federal fiscal year 2020 that healthcare providers should understand. The most significant of these proposed rules is in the Inpatient PPS proposed rule, which seeks to address the growing disparity between high and low wage index hospitals.
This provocative proposal calls for hospitals in the bottom quartile to receive an increase that would be half of the difference between the hospital’s pre-adjustment wage index and the 25th percentile wage index value across all hospitals. To achieve budget neutrality, the hospitals in the top quartile will have their individual wage index values reduced by 4.3%. These changes would remain in effect for at least four years.
DataGen has analyzed the estimated impact on providers in these payment settings throughout the country. Highlights of the five proposed rules follow.
- The Inpatient PPS proposed rule, which would start October 2019, sets a 5% cap on any decrease to a hospital’s wage index in FFY 2020. Additionally, it updates Medicare Disproportionate Share Hospital payment policies; Value-Based Purchasing, Readmission Reduction Program and Hospital-Acquired Condition programs; and payment penalties for non-compliance with the Hospital Inpatient Quality Reporting and Electronic Health Record incentive programs. The proposed rule also increases the new technology add-on payment rate, including the add-on for CAR-T cancer therapies.
- The Inpatient Rehabilitation Facility PPS proposed rule includes wage index and marketbasket updates, changes the IRF marketbasket base year from 2012 to 2016 Medicare cost report data, removes IRF 1-year wage index lag, updates the CMGs relative weights and average length of stay and the requirement for the IRF QRP, and changes the qualifications for rehabilitation physicians. CMS proposes to remove one item from the motor score to assign patients to case-mix groups beginning FFY 2020 and seeks to consolidate CMGs that are only different by their respective communication score within a rehabilitation impairment category.
- The Inpatient Psychiatric Facility PPS: In addition to the regular marketbasket and wage index updates, this proposed rule includes a change to the IPF marketbasket base year from 2012 to 2016 Medicare cost report data, removes the IPF one-year wage index lag and updates the IPF QRP beginning with the FFY 2021 determination year.
- Effective FFY 2020, Skilled Nursing Facility PPS providers will have a new case-mix methodology, the Patient Driven Payment Model, which replaces Resource Utilization Groups — version IV. FFY 2020 is the second 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.
- The Long-Term Care Hospital proposed rule reflects the annual update to the Medicare fee-for-service LTCH payment rates and policies. The full site-neutral payment rate (no longer a transition blended payment rate) goes into effect FFY 2020 at the start of a LTCH’s next cost report period. The applicable discharge percentage threshold adjustment begins in FFY 2021 (for discharges in FFY 2020) where LTCHs with less than 50% of patients who meet the standard LTCH PPS requirements receive the site-neutral rate for ALL cases.
DataGen has provided briefs on these rules. Comments on these rules are due in mid to late June 2019, depending on the payment setting. The rules are available in the Federal Register.