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Take note: What to know about recent CMS rules

DATE: 09/13/2019

CMS released five final rules for federal fiscal year 2020 and two proposed rules for calendar year 2020 that healthcare providers should note.

The most significant is the Inpatient PPS final rule, which addresses the growing disparity between high and low wage-index hospitals. Under this policy, hospitals in the bottom quartile will receive an increase to their wage index equal to half of the difference between the hospital’s pre-adjustment wage index and the 25th percentile WI value across all hospitals. To achieve budget neutrality, CMS reduced the national standardized amount instead of the proposed reduction to the wage index of hospitals in the top quartile.

These changes will remain in effect for at least four years.

CMS also adopted the proposal to remove the wage index data of urban hospitals that reclassify as rural when calculating each state’s rural floor, beginning in FFY 2020. There will be a 5% cap on any decrease to a hospital’s WI in FFY 2020.

Final rule highlights:

  • The Inpatient PPS final rule, effective October 2019, updated Medicare Disproportionate Share Hospital payment policies; the 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 final rule also increases the new technology add-on payment rate, including the add-on for CAR-T cancer therapies.
  • The Inpatient Rehabilitation Facility PPS final rule includes the regular WI and marketbasket updates, changes the IRF marketbasket base year from 2012 to 2016 Medicare cost report data, removes the one-year wage index lag, updates the Case Mix Groups’ relative weights and average length of stay, updates IRF Quality Reporting Program requirements and changes the definition of rehabilitation physicians. CMS will also remove one item from the motor score used to assign patients to CMGs beginning FFY 2020.
  • The Inpatient Psychiatric Facility PPS final rule, in addition to the regular WI and marketbasket updates, 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.
  • The Skilled Nursing Facility PPS final rule implements a new case-mix methodology (Patient Driven Payment Model) replacing the RUGS-IV categories, effective FFY 2020. FFY 2020 is the second year for the SNF Value-Based Purchasing program, where SNFs may receive incentive payments based on their performance on the SNF 30-Day All-Cause Readmission Measure.
  • The Long-Term Care Hospital PPS final 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 after Oct. 1, 2019. The applicable discharge percentage threshold adjustment begins in FFY 2021 (for discharges in FFY 2020) where LTCHs with less than 50% patients meeting the standard LTCH PPS requirements get a site-neutral rate for all

CMS also released two proposed rules for the outpatient and home health payment settings for calendar year 2020. Comments on these rules are due to CMS on Sept. 27 and Sept. 9, respectively.

Proposed rule highlights:

  • The major items in the Outpatient PPS proposed rule include CMS’ proposed expansion of the Medicare Physician Fee Schedule payment methodology to excepted off-campus provider-based departments that are currently paid under the OPPS rates, resulting in an additional 30% reduction for clinic services beginning CY 2020. Another proposal is to remove total hip arthroplasty from the inpatient-only list. CMS proposes to improve price transparency of standard charges by requiring hospitals to publicly report charges, negotiated rates, and information for shoppable items and services in a consumer-friendly manner.
  • The Home Health PPS proposed rule, which sets forth implementation of the Patient-Driven Groupings Model, proposes temporary transitional payments for home infusion therapy for CY 2020 and proposes to group home infusion drugs into three payment categories for CY 2021. CMS proposes to allow therapy assistants, rather than solely therapists, to perform maintenance therapy.

DataGen provided briefs on these final and proposed rules and analyzed provider-specific estimated reimbursement impacts in the various payment settings. Online versions of these rules are available on the Federal Register.

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