Inpatient Prospective Payment System Final Rule Released for Fiscal Year 2020

Posted on August 06, 2019

On Aug. 2, the Centers for Medicare & Medicaid Services (CMS) released a final rule to update the Medicare fee-for-service inpatient prospective payment system (IPPS) for fiscal year (FY) 2020, which begins Oct. 1, 2019. In the coming weeks, the MHA will distribute updated hospital-specific impact analyses and additional details of the final rule. Highlights include:

  • A net 2.7% increase to the standardized operating rate for hospitals that successfully participate in the inpatient quality reporting (IQR) program and use meaningful electronic health records.

  • A net 0.6% increase to the federal capital rate. 

  • Revisions to the wage index methodology that will increase the wage index for hospitals with a wage index value below the 25th percentile. The CMS will maintain budget neutrality through an adjustment to the standardized operating rate for all IPPS hospitals, rather than a decrease to the wage index for hospitals above the 75th percentile, as proposed. This policy will be effective for at least four years, beginning in FY 2020. As proposed, the CMS finalized a 5% cap to help mitigate any significant decreases in the wage index values of hospitals for FY 2020. As a result, a hospital’s final wage index for FY 2020 will not be less than 95% of its final wage index for FY 2019. 

  • The CMS did not finalize the proposed modifications to severity levels for the vast majority of nearly 1,500 diagnosis codes. The MHA, along with the American Hospital Association and others, opposed these changes and urged the CMS not to implement them until additional analysis is completed. 

  • A change to using a single year of data from worksheet S-10 for distributing uncompensated care payments, which comprise 75% of Medicare disproportionate share hospital payments. Specifically, the CMS will use S-10 data from FY 2015 cost reports. Currently, the CMS is using an average of three years of data. 

  • A 2.8% increase to the cost outlier threshold, increasing it from the current $25,743 to $26,473 for FY 2020. This will result in slightly fewer cases qualifying for an outlier payment. 

  • Changes to the Hospital IQR Program, including removing the claims-based hospitalwide all-cause readmission measure (National Quality Forum #1789), replacing it with the newly adopted hybrid hospitalwide all-cause readmission measure. 

  • The adoption of one new opioid-related electronic clinical quality measure (eCQM): safe use of opioids — concurrent prescribing eCQM, beginning with the calendar year (CY) 2021 reporting period. The CMS did not finalize its proposal to adopt the hospital harm — opioid-related adverse events eCQM. 

  • An increase in the payment rate for new technology add-on payments, including for chimeric antigen receptor (CAR) T-cell therapies, from 50% to 65%. In addition, the CMS is increasing the add-on payment to 75% for certain antimicrobials. 

  • A change in the hospital value-based purchasing program to use the same data used in the hospital-acquired conditions reduction program to calculate the National Health Safety Network Healthcare-associated Infection measures, beginning with CY 2020 data collection. 

  • An electronic health record reporting period of one, self-selected, calendar quarter of discharge data for four self-selected eCQMs in the Hospital IQR Program measure set. 

Members with questions on the FY 2020 IPPS final rule should contact Vickie Kunz at the MHA.

Tags: final rule, wage index, IPPS, inpatient, budget neutrality

Posted in: Member News

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