Tag: IPPS

CMS Releases FY 2027 LTCH Prospective Payment System Proposed Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service (FFS) long-term care hospital (LTCH) prospective payment system (IPPS) for fiscal year (FY) 2027. Highlights of the proposed rule include:

  • Increasing the standard LTCH PPS rate by a net 2.7%, after the 0.8 productivity cut and budget neutrality adjustments, from $50,824 to $52,177 for LTCHs that successfully comply with the CMS quality reporting program and electronic health record requirements. LTCHs that do not meet the requirements for these programs are subject to a 2-percentage-point reduction in the annual update.
  • Continue paying cases at the site-neutral rate if they fail to meet LTCH criteria.
  • Maintaining the fixed-loss amount for high-cost outlier cases at the current $78,936 for standard LTCH payment rate cases. Site-neutral payment cases are subject to the inpatient PPS fixed loss amount, proposed at $51,679.
  • Increasing the labor-related share of the standardized operating rate slightly from 72.9% to 73%.
  • Removing two measures from the LTCH Quality Reporting Program (QRP) and from public display beginning with the FY 2028 payment determination. If finalized, LTCHs would not be required to report calendar year 2026 data for the COVID-19 Vaccination Coverage Among Healthcare Personnel measure. The CMS also proposes to remove the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure beginning with the FY 2028 payment determination.
  • Revising the LTCH QRP data submission deadlines beginning with the FY 2029 LTCH QRP to reduce the timeframe for data submission from four and a half months after the end of the performance period to 45 days.

The MHA will provide a hospital-specific impact analysis and additional details in the coming weeks. Members are encouraged to submit comments to CMS by June 9 and notify Vickie Kunz at the MHA of any identified issues by June 1. CMS is expected to release a final rule around Aug. 1.

CMS Releases FY 2027 Hospital Inpatient Prospective Payment System Proposed Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service (FFS) inpatient prospective payment system (IPPS) for fiscal year (FY) 2027. Highlights of the proposed rule include:

  • Mandating participation in the expanded Comprehensive Joint Replacement Model by all acute care hospitals paid under the inpatient prospective payment system beginning Oct. 1, 2027, for beneficiaries undergoing lower extremity joint replacements in the inpatient or outpatient setting.
  • Increasing the standardized operating rate by a net 3.2%, after a 0.8% productivity cut and budget neutrality adjustments, from $6,752.61 to $6,967.87 for hospitals that successfully comply with the CMS quality reporting program and electronic health record requirements. Hospitals that do not meet these requirements are subject to a reduced annual update.
  • Increasing the federal capital rate by 4%, from $524.15 to $545.22.
  • Increasing the cost outlier threshold by 28%, from $40,397 to $51,704, to maintain the target of paying 5.1% of aggregate inpatient prospective payment system payments as outliers.
  • Maintaining the current labor-related share of the standardized operating rate at 66% for hospitals with a wage index greater than 1.0 and 62% for those with a wage index equal to or less than 1.0.
  • Decreasing disproportionate share hospital and uncompensated care payments by $564 million nationally. Uncompensated care payments will be allocated using the average of the three most recent years of audited Worksheet S-10 data.
  • Updating Medicare Severity-Diagnosis Related Group relative weights using FY 2025 MedPAR claims data and updated cost report and cost-to-charge ratios.
  • Adding 14 new Medicare Severity Diagnosis-Related Groups while deleting 18, with most changes within Major Diagnostic Category 05, Diseases and Disorders of the Circulatory System; Major Diagnostic Category 08, Diseases and Disorders of the Musculoskeletal System and Connective Tissue; and Major Diagnostic Category 13, Diseases and Disorders of the Female Reproductive System.
  • Modifying off-campus provider-based location rules by changing the “same patient population” criteria. Specifically, CMS proposes limiting the referral-based 75% test to outpatient departments only. Inpatient facilities seeking provider-based status could continue using the alternative ZIP code overlap test, but would no longer be allowed to use the referral-based test to meet the location requirement.
  • Adopting eight measures for the Hospital Inpatient Quality Reporting Program, including 3 measures not previously used in CMS quality programs:
    • Excess Days in Acute Care After Hospitalization for Diabetes
    • Advance Care Planning
    • Hospital Harm – Postoperative Venous Thromboembolism
  • Adopting one measure on sepsis readmissions for the Hospital Readmissions Reduction Program for the FY 2029 program year.

The MHA will provide a hospital-specific impact analysis and additional details on the proposed rule in the near future. Members are encouraged to submit comments to CMS by June 9 and to notify Vickie Kunz of any issues identified by June 1.  The CMS is expected to release a final rule around Aug. 1.

CMS Releases FY 2026 LTCH Prospective Payment System Final Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) long-term care hospital (LTCH) prospective payment system (IPPS) for fiscal year (FY) 2026.

Specifically, the rule will:

  • Increase the standard LTCH PPS rate by a net 2.9% after the 0.7% productivity adjustment and budget neutrality adjustments from $49,383 to $50,824 for LTCHs that meet the CMS quality program reporting requirements. LTCHs that fail to meet these requirements are subject to a 2-percentage point reduction to the annual update.
  • Continue paying cases at the site-neutral rate if they fail to meet LTCH criteria.
  • Increase the high-cost outlier (HCO) threshold by 2.5% for standard LTCH cases from the current $77,048 to $78,936 to achieve the target of paying roughly 8% of aggregate LTCH payments as HCO payments.
  • Use the inpatient PPS cost outlier threshold finalized at $43,397 for site-neutral cases.
  • Increase the labor-related share of the rate from 72.8% to 72.9%.
  • Update the LTCH Quality Reporting Program to remove four standardized patient assessment data elements focused on social determinants of health and modifying the COVID-19 vaccine among patients and residents measure to exclude patients who expire.

The MHA continues to review the final rule and will provide LTCHs with an estimated impact analysis in the coming weeks. Members with questions should contact Vickie Kunz at the MHA.

CMS Releases FY 2026 Hospital Inpatient Prospective Payment System Final Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) inpatient prospective payment system (IPPS) for fiscal year (FY) 2026.

Highlights of the final rule include:

  • Increasing the standard operating rate by a net 1.9%, after the 0.7% productivity cut and budget neutrality adjustments, from $6,624.39 to $6,752.61, for hospitals that successfully comply with the CMS quality reporting program and electronic health record requirements. Hospitals that do not meet requirements for these programs are subject to a reduced annual update.
  • Increase the federal capital rate by 2.3%, from $512.14 to $524.15.
  • Decrease the cost outlier threshold by 12.6% from $46,217 to $40,397 to maintain the target of paying 5.1% of aggregate IPPS payments as outlier.
  • Rebasing and revising the labor-related share of the standardized operating rate from 67.6% to 66% for hospitals with a wage index greater than 1.0.
  • Increasing disproportionate share hospital and uncompensated care (UCC) payments by approximately $2 billion nationally. UCC payments will be allocated using the average of three most recent years of audited Worksheet S-10 data.
  • Adding five new Medicare Severity Diagnosis Related Groups (MS-DRGs) while deleting six MS-DRGs, with most changes within Major Diagnostic Category 05, Diseases and Disorders of the Circulatory System.
  • Removing four measures from the Hospital Inpatient Quality Reporting Program effective with the 2024 reporting and FY 2026 payment period:
    • COVID-19 vaccination coverage among health care personnel.
    • Hospital commitment to health equity structural measure.
    • Screening for social drivers of health.
    • Screen positive rate for social drivers of health.
  • Modifying the Hybrid hospital-wide readmission and mortality measures and the stroke mortality and elective total hip and knee arthroplasty measures.
  • Updating and codifying the Extraordinary Circumstances Exception (ECE) policy to clarify that the CMS has discretion to grant an extension in response to an ECE request from a hospital.
  • Removing the health equity adjustment from the hospital value-based purchasing program scoring methodology beginning with the FY 2026 program.
  • Modifying the six measures in the Readmissions Reduction Program to include Medicare Advantage (MA) beneficiaries in the patient cohorts and shortening the applicable performance period from three years to two years. For example, FY 2027 HRRP penalties would be based on performance July 1, 2023, through June 30, 2025. The CMS did not finalize its proposal to include MA data in the calculations of aggregate payments for excess readmissions; as a result, aggregate penalties are expected to include 2% instead of 13% under the proposed update.
  • Making a technical update to the National Healthcare Safety Network healthcare associated infection measures baseline.

The MHA continues to review the final rule and will provide hospitals with an updated estimated impact analysis and rule brief in the next few weeks. Members with questions should contact Vickie Kunz at the MHA.

CMS Releases FY 2026 Hospital IPPS Proposed Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service inpatient prospective payment system (IPPS) for fiscal year (FY) 2026.

The rule proposes to:

  • Increase the standard operating rate by a net 3.2%, after the 0.8% productivity cut and budget neutrality adjustments, from $6,624.39 to $6,835.47, for hospitals that successfully comply with the CMS quality reporting program and electronic health record requirements. Hospitals that do not meet the requirements for these programs are subject to a reduced annual update.
  • Increase the federal capital rate by 3.3%, from $512.14 to $528.95.
  • Decrease the cost outlier threshold by 4.1%, from $46,217 to $44,305, to maintain the target of paying 5.1% of aggregate IPPS payments as outlier.
  • Rebase and revise the labor-related share of the standardized operating rate from 67.6% to 66% for hospitals with a wage index greater than 1.0.
  • Increase disproportionate share hospital and uncompensated care (UCC) payments by $1.5 billion nationally. UCC payments will be allocated using the average of three most recent years of audited Worksheet S-10 data.
  • Add seven new Medicare-Severity (MS) Diagnosis Related Groups, while deleting six MS-DRGs, with most changes within Major Diagnostic Category 05, Diseases and Disorders of the Circulatory System.
  • Remove four measures from the Hospital Inpatient Quality Reporting Program, effective with the 2024 reporting and FY 2026 payment period:
    • COVID-19 vaccination coverage among health care personnel.
    • Hospital commitment to health equity structural measure.
    • Screening for social drivers of health.
    • Screen positive rate for social drivers of health.
  • Modify the Hybrid hospital-wide readmission and mortality measures and the stroke mortality and elective total hip and knee arthroplasty measures.
  • Update and codify the Extraordinary Circumstances Exception (ECE) policy to clarify that the CMS has discretion to grant an extension in response to an ECE request from a hospital.
  • Remove the health equity adjustment from the hospital value-based purchasing program scoring methodology beginning with the FY 2026 program.
  • Include Medicare Advantage patients in the calculation of multiple claims-based measures across several programs, including the Hospital Readmissions Reduction program, beginning with the FY 2027 program.
  • Shorten the Hospital RRP’s performance period from three years to two years. For example, FY 2027 HRRP penalties would be based on July 1, 2023 through June 30, 2025 performance.
  • Seek stakeholder comments in response to the Request for Information on opportunities to streamline regulations and reduce administrative burden on providers, suppliers, beneficiaries and other interest parties in the Medicare program.

The MHA continues to review the proposed rule and will provide hospitals with an estimated impact analysis in the next few weeks. The MHA encourages hospitals to review the proposed rule and submit comments to the CMS by June 10 and to notify Vickie Kunz at the MHA regarding questions or issues identified by May 27.

CMS Releases FY 2025 Hospital Inpatient Prospective Payment System Final Rule

Member News

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2025.

Highlights of the final rule include:

  • Increasing the standard operating rate by a net 1.7%, after budget neutrality adjustments, from $6,497.77 to $6,606.51, for hospitals that successfully comply with the CMS quality reporting program and electronic health record requirements. Hospitals that do not meet requirements for these programs are subject to a lower annual update.
  • Updating the federal capital rate by 1.3%, from $503.83 to $510.51.
  • Increasing the cost outlier threshold by 8%, from $42,750, to $46,152, to maintain the target of paying 5.1% of aggregate IPPS payments as outlier.
  • Revising core based statistical areas (CBSAs) as a result of the new Office of Management and Budget labor market delineations based on the 2020 Decennial Census.
  • Implementing a separate IPPS payment for small, independent hospitals, defined as those with 100 or fewer beds that are not part of a chain organization, to voluntarily establish and maintain a six-month buffer stock of one or more of 86 essential medicines. This separate payment will not be budget neutral.
  • Creating 12 new Medicare Severity Diagnosis Related Groups (MS-DRGs) and deleting 5 MS-DRGs, most of which are within Major Diagnostic Category 08 (Diseases of the Musculoskeletal System and Connective Tissue).
  • Establishing a new mandatory CMS Innovation Center model, Transforming Episode Accountability Model, that would provide bundled payment for five surgical procedures to hospitals in 188 selected CBSAs.
  • Using the average of FY 2019, 2020 and 2021 Worksheet S-10 uncompensated care cost (UCC) data for the UCC pool allocation, which comprises 75% of Medicare disproportionate share hospital (DSH) payments. After adjusting this pool for the percent of uninsured individuals, total DSH and UCC payments will be approximately $200 million less than FY 2024 payments.
  • Adding seven new measures, primarily focused on patient safety-related practices and outcomes to the inpatient quality reporting program, while removing five measures and modifying two existing measures, including the Hospital Consumer Assessment for Healthcare Providers and Systems survey measure.
  • Increasing the performance-based scoring threshold from 60 points to 70 points, beginning with the electronic health record reporting period in calendar year (CY) 2025, and from 70 points to 80 points in CY 2026.
  • Increasing the number of mandatory electronic clinical quality measures that hospitals must report for both the IQR and the Promoting Interoperability programs.
  • Modifying and making permanent weekly reporting by hospitals, including critical access hospitals, of acute respiratory illness data beginning Nov. 1, 2024, on confirmed infection of COVID-19, influenza and respiratory syntactical virus among hospitalized patients, hospital capacity and limited patient demographic information, including age.
  • Finalizing the proposal to separate the Antimicrobial Use and Resistance Surveillance measure into separate measures (an Antimicrobial Use Surveillance measure and an Antimicrobial Resistance Surveillance measure), beginning with the electronic health record reporting period in CY 2025.
  • Adopting severity level changes related to seven social determinants of health diagnosis codes (SDOH Z codes) that describe inadequate housing and housing instability, moving these from non-complication or comorbidity to complication or comorbidity for FY 2025.

The MHA continues to review the final rule and will provide hospitals with an updated estimated impact analysis in the next few weeks. Members with questions should contact Vickie Kunz at the MHA.