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CMS Releases IPPS and LTCH Proposed Rule for FY 2020

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule that updates the Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year (FY) 2020.  CMS pays acute care hospitals for inpatient hospital stays under the IPPS and is required to annually update IPPS hospital payment rates.  LTCHs are paid under the LTCH PPS and are typically updated annually according to a separate market basket based on LTCH-specific goods and services.  CMS sets base payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness under the two payment systems.  Hospitals receive a single payment based on the payment classification assigned at discharge, subject to certain adjustments.  The proposed rule would apply to approximately 3,300 acute care hospitals and approximately 390 LTCHs for discharges occurring on or after October 1, 2019.

The proposed rule includes the following highlights for general acute care hospitals paid under the IPPS:

IPPS Payment Rate Change Proposals 

CMS is proposing an increase in operating payment rates of approximately 3.2 percent for successful participants in the Hospital Inpatient Quality Reporting (IQR) Program and meaningful electronic health record (EHR) program. The increase reflects the projected hospital market basket update of 3.2 percent, reduced by a 0.5 percentage point productivity adjustment. The update also reflects a proposed positive 0.5 percentage point adjustment required by legislation.  CMS projects that the proposed changes to IPPS payment policies will result in an increase in operating payments of approximately 3.5 percent.  After accounting for proposed changes in uncompensated care payments, new technology add-on payments, low-volume hospital payments, and capital payments, CMS estimates an additional increase in IPPS payments of 0.2 percent.  This would lead to an overall increase in IPPS payments of approximately 3.7 percent. CMS projects that in FY 2020, total Medicare spending on inpatient hospital services, including capital, will increase by about $4.7 billion.

Proposed Changes to New Technology Add-On Payments

CMS is proposing:

  • A pathway for an alternative new technology add-on payment for a medical device that receives FDA marketing authorization and is part of an expedited program for medical devices that are intended to treat serious or life-threatening diseases or conditions for which there are unmet medical needs (i.e., the Breakthrough Devices Program). The medical device would be considered new and would only need to meet the cost criterion to receive the add-on payment;
  • An increase in the add-on payment from 50 percent to 65 percent, beginning in FY 2020;
  • A solicitation for stakeholder comments on potential revisions to the substantial clinical improvement criterion currently used to evaluate applications for the new technology add-on payment; and
  • Presentation of 17 new applications for new technology add-on payments and a proposal to continue the add-on payments for 10 of 13 technologies currently receiving the payments (including two for types of chimeric antigen receptor (CAR) T‑cell therapy).

Wage Index Changes 

CMS is proposing:

  • An increase to the wage index for hospitals with a wage index value below the 25th percentile and decreasing the wage index for hospitals above the 75th percentile to address the disparities between high and low wage index hospitals;
  • A five percent cap on any decrease in a hospital’s wage index from its final wage index for FY 2019; and
  • Removal of urban to rural hospital reclassifications from the rural floor wage index value calculation in response to certain states inappropriately using the reclassifications to influence their rural floor wage index values.

Uncompensated Care Payments

CMS is proposing to distribute approximately $8.5 billion in uncompensated care payments in FY 2020, an approximate $216 million increase from FY 2019.  CMS also proposes to use a single year of uncompensated care costs from FY 2015 Medicare cost report Worksheet S-10 data.  CMS is seeking public comments on whether to alternatively use Worksheet S-10 data from FY 2017 cost reports, due to changes in reporting instructions that became effective in FY 2017.

Hospital Acquired Conditions (HAC) Reduction Program

CMS is proposing to:

  • Specify data collection dates used to calculate hospital performance for the FY 2022 HAC Reduction Program;
  • Adopt eight factors previously adopted by the Hospital IQR and Hospital Value-Based Payment (VBP) Programs to consider when deciding whether to remove a measure from the HAC Reduction Program; and
  • Clarify processes for validating National Healthcare Safety Network (NHSN) Healthcare-Associated Infection (HAI) data submitted by hospitals to the Centers for Disease Control and Prevention (CDC).

Hospital Readmissions Reduction Program

CMS is proposing to:

  • Specify the performance period for the FY 2022 program year;
  • Adopt the same eight factors being considered under the HAC Program in considering whether remove a measure from the HRRP;
  • Update the “dual eligible” definition; and
  • Adopt a subregulatory process to address potential non-substantive changes to the payment adjustment factor components.

Inpatient Quality Reporting Program

CMS is proposing to remove the Claims-Based Hospital-Wide All-Cause Readmission measure and replace it with a proposed Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (Hybrid HWR) measure.  The Hybrid HWR measure would be effective as part of the FY 2026 payment determination, following two years of voluntary reporting.

CMS is also proposing the following changes to electronic clinical quality measure (eCQM) reporting:

  • Adoption of two new opioid related eCQMs beginning with the CY 2021 reporting period/FY 2023 payment determination:
    • Safe Use of Opioids – Concurrent Prescribing eCQM, and
    • Hospital Harm – Opioid-Related Adverse Events eCQM;
  • For the CY 2020 and 2021 reporting periods, to extend the current eCQM reporting and submission requirements mandating that hospitals submit one, self-selected calendar quarter of discharge data for four self-selected eCQMs in the Hospital IQR Program measure set;
  • For the CY 2022 reporting period, to require hospitals to report one, self-selected calendar quarter of data for a total of four eCQMs, including three self-selected eCQMs, and the proposed Safe Use of Opioids – Concurrent Prescribing eCQM;
  • To require that EHR technology be certified to all eCQMs available to report for the CY 2020 reporting period and subsequent years; and
  • Solicitation of public comments on three potential new Hospital IQR Program measures: Hospital Harm—Severe Hypoglycemia eCQM; Hospital Harm—Pressure Injury eCQM; and Cesarean Birth eCQM.

Value-Based Purchasing Program

Beginning with the CY 2020 data collection, CMS is proposing that the Hospital VBP Program would use the same data as the HAC Reduction Program to calculate the National Health Safety Network (NHSN) Healthcare-Associated Infection (HAI) measures.  CMS would also rely on the HAC Reduction Program process to validate the NHSN HAI measures to ensure that the measure rates are accurate for VBP program use.

PPS-Exempt Cancer Hospital Quality Reporting Program 

The PCHQR Program collects and publishes data on an announced set of quality measures.  The proposed rule seeks to:

  • Adopt one new claims-based outcome measure, the Surgical Treatment Complications for Localized Prostate Cancer measure, beginning with the FY 2022 program year;
  • Remove the External Beam Radiotherapy for Bone Metastases measure because the burden outweighs the benefit of its use, beginning with the FY 2022 program year;
  • Remove the three current pain management questions from the version of the Hospital Consumer Assessment of Healthcare Providers and Systems survey used in the PCHQR Program, beginning with October 1, 2019 discharges;
  • Begin publicly reporting the Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy measure in Calendar Year (CY) 2020;
  • Begin publicly reporting data for the Colon and Abdominal Hysterectomy Surgical Site Infection, Methicillin-resistant Staphylococcus Aureus (MRSA), Clostridium Difficile (CDI) and Healthcare Personnel Vaccination measures beginning with the October 2019 Hospital Compare release; and
  • Conduct confidential national reporting for four end-of-life measures and one unplanned readmissions measure to prepare hospitals for the public reporting of these measures.

Medicare and Medicaid Promoting Interoperability Programs

CMS is proposing:

  • For CY 2021, an EHR reporting period of a minimum of any continuous 90-day period for new and returning participants attesting to CMS as part of the Medicare Promoting Interoperability Program (previously EHR Incentive Programs);
  • For CY 2020, to keep the Query of Prescription Drug Monitoring Program (PDMP) measure as optional and available for bonus points, rather than making it mandatory, because stakeholders noted unintended and unforeseen implementation and provider burden challenges. CMS also proposes to convert this measure from a numerator/denominator response to a yes/no attestation beginning with the CY 2019 EHR reporting period;
  • In CY 2020, to remove the Verify Opioid Treatment Agreement measure based on stakeholder feedback regarding implementation challenges and increased burden.
  • Solicitation of comments on the following topics:
    • Opioid measures for potential inclusion in the Promoting Interoperability Program that are based on existing National Quality Forum (NQF) and CDC efforts;
    • Measures to engage vendors and clinicians in improving the efficiency of healthcare providers’ use of EHRs;
    • Inclusion of data from the Medicare Promoting Interoperability Program on the CMS Hospital Compare website;
    • Using Certified EHR Technology (CEHRT) to integrate patient-generated health data into EHRs;
    • Activities that promote the safety of EHRs; and
    • Reporting of a measure requiring the use of an open application programming interface (API), including as a potential alternative to the patient access measure.

The proposed rule includes the following highlights for LTCHs paid under the LTCH PPS:

LTCH PPS Payment Rate Change Proposals 

CMS is proposing to increase LTCH-PPS payments by approximately 0.9 percent ($37 million).  In FY 2020, LTCH PPS payments for discharges paid using the standard LTCH payment rate are expected to increase by 2.3 percent.  This increase accounts for the proposed FY 2020 standard federal rate update of 2.7 percent, as well as an estimated decrease in outlier payments and other factors.

Site Neutral Payment Rates

The statutorily-mandated transition period for certain LTCH discharges receiving a lower site neutral payment rate was set to end after cost reporting periods that began in FY 2019.  Therefore, for LTCH discharges occurring in cost reporting periods beginning in FY 2020, LTCH site neutral payment rate cases will begin to be paid fully on the site neutral payment rate, rather than the transitional blended rate.  Cases continuing to transition to the site neutral payment rates will decrease by approximately 4.9 percent.  This decrease accounts for the LTCH site neutral payment rate cases that will no longer be paid a blended payment rate as their statutory transition period ends.

LTCH Quality Reporting Program 

CMS is proposing to adopt two new process measures for the LTCH QRP for the “Transfer of Health Information” quality measure domain: “Transfer of Health Information to the Provider–Post-Acute Care” and “Transfer of Health Information to the Patient–Post-Acute Care.”  CMS is also proposing to change several standardized patient assessment data elements that assess either functional status, cognitive function and mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, or social determinants of health.  In addition, CMS is proposing to modify the “Discharge to Community” measure to:

  • Exclude nursing home residents who already reside in the nursing home;
  • Move the implementation date of future versions of the LTCH CARE Data Set from April to October;
  • Adopt data collection and public display periods for various measures; and
  • No longer publish a list of compliant LTCHs on the LTCH QRP website.

CMS will accept comments on the proposed rule until June 24, 2019.

The CMS proposed rule is available at: