Health Reform WK-EDGE FY 2019 IPPS spending will increase by $4.8B, LTCH payments will increase by $39M
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Wednesday, August 29, 2018

FY 2019 IPPS spending will increase by $4.8B, LTCH payments will increase by $39M

By Susan Smith, J.D., M.A.

Medicare spending on inpatient hospital services in fiscal year (FY) 2019, together with other changes to the inpatient prospective payment system (IPPS) policies, including an increase in new technology add-on payments of $0.2 billion, will increase by approximately $4.8 billion. CMS reported that the increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 1.85 percent. CMS projects that long term care hospital prospective payment system (LTCH PPS) payments will increase by approximately 0.9 percent, or $39 million in FY 2019. This increase reflects the continued phase-in of the dual payment rate system, which was extended through FY 2019 by the Bipartisan Budget Act of 2018 (P.L. 115-123) (Final rule, 83 FR 41144, August 17, 2018).

Standardized amount. The FY 2019 market basket update used to determine the applicable percentage increase for the IPPS is 2.9 percent. CMS adjustedthe projected hospital market basket update of 2.9 percent by a -0.8 percentage point productivity adjustment, a +0.5 percentage point adjustment required by The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10), and the -0.75 percentage point adjustment to the update required by the Patient Protection and Affordable Care Act (ACA) (P.L.111-148). CMS is continuing to use a labor related share of 68.3 percent for the national standardized amounts for all IPPS hospitals, including hospitals in Puerto Rico, that have a wage index value that is greater than 1.0000. CMS applied the wage index to a labor-related share of 62 percent of the national standardized amount for all IPPS hospitals, including hospitals in Puerto Rico) whose wage index values are less than or equal to 1.0000.

CMS has updated the hospital-specific rates applicable to sole community hospitals and Medicare dependent hospitals is an update of 1.35 percent for a hospital that submits quality data and is a meaningful EHR user; an update of 0.625 percent for a hospital that fails to submit quality data and is a meaningful EHR user; an update of –0.825 percent for a hospital that submits quality data and is not a meaningful EHR user; and an update of –1.55 percent for a hospital that fails to submit quality data and is not a meaningful EHR user. For FY 2019, each hospital’s payment per discharge under the IPPS is based on 100 percent of the Federal national rate, also known as the national adjusted standardized amount. This amount reflects the national average hospital cost per case from a base year, updated for inflation.

Disproportionate Share Hospital (DSH) adjustments. For FY 2019, CMS will distribute roughly $8.3 billion in uncompensated care payments, an increase of approximately $1.5 billion from the FY 2018 amount due to an increase in the CMS Office of the Actuary’s estimate of payments that would otherwise be made for Medicare DSH and an updated estimate of the change in the percentage of uninsured individuals since 2014 based on the latest available data. CMS also will continue incorporating uncompensated care cost data from Worksheet S-10 of the Medicare cost report into the methodology for distributing these funds. Specifically, for FY 2019, CMS proposes to use Worksheet S-10 data from FY 2014 and FY 2015 cost reports in combination with insured low-income days data from FY 2013 cost reports to determine the distribution of uncompensated care payments. Based on public feedback emphasizing the importance of audits in ensuring the accuracy and consistency of Worksheet S-10, CMS expects audits to begin the fall of 2018.

LTCH PPS Changes. CMS updates the LTCH PPS standard Federal payment rate by 1.35 percent. This is the payment rate applicable to LTCH patients that meet certain clinical criteria under the dual rate LTCH PPS payment system required by the Pathway for SGR Reform Act of 2013. CMS finalized its proposal to eliminate the 25 percent threshold policy in a budget neutral manner by adopting a budget neutrality adjustment. The adjustment each year will be approximately -0.9 percent, however, the exact amount of the adjustment will be different until FY 2021 to account for the end of transitional payments for site-neutral payment rate discharges. CMS has codified definitions of dual-eligible patients, the proportion of dual eligible, and the applicable period for dual-eligibility.

Burden Reduction. CMS noted that overall, the final rule will reduce the number of hours hospitals spend on paperwork by about two million hours. In this final rule, CMS is reducing hospitals’ burden by:

  • removing the requirement that certification statements detail where in the medical record the required information can be found;
  • reducing the number of denied claims for clerical errors in documenting physician admission orders by removing the requirement that a written inpatient admission order be present in the medical record as a specific condition of Medicare Part A payment;
  • providing more flexibility for new urban teaching hospitals to enter into Medicare Graduate Medical Education (GME) affiliation agreements, which allow hospitals to share full-time equivalent cap slots to accommodate the cross training of residents;
  • reducing documentation requirements by allowing hospitals to use average hourly wage data from the current year’s IPPS final rule that is available on the CMS website to demonstrate they are the only hospital in their labor market area for the purpose of meeting an exemption from certain wage index geographic reclassification requirements beginning with applications for reclassification for FY 2021;
  • revising regulations to allow certain hospitals that are excluded from the IPPS (for example, LTCHs) to operate IPPS-excluded units (so long as such an arrangement would be allowed under the applicable hospital conditions of participation);
  • revising regulations to allow that an IPPS-excluded satellite of an IPPS-excluded unit of an IPPS-excluded hospital will not have to comply with the separateness and control requirements so long as the satellite of the unit is not co-located with an IPPS hospital.

Medicare and Medicaid Promoting Interoperability Programs. CMS has finalized changes to the Medicare and Medicaid Promoting Interoperability Programs (formerly known as the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs for Eligible Hospitals, Critical Access Hospitals (CAHs), and Eligible Professionals (EPs)). Changes to the Program include:

  • an EHR reporting period of a minimum of any continuous 90-day period in each of calendar years (CYs) 2019 and 2020 for new and returning participants attesting to CMS or their state Medicaid agency;
  • a new performance-based scoring methodology consisting of a smaller set of objectives for Medicare participants;
  • two new e-Prescribing measures related to e-prescribing of opioids: (1) the Query of PDMP measure that will be optional in CY 2019 and required beginning in CY 2020, and (2) the Verify Opioid Treatment Agreement that will be optional for both CYs 2019 and 2020;
  • changes to measures, including the removal of certain measures that do not emphasize interoperability and the electronic exchange of health information;
  • codification of the program instructions issued to subsection (d) Puerto Rico hospitals and amended regulations under Parts 412 and 495 to reflect that provisions that apply to eligible hospitals include subsection (d) Puerto Rico hospitals unless otherwise indicated.

For eligible hospitals and CAHs that report Electronic Clinical Quality Measures (eCQMs), CMS noted that beginning with an EHR reporting period in CY 2019, all eligible hospitals and CAHs are required to use the 2015 Edition of CEHRT. In addition, CMS:

  • has adopted of one, self-selected calendar quarter of CY 2019 data, for eligible hospitals and CAHs that report eCQMs electronically, to report on at least four self-selected eCQMs from a set of 16;
  • has set the submission period to be two months following the close of the calendar year 2019, ending February 29, 2020;
  • will remove 8 of the 16 eCQMs, to produce a smaller set of meaningful measures that are in alignment with the Hospital Inpatient Quality Reporting (IQR) Program beginning with the reporting period in 2020.

Meaningful Measures. The final rule removes a total of 18 measures from CMS quality programs and de-duplicates another 25 measures. CMS reduced the total number of measures acute care hospitals are required to report across the Hospital Inpatient Quality Reporting (IQR), Value-Based Purchasing (VBP), Hospital-Acquired Conditions (HAC) Reduction, and Hospital Readmissions Reduction (HRR) Programs.

IQR Program. In the FY 2019 final rule, CMS adopted a new measure removal factor to consider when evaluating measures for removal from the Hospital IQR Program measure set. The new removal factor is "The costs associated with a measure outweigh the benefit of its continued use in the program." In addition, CMS:

  • removed 18 previously adopted measures that are "topped out," do not result in better patient outcomes, or have associated costs that outweigh the benefit of its continued use in the program;
  • de-duplicated 21 measures that will remain in one of the other hospital quality programs;
  • will remove the six healthcare-associated infection (HAI) patient safety measures that are being de-duplicated in CY 2020, one year later than proposed;
  • finalized two proposed measures related to the reporting of eCQMs in the Hospital IQR Program beginning with the CY 2019 reporting period/FY 2021 payment determination that require: (1) hospitals to submit one, self-selected calendar quarter of discharge data for four eCQMs in the Hospital IQR Program measure set; and (2) the use of the 2015 Edition of Certified Electronic Health Record Technology for eCQMs.

VBP Program. In the final rule, CMS is removing of four duplicative measures from VBP Program, all of which are included in the IQR Program measure set, but is maintaining six patient safety measures that are also in the HAC Program measure that it had proposed to remove based on public comments on their importance in the hospital setting. CMS is also not finalizing removal of the safety domain or revised weighting of the VBP Program domains. The four measures being deleted include one from the Safety domain and three condition-specific payment measures from the Efficiency and Cost Reduction domain. They are:

  • beginning with the FY 2021 program year, Elective Delivery (NQF #0469) (PC-01).
  • effective FY 2019: Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and Hospital-Level, Risk-Standardized Payment Associated With a 30-DayEpisode-of-Care for Pneumonia (PN Payment) (NQF #2579).

HAC Reduction Program. Under the final rule, measures in the HAC Reduction Program will stay the same, however, CMS has made three changes to the HAC Reduction Program policies. The changes require CMS to: (1) specify the dates of the time period used to calculate hospital performance for the FY 2021 HAC Reduction Program; (2) adopt administrative processes to receive and validate National Healthcare Safety Network (NHSN) Healthcare-associated Infection (HAI) data that is submitted by hospitals to the Centers for Disease Control and Prevention beginning CY 2020; and (3) adopt a new scoring methodology, which will equally weight all measures used in a hospital’s program score.

HRR Program. Measures under the HRRP will stay the same, however, CMS has finalized its proposals to (1) establish the applicable period for the FY 2019, FY 2020, and FY 2021 program years; and codify definitions of dual-eligible patients, proportion of dual-eligibles, and applicable period for dual-eligibility at 42 C.F.R. 412.152.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program, The final rule adopts one additional factor when evaluating measures for removal from the PCHQR Program measure set, "The cost associated with the measure outweighs the benefit of its continued use in the program," and adds one new claims-based outcome measure beginning with the CY 2019 reporting period, Proportion of 30-Day Unplanned Readmissions for Cancer Patients measure (NQF #3188). CMS has removed four measures based on measure performance, beginning with the CY 2019 reporting period:

  • Oncology: Radiation Dose Limits to Normal Tissues;
  • Oncology: Medical and Radiation – Pain Intensity Quantified;
  • Prostate Cancer: Adjuvant Hormonal Therapy for High Risk Prostate Cancer Patients; and Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer Patients.

Long Term Care Hospital Quality Reporting Program (LTCH QRP). For FY 2019, CMS has updated the methods by which LTCHs are notified of noncompliance with the requirements of the LTCH QRP and added an additional measure removal factor, the costs associated with a measure outweigh the benefit of its continued use in the program. In addition, CMS has removed three measures that either have significant operational challenges with reporting or are duplicative of other measures in the LTCH QRP Program, as follows:

  • NHSN Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia Outcome Measure (NQF #1716) (beginning with the FY 2020 LTCH QRP)
  • NHSN Ventilator-Associated Event (VAE) Outcome Measure (beginning with the FY 2020 LTCH QRP
  • Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) (beginning with the FY 2021 LTCH QRP)

FederalRegisterIssuances: FinalRules NewsFeed HealthInformationTechnologyNews HealthCareAcquiredConditionNews HospitalReadmissionNews InpatientFacilityNews MedicarePartANews ProviderPaymentNews QualityNews ReportingTransparencyNews VBPNews

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