Quick Take: FY 2021 IPPS/LTCH Proposed Payment Rule
Amid COVID-19 activities, the Centers for Medicare & Medicaid Services (CMS) continues to do its regular work as well. On May 11, CMS released the Fiscal Year (FY) 2021 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospitals (LTCH) proposed payment rule (CMS-1735-P).
CMS indicates the proposed rule would increase payments to 3,200 IPPS hospitals by $2.07 billion – $1.98 billion of that for operating payments and uncompensated care with another $98 billion in IPPS capital and new technology payments.
Watch for CLA’s detailed Regulatory Advisory on the proposed IPPS/LTCH rule, coming soon to claconnect.com. If you missed our Regulatory Advisor on the FY 2021 proposed Skilled Nursing Facility and Hospice rules, access it HERE.
Here is a sneak peek at key proposed changes for 2021.
Market-basket update. CMS proposes a net rate increase of 3.1 percentage points (market basket update of 3.0 minus 0.4 for productivity plus 0.5 for documentation/coding adjustment as mandated by MACRA Section 414).
Wage Index. CMS proposes to use newer Office of Management and Budget (OMB) delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas to calculate area wage indexes. Doing so would create new Core-Based Statistical Areas (CBSAs), switch some urban counties to rural and vice versa, and split several existing CBSAs apart. In addition, the revised OMB delineations would affect various hospital reclassifications, the out migration adjustment, and treatment of hospitals located in certain rural counties. As it has done with other wage index changes, CMS would impose a “transition cap” to protect hospitals from a decrease of greater than 5% in one year from shifts in the wage index.
New CAR-T Cell Therapy MS-DRG. CMS proposes creating a separate MS-DRG (MS-DRG 018) for CAR-T cell therapies. CMS would use an adjusted case count of 0.15 for CAR-T clinical trial cases used in determining national average standardized cost per case, budget neutrality and outliers.
New MS-DRG for Hip Replacements. CMS proposes two new MS-DRGs for hip replacements: MS-DRG 521 (Hip Replacement with Principal Diagnosis of Hip Fracture with MCC) and MS-DRG 522 (Hip Replacement with Principal Diagnosis of Hip Fracture without MCC). CMS notes that the Comprehensive Care for Joint Replacement (CJR) model includes episodes triggered by MS-DRG 469 with hip fracture and MS-DRG 470 with hip fracture. CMS seeks stakeholder feedback on whether to incorporate MS-DRG 521 and MS-DRG 522, if finalized, into the CJR model’s proposed extension to December 31, 2023.
Medicare Disproportionate Share Hospital (DSH) Payments. CMS estimates that the pool of uncompensated care payments will decrease by $534 million for FY2021. CMS proposes to use a hospital’s FY 2017 Worksheet S–10 data for Factor 3.
Median Negotiated Rates. CMS proposes that hospitals would be required to report certain market-based payment rate information on their Medicare cost report for cost reporting periods ending on or after January 1, 2021. This data could be used in the future to adjust the methodology for calculating the IPPS MS-DRG relative weights and reduce the dependence on the hospital chargemaster in Medicare IPPS payments. CMS proposes hospitals would report negotiated third-party payer rates for an item or service provided by the hospital. This would also include Medicare Advantage.
Bad Debt Policies. CMS proposes to “clarify, update and codify certain longstanding Medicare bad debt principles” as well as recognize the new Accounting Standards Update – Topic 606 for revenue recognition and classification of Medicare bad debts. Policies addressed include timelines to issue a bill, reasonable collection efforts, definition of non-indigent, partial payments, treatment of deductibles and co-insurance amounts among others.
Promoting Interoperability Program (PI). CMS proposes a reporting period of a minimum of any continuous 90-day period in CY2022 for new and returning eligible hospitals and CAHs. CMS proposes to continue the Query of PDMP measure as an optional measure worth five bonus points in CY2021. Additionally, CMS proposes to rename the Support Electronic Referral Loops by Receiving and Incorporating Health Information as the Support Electronic Referral Loops by Receiving and Reconciling Health Information. Finally, CMS proposes to align eQCM reporting periods with the Inpatient Quality Reporting program (IQR).
Quality Programs. CMS makes no changes to measures under most hospital quality reporting programs, however, they do continue to align and refine various validation procedures between the Hospital Acquired Conditions and Inpatient Quality Reporting (IQR) programs, including using a single random sample of 400 hospitals. CMS would make other changes to the IQR to incrementally combine the validation processes for chart-abstracted measure data and clinical quality measures among other changes.
LTCHs. CMS expects LTCH payments to decline by $36 million. CMS proposes to rebase the LTCH market basket and adopt the newer wage index delineations. The proposed standard federal payment net rate increase would be 2.5 percentage points. CMS makes no changes to the LTCH quality reporting program.
How we can help
If you want to submit comments on any of the above, those are due to CMS by July 10, 2020. If you’re looking for more insights or details on how the proposed rule could impact your hospital, we’re here to help you understand, model and prepare for these changes.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
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