Medicare Payment and Reimbursement

IPPS Rule Includes Pay Bump, Reporting Simplification

August 7, 2018 8:32 am

Controversial elements include offsets used to pay for elimination of the so-called 25 percent rule for long-term care hospitals and a decision to maintain penalties for hospital-acquired conditions.

Aug. 6—More than 3,000 hospitals will receive an average increase of nearly 3 percent in their Medicare inpatient payment rates—along with a slew of policy changes—under a recently issued final rule.

The final rule for the FY19 Medicare Inpatient Prospective Payment System (IPPS), scheduled to be published Aug. 17 in the Federal Register, will provide a 2.9 percent average market basket increase—slightly larger than the 2.8 percent increase included in the proposed rule issued in April.

The rate increase, along with changes to IPPS payment policies, such as a $200 million increase in new-technology add-on payments, will increase Medicare inpatient hospital service spending by $4.8 billion in FY19, according to Centers for Medicare & Medicaid Services (CMS) estimates.

Reporting Reductions

The final rule reduced the number of measures that acute care hospitals are required to report in four programs: Inpatient Quality Reporting (IQR), Value-Based Purchasing (VBP), Hospital-Acquired Conditions (HAC) Reduction, and the Hospital Readmissions Reduction Program (HRRP).

“CMS updated the number of measures required for each of these programs after engaging in a careful and holistic review of all the quality measures and seeking input from various stakeholders through the public comment process,” a fact sheet stated.

In total, the rule will remove 18 measures from CMS quality programs and will “de-duplicate” another 25 measures that are included in more than one program. Removed measures include the Catheter-Associated Urinary Tract Infection Outcome Measure, Patient Safety and Adverse Events Composite, and Median Time from ED Arrival to ED Departure for Admitted ED Patients.

CMS decided not to remove some measures it had proposed to drop from the VBP program but will remove them from the IQR program—after a one-year delay. Similarly, six HAC patient safety measures will be removed for CY20, which is one year later than originally proposed.

Hospital advocates were concerned that CMS opted to continue penalties of up to 1 percent for hospitals in the worst-performing quartile of the HAC program.

“We have long felt that all of the five hospital quality and payment programs overseen by CMS need to be mutually exclusive to ensure that hospitals are not inappropriately hit with double or triple penalties for the same event,” Blair Childs, senior vice president of public affairs for Premier, said in a written statement. “In leaving the HAC penalties the same, CMS missed an opportunity to harmonize measurement around indicators that truly matter, and avoid duplication across programs.” Other policies aimed at reducing hospital paperwork burdens included ending the requirement to place a written inpatient admission order in the medical record to receive Part A payment.

CMS estimated the reporting changes will cut 2 million hours from the time that hospital officials must spend on paperwork.

“We are encouraged that this rule starts to implement the administration’s ‘meaningful measures’ initiative to streamline quality measurements,” Tom Nickels, executive vice president of the American Hospital Association, said in a written statement.

Interoperability Focus

The final rule allowed electronic health record (EHR) reporting to be done in any continuous 90-day period in both CY19 and CY20 for attestation to CMS or a state Medicaid agency.

The Medicare Promoting Interoperability Program, formerly known as the EHR Incentive Program, added a new performance-based scoring methodology with fewer objectives.

Beginning in CY19, all eligible hospitals reporting under the Promoting Interoperability program must use the 2015 Edition of certified EHR technology.

Hospitals that report electronic Clinical Quality Measures (eCQMs) electronically must report at least four self-selected eCQMs from a set of 16. In 2020, CMS will remove eight of the 16 eCQMs to reduce reporting burdens.


CMS also finalized its proposal that, beginning in CY19, hospitals post online a publicly accessible list of their standard charges “in a machine-readable format,” and update the information at least annually.

The agency will consider action in future payment rules based on feedback it received to the proposed rule regarding surprise out-of-network bills, facility fees and physician fees for emergency department visits, barriers preventing providers from informing patients of their out-of-pocket costs, ways to better inform patients of their out-of-pocket obligations, and the role of providers in addressing the challenge.

Uncompensated Care

Hospitals will receive a $1.5 billion increase in uncompensated care payments, which will total $8.3 billion in FY19.

The UCC pay bump stemmed from an increase in the number of uninsured as identified by the CMS Office of the Actuary. Hospital advocates have worried that the federal government had been underestimating the uninsured-patient burden on hospitals since the 2014 implementation of the Affordable Care Act’s coverage expansion.

The payments will continue to be based on Worksheet S-10 data from the Medicare cost report, but CMS will begin audits this fall to assess the accuracy and consistency of S-10 data. Such assessments have been another long-standing hospital priority.

LTCH Changes

The Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) includes a 1.35 percent increase in the standard federal payment rate for LTCH patients who meet certain clinical criteria under the dual-rate LTCH PPS payment system. Overall, CMS projected LTCH PPS payments will increase by approximately 0.9 percent, or $39 million, in FY19.

CMS finalized a proposal to eliminate the 25 percent threshold policy, which cuts LTCH Medicare pay to an equivalent amount under the IPPS for patients transferred from an acute care hospital that has referred more than one-quarter of its patients to the LTCH. However, CMS will do so through a budget neutrality adjustment that will institute offsetting pay cuts of about 0.9 percent.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


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