Medicare Payment and Reimbursement

FY 2019 IPPS/LTCH Final Rule

November 7, 2018 1:54 pm

HFMA Executive Summary

CMS published a final rule describing fiscal year 2019 (FY 2019) policies and rates for the hospital inpatient prospective payment system (IPPS) and the long-term care hospital prospective payment system (LTCH PPS). For more information on these highlights from the FY 2019 IPPS/LTCH final rule, download a detailed summary, a PowerPoint presentation, or the full text  of the rule in the August 17, 2018, Federal Register.

Payment rate increases: For most hospitals that successfully report quality measures and are meaningful users of EHRs, the increase in operating payment rates will be 1.85%: a market basket increase of 2.9 percent; minus the MFP adjustment of 0.8%, the ACA required update reduction of -0.75%, plus the documentation and coding adjustment of 0.5%. 

  • HRRP: penalties for 2,559 hospitals, down from 2,591 in FY 2018. Estimated savings from the HRRP will be approximately $566 million in FY 2019, or about the same as FY 2018.
  • Low Volume Hospitals: Medicare payments will increase by $75M for 628 providers, up from 612 providers receiving $350M in FY2018.
  • Medicare DSH: Traditional payments are expected to be $16.339 billion.
  • Uncompensated Care: Uncompensated care payments will increase by approximately $1.5 billion. 

Meaningful Measures Initiative: While CMS proposed that the Hospital VBP Program should focus on measurement priorities not covered by the HRRP or the HAC Reduction Program, based on the comments received on this proposal, it now believes that duplication of patient safety measures in the HAC Reduction Program and the VBP Program is appropriate. Four measures are finalized for removal from the Hospital VBP Program. The total number of VBP Program measures for FY 2021 is reduced from 15 to 12. Beginning in FY 2022, there will be 13 measures, with the addition of the COPD mortality measure that year.

Value-Based Purchasing Program Domains & Weighting: 
The patient safety domain and six of the measures from that domain will remain in the VBP Program. CMS will change the name of the Clinical Care domain to  “Clinical Outcomes” beginning in FY 2020. Proposed reweighting of the Clinical Outcomes domain at 50 percent is not adopted. All four domains will remain for the VBP Program, and will each continue to be weighted equally at 25 percent.

Hospital Inpatient Quality Reporting (IQR) Program: CMS finalizes its proposal to remove 39 measures from the Hospital IQR Program for FYs 2020 through 2023 payment determinations; 19 of these measures will continue to be used in either the HRRP, the Hospital VBP Program, or the HAC Reduction Program, and hospital-specific performance on these 19 measures will still be reported on Hospital Compare.

Admission Order Documentation Requirements: CMS eliminates the requirement that a physician order must be present in the medical record, and be supported by the physician admission and progress notes, in order for the hospital to be paid for inpatient services under Medicare Part A. If other available documentation supports that all the coverage criteria (including medical necessity) are met, and the hospital is operating in accordance with the conditions of participation, CMS believes it is no longer necessary to also require specific documentation of inpatient admission orders as a condition of payment.

EHR Programs: CMS announced that it has renamed the Medicare and Medicaid EHR Incentive Programs, the Medicare and Medicaid Promoting Interoperability Programs. Hospitals that are not meaningful EHR users under the Medicare program are subject to a reduction of 2.175 percent in the update factor for FY 2019. CMS proposed no changes to its previously finalized policy for 2019, under which eligible hospitals and CAHs must use EHR technology certified to the 2015 Edition of Certified EHR Technology. CMS adopts major changes to the scoring system used to determine whether an eligible hospital or CAH has met the meaningful use requirements beginning with the 2019 reporting period. The new methodology requires eligible hospitals and CAHs to report on four objectives and six measures. A score of 50 points or more will satisfy the meaningful use requirement.

  • New scoring methodology and new measures are adopted for the program. New objectives and measures will include:
    • e-Prescribing: (1 to 3 measures; 5 to 15 points). Includes the existing e-prescribing measure, weighted at 10 points, and two optional new measures worth five bonus points each.
    • Health Information Exchange (2 measures; 40 points)
    • Provider to Patient Exchange (1 measure; 40 points
    • Public Health Data Exchange (2 measures; 10 points)

Interoperability: Medicare and Medicaid Promoting Interoperability Program participants must attest to meaningful use to CMS or to the state for a minimum reporting period of any continuous 90-day period during the calendar year (2019 or 2020, respectively). CMS requested public comment on the future direction of the Promoting Interoperability Programs. Although it received approximately 313 timely comments, it did not summarize nor responded to them.

Price Transparency: Upon request, CMS received comments on how hospitals and other providers can provide useful information to help consumers understand the costs of health care services. In order to promote greater price transparency, CMS will update guidelines to require hospitals to make a list of current standard charges available via internet in a machine-readable format, updated at least annually. This is the only change that it is making at this time.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program: Four cancer-related measures will be removed from the PCHQR Program beginning with FY 2021. A final decision on removal of two infection measures under the new cost removal factor 8 is deferred most likely until the 2019 Hospital OPPS final rule. One new claims-based measure will be added to the program.

Long Term Care Hospital Updates

Payment rate Increase: The FY19 update for hospitals submitting quality data is 1.35%; a market basket increase of 2.9%, minus 0.8% MFP, and 0.75% ACA reduction. For LTCHs failing to submit data to the LTCH QRP, the annual update would be reduced by 2.0%, or -0.65%.

Payment Rate Impact: The overall impact of the payment rate and policy changes, for all LTCHs from FY 2018 to FY 2019, will be an increase of 0.9 percent or $39 million in aggregate payments (from $4.502 billion to $4.540 billion).

High-Cost Outlier (HCO) Case Payments: The established threshold is $27,124.

Fixed-Loss Amount: The FY 2019 fixed-loss amount is $27,124; for site-neutral cases, $25,769.

Elimination of the “25-Percent Threshold Policy” Adjustment: CMS is eliminating the 25% threshold policy because it believes aggregate LTCH PPS payments are sufficient. It is working to make elimination of this policy budget neutral because it is necessary to ensure that this elimination does not increase aggregate LTCH PPS payments in FY 2019 and future years.

Long-Term Care Hospital Quality Reporting Program: Three measures are finalized for removal from the LTCH QRP measure set. Removal of these measures are estimated to reduce costs by $1,149 per LTCH annually, or $482,469 for all LTCHs.


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