FY 2018 Medicare Inpatient Prospective Payment System Final Rule Released

August 2017 ~

CMS has issued the final rule for the fiscal year (FY) 2018 Update to the Medicare Inpatient Prospective Payment System (IPPS). The rule outlines the general IPPS payment update, includes proposed rates for long-term care hospitals, addresses changes to the payment methodology for Disproportionate Share Hospitals (DSH) and makes changes to the Hospital Inpatient Quality Reporting Program and Hospital Value-Based Purchasing Program. The rule, released on August 2, finalizes changes to the Medicare payment rate and policies update for FY 2018 and calls for a 1.2% payment rates increase for FY 2018.

Medicare Inpatient Prospective Payment System (IPPS)

Under the final rule, acute care hospitals that report quality data and are also meaningful users of electronic health records (EHR) will receive a 1.2% increase in Medicare operating rates in fiscal year 2018. In addition, CMS is finalizing changes to the 2018 EHR reporting program to reduce the reporting period from a full year to any continuous 90-day period during the calendar year.

CMS finalized its proposal to begin incorporating uncompensated care cost data from Worksheet S-10 of the Medicare cost report. CMS will use worksheet S-10 data to determine uncompensated care payments and distribution beginning in fiscal year 2018. Based on these changes, CMS predicts the rate increase, together with other changes to IPPS payment policies, will cause total Medicare spending on inpatient hospital services to increase by approximately $2.4 billion in fiscal 2018.

Long-Term Care Hospitals (LTCH)

Under the rule, traditional LTCH PPS rates will be updated by 1.0%, as mandated, while payment rates for site-neutral cases will decrease by a net 20%. After accounting for all the rule’s provisions, LTCH payments are estimated to decrease by an overall 2.4% ($110 million) compared to FY 2017 payment levels. In addition, CMS finalized a regulatory moratorium on the 25% Rule during FY 2018 so it can evaluate whether the policy is still needed; this proposal is estimated to increase payments by $70 million.

In addition, CMS finalized as proposed a new short-stay outlier policy that pays a graduated per diem rate, blending the inpatient PPS and LTCH amounts, which is intended to remove the financial incentive to delay discharge. The agency also finalized, with slight modifications, its proposal to narrow the “separateness and control” requirements so that they apply only to IPPS-excluded hospitals that are co-located with IPPS hospitals. The rule finalizes a number of changes to the FY 2020 LTCH Quality Reporting Program, including the addition of measures assessing pressure ulcer changes, compliance with a spontaneous breathing trial, and ventilator liberation rates, for which agencies will begin reporting data on July 1, 2018. CMS will remove an existing pressure ulcer measure, and a measure assessing all-cause readmissions within 30 days of LTCH discharge. In addition, CMS substantially scaled back its proposal to require LTCHs to collect certain standardized patient assessment data beginning with LTCH admissions on or after April 1, 2018. These changes will become effective as of October 1, 2017.

Disproportionate Share Hospitals (DSH)

CMS will use data from its National Health Expenditure Accounts instead of data from the Congressional Budget Office to estimate the% change in the rate of uninsurance, which is used in calculating the total amount of uncompensated care payments available to Medicare Disproportionate Share Hospitals. CMS said this change will result in Medicare DSH payments increasing by $800 million in fiscal year 2018.

Hospital Inpatient Quality Reporting Program

Also under the rule, CMS will implement the socioeconomic payment adjustment factor in FY 2019 to the hospital readmissions reduction program (HRRP) mandated by the 21st Century Cures Act (P.L. 114-255). The agency says it will assess penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid. CMS is also adopting a number of quality measure reporting requirements to the hospital-acquired conditions (HAC) reduction program.

Hospital Value-Based Purchasing Program

CMS will remove one measure in fiscal year 2019 and adopt one new measure in FY 2022 and another in FY 2023. CMS will remove the PSI 90 measure from the safety domain beginning in FY 2019, and adopt the patient safety and adverse events composite PSI 90 measure beginning in FY 2023. CMS will also adopt the hospital-level, risk-standardized payment associated with a 30-day episode of care for pneumonia measure for the efficiency and cost reduction domain in FY 2022.

The final rule is scheduled to be printed in the Federal Register on August 14. For more information reference the CMS Fact Sheet or see the full text of the final rule in the Federal Register.


Source(s): Emergency Department Practice Management Association; CMS Fact Sheet; Federal Register; American Hospital Association (AHA); Becker’s Hospital CFO Report; Healthcare Payer News; Healthcare IT News; Healthcare Informatics; Fierce Healthcare; HMA Roundup; Modern Healthcare; RevCycleIntelligence;