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Today, the Centers for Medicare & Medicaid Services (CMS) issued its final rule updating the inpatient and long-term care hospital prospective payment systems (PPS) for federal fiscal year (FFY) 2018.
For inpatient PPS hospitals, CMS finalized a market-basket update of 2.7 percent, reduced by a negative 0.6 percent productivity adjustment and the negative 0.75 adjustment required by the Affordable Care Act (ACA), as well as a cut of 0.6 percent to remove the one-time, temporary adjustment that it made in FFY 2017 to restore the unlawfully instituted two-midnight policy cuts. In addition, CMS finalized an increase of 0.4588 percent, as required by the 21st Century Cures Act, to partially restore cuts made as a result of the American Taxpayer Relief Act of 2012. CMS estimates total Medicare spending on inpatient hospital services will increase by approximately 1.2 percent, or $2.4 billion, as compared to FFY 2017.
The final rule also implements ACA-mandated Medicare disproportionate share hospital (DSH) reductions. Despite CHA’s strong opposition, CMS has adopted its proposed Medicare DSH policy with slight modifications. CMS will proceed in implementing a three-year transition period, beginning in FFY 2018, during which it will utilize a blend of the current proxy and uncompensated care cost data from Worksheet S-10 of the Medicare cost report in the methodology for distributing Medicare DSH uncompensated care payments. CMS did, however, modify the trim methodology and comments on aberrant data. CHA is currently analyzing those provisions.
Notably, in the final rule CMS acknowledges many comments, including those from CHA and its member hospitals, related to the challenges of the S-10 worksheet instructions and data variation. CMS notes it will “work with stakeholders to address their concerns through provider education and refinement of the instructions for the Worksheet S-10.” Unfortunately, CMS has not laid out a process for stakeholder engagement at this time. CMS reminds hospitals that that they may resubmit certain Worksheet S‑10 data to their Medicare administrative contractors by Oct. 31. CMS notes in the final rule that limited revisions to the FFY 2014 cost report can also be made.
Finally, CMS also adopted its proposal to use data from its National Health Expenditure Accounts, instead of from the Congressional Budget Office, to estimate the percent change in the rate of uninsured. CHA strongly supported this proposal, as it results in an increase of overall Medicare DSH in FFY 2018 compared to FFY 2017.
On a more positive note, CHA is pleased CMS has withdrawn its proposal to compel the accrediting organizations to release their reports, a proposal CHA opposed. Also, CMS finalized its proposal to reduce electronic clinical quality measure reporting requirements under the Medicare and Medicaid electronic health record (EHR) incentive program, and will allow for any 90-day continuous reporting period during calendar year 2018. As proposed in the Quality Payment Program proposed rule and advocated for by CHA, CMS finalized its policy to allow hospitals to continue to use 2014 certified EHR technology in 2018.
The proposed rule also includes updates to the long-term care hospital PPS and continued implementation of the Improving Medicare Post-Acute Care Transformation Act. Details on those provisions will be issued separately. CHA is currently reviewing the final rule and will provide members with a more detailed summary in the coming weeks. Additional information will be available in CHA News.
