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CMS Issues FFY 2020 IPPS Final Rule

The Centers for Medicare & Medicaid Services (CMS) released its federal fiscal year (FFY) 2020 inpatient prospective payment system (IPPS) final rule.  

Key highlights of the proposed rule include:

  • Area Wage Index: CMS finalized – with modification – its proposal to make changes to the area wage index. The final rule: 
    • Increase wage index values for low-wage hospitals in the bottom 25th percentile.
    • Cut the base payment for all IPPS hospitals, as opposed to the initial proposal to reduce wage index values for the hospitals in the highest 25th percentile. 
    • Cap any decrease in a hospital’s wage index at 5% in FFY 2020 compared to FFY 2019. 
    • Exclude wage index data from urban hospitals that reclassify as rural when calculating each state’s rural floor.
    • Include wage data from the eight California hospitals that were deleted from the proposed rule calculation.
  • Medicare DSH Payments: Despite CHA’s continued concerns with the reliability and validity of data reported on Worksheet S-10 and a request for a blended approach, CMS finalized its proposal to use a single year of uncompensated care data from Worksheet S-10 to determine the distribution of disproportionate share hospital (DSH) uncompensated care payments for FFY 2020. Specifically, the agency will use S-10 data from the FFY 2015 audited cost report.
  • Comprehensive CC/MCC Analysis: In response to comments from CHA and other stakeholders, CMS generally did not finalize proposed changes to severity level designations. CMS agreed with commenters that changes based on its comprehensive analysis were premature, and will conduct additional analysis and provide publicly available information — such as a test GROUPER — to allow for impact testing,
  • New Technology Add-on Payments: CMS finalized its proposal to increase the new technology add-on payment (NTAP) from 50% to 65% of the marginal cost of the case, capped at 65% of the cost of the technology. CMS is also increasing the add-on payment to 75% for certain antimicrobials.
  • Annual Payment Update: For FFY 2020, CMS will increase payment rates by 3.1% compared to FFY 2019. The update includes an initial market basket update of 3.1%, minus 0.4% for productivity and plus 0.5& to partially restore cuts made as a result of the American Taxpayer Relief Act (ATRA) of 2012. CMS estimates that, after accounting for all policies in the final rule, total IPPS payments will increase by 3%, or approximately $3.8 billion.
  • Quality Reporting Programs: CMS finalized a number of changes to hospital quality reporting programs, including two new measures for the Inpatient Quality Reporting Program. For the FFY 2023 payment period, CMS adopts one new opioid-related electronic clinical quality measures (eCQM), “Safe Use of Opioids – Concurrent Prescribing.” Beginning with the FFY 2024 payment period, all hospitals will be required to report this eCQM and choose three additional eCQMs. CMS did not finalize adoption of its proposed “Hospital Harm – Opioid Related Adverse Events” eCQM. Beginning with the FFY 2026 reporting period, CMS will require hospitals to report the currently voluntary “Hybrid Hospital-Wide All-Cause Readmissions” measure, following two additional voluntary reporting periods. CMS also finalized policies for the Hospital Readmissions Reduction Program, Hospital-Acquired Conditions Reduction Program, or the Hospital Value-Based Purchasing Program.
  • Promoting Interoperability Program: CMS finalized a continuous 90-day reporting period for hospitals and critical access hospitals in the Medicare Promoting Interoperability Program for the calendar year 2021 reporting period. In addition, CMS will allow optional reporting of the “Query of Prescription Drug Monitoring Program” measure for the 2020 reporting period. CMS also finalized its proposal to remove the “Verify Opioid Treatment Agreement” measure beginning in 2020, in response to comments from CHA and other stakeholders about significant implementation challenges. CMS finalized proposals to align eCQM reporting requirements with the hospital inpatient quality reporting program. 

CHA is currently analyzing the final rule and will provide members with a more detailed summary in the coming weeks. Additional information is available in a CMS fact sheet.

On August 16, CHA will host a complimentary members-only briefing from 10-11 a.m. (PT) to update members on the finalized area wage index proposal and next steps. Register here