Proposed Rule Issued for Medicare Inpatient Prospective Payment System

Posted on May 14, 2020

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service inpatient prospective payment system for fiscal year (FY) 2021, which begins Oct. 1. Key information from the proposed rule includes:

  • Increasing the standardized operating rate by a net 3.16% for hospitals that successfully participate in the inpatient quality reporting (IQR) program and are meaningful users of electronic health records.
  • Requiring hospitals to report by Medicare Severity Diagnosis-related Group (MS-DRG) the median payer-specific negotiated rates for inpatient services on the Medicare cost report for Medicare Advantage organizations and third-party payers. This in addition to requirements of the November 2019 transparency final rule that mandates hospitals to post charges and negotiated payment rates for all items and services in a machine-readable format, as well as charges and negotiated payment rates for at least 300 “shoppable” services in a searchable format.
  • Using FY 2017 data from Medicare cost report Worksheet S-10 to determine the distribution of uncompensated care (UCC) pool payments. FY 2021 UCC payments are estimated at approximately $7.82 billion, down roughly $530 million from FY 2020.
  • Creating MS-DRG 018 for chimeric antigen receptor (CAR) T-cell immunotherapy with a proposed relative weight of 37.14 to reflect the high cost and discontinuing the new technology add-on payments for the two CAR T products currently available.
  • Increasing the cost outlier threshold by 12% from $26,778 to $30,006, which will reduce the number of cases that qualify for an outlier payment.
  • Modifying the definition of “displaced resident” for the purpose of transferring Medicare medical residency slots after a teaching hospital or residency program closes.
  • Continuing the low-wage-index hospital policy implemented in the FY 2020 final rule, funded by reducing the standardized operating rate for all hospitals.
  • Maintaining a reporting period of any continuous 90-day period for the calendar year (CY) 2022 Promoting Interoperability Program and retaining the Query of Prescription Drug Monitoring Program measure as an optional measure worth five bonus points in CY 2021.
  • Retaining the current IQR measure set, but increasing the number of quarters required for electronic clinical quality measure (eCQM) reporting to two self-selected quarters for CY 2021, increasing to all four quarters for CY 2023. In addition, the CMS proposes to start publicly reporting eCQM measure results in late 2022 for CY 2021 data.
  • Deferring proposals on hospital overall star ratings to future rulemaking due to the COVID-19 pandemic, with no timeframe for making updates.
  • Making minimal changes to the value-based purchasing, readmissions reduction and the hospital acquired-conditions reduction programs, primarily carrying forward existing policies.

The MHA will provide a hospital-specific analysis and a summary of the proposed rule within the next few weeks. The association will also share its draft comments prior to the July 10 due date and encourages hospitals to contact Vickie Kunz by June 30 regarding issues identified. The CMS has waived the typical timeline, which requires release of a final rule by Aug. 1. Due to the pandemic, the CMS can provide as few as 30 days between publication of the final rule and the Oct. 1 effective date. Members with questions should contact Vickie Kunz at the MHA.          



Tags: CMS, IPPS, Vickie Kunz

Posted in: Member News

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