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HMA Summary of Fiscal Year 2020 Medicare Proposed Rules for Medicare Part A Providers

This week, our In Focus section reviews the Centers for Medicare & Medicaid Services (CMS)-issued Fiscal Year (FY) 2020 Medicare Part A proposed rules. Between April 17 and April 23, 2019, the CMS issued the proposed rules for general acute care hospitals paid under the Inpatient Prospective Payment System (IPPS), the skilled nursing facility (SNF) prospective payment system (PPS), the Inpatient Rehabilitation Facility (IRF) PPS, the Long-Term Care Hospital (LTCH) PPS, the Hospice PPS, and the Inpatient Psychiatric Facility (IPF) PPS. These proposed regulations include annual payment rate changes and other proposed policy changes. Comment deadlines for these rules vary.

CMS proposed ruleComment submission deadline
Inpatient Rehabilitation FacilityJune 17, 2019
Inpatient Psychiatric FacilityJune 17, 2019
HospiceJune 18, 2019
Skilled Nursing FacilityJune 18, 2019
Long Term Care HospitalJune 24, 2019
Inpatient HospitalJune 24, 2019

Overall, the six FY 2020 Part A proposed rules include favorable payment rate updates across each of the provider types, ranging from a 1.85 percent payment increase for inpatient psychiatric facilities to a 3.7 percent payment rate increase for acute care hospitals. As a whole, these rate updates are higher than in recent years and may reflect trends in cost growth. Several of these regulations also propose policies to improve the assessment of providers’ capacity to exchange information with other providers and patients. Among the other significant policy changes included in these regulations, CMS proposes changes to hospital wage indexes and hospital add-on payments for new technologies (medical devices and drugs) and proposes several policies which create consistency across the post-acute care payment systems in advance of a unified PACPPS.

2020 Medicare Hospital Inpatient Prospective Payment System (IPPS) Proposed Rule Highlights

CMS proposes to update payments for general acute care hospitals paid under the IPPS in FY 2020 by 3.2 percent. CMS also proposes various policy changes related to hospital quality programs and electronic interoperability. Under the Inpatient Quality Reporting (IQR) program, CMS proposes deriving the hospital-wide all-cause readmission measure from both claims data and electronic health record data, and also proposes adding electronic clinical quality measures (eCQMs) related to opioid use and opioid adverse events. In addition, CMS proposes various policies related to its Promoting Interoperability Program (formerly EHR Incentive Program) which encourage providers to share data with other providers.

CMS also proposes several policy changes to the hospital wage index methodology for FY 2020 which are likely to shift payments from urban to rural hospitals and incite debate. Specifically, CMS proposes a temporary four-year formulaic increase to wage indexes for hospitals with wage index values below the 25th percentile of all hospital wage indexes. To maintain budget neutrality, CMS proposes a corresponding formulaic decrease to the wage indexes for hospitals with wage index values above the 75th percentile. In addition, CMS proposes removing urban-to-rural hospital reclassifications from the controversial ‘rural floor’ wage index policy which in the past resulted in additional payments shifting to urban hospitals in Massachusetts.

CMS proposes several changes to the IPPS new technology add-on payment (NTAP) policy which would increase Medicare payment rates for cases involving new technologies and potentially increase the number of new technologies receiving NTAP payments. CMS proposes to increase NTAP payments to hospitals for qualifying cases in FY 2020 by paying 65 percent of the marginal cost the DRG rate, rather than the current 50 percent. These are cases involving medical devices or drugs deemed new technologies by CMS. CMS also proposed implementing an alternative pathway for manufacturers to earn NTAP status for their medical devices in which devices that possess the Food and Drug Administration’s ‘marketing authorization’ would be deemed NTAP eligible if they also demonstrate they are high cost. In addition, CMS solicits comment on their proposal to approve NTAP status for two NTAP applications involving chimeric antigen receptor T-cell therapy, which are estimated to yield a maximum NTAP payment of $242,450 per case.

2020 Medicare Skilled Nursing Facility (SNF) Proposed Rule Highlights

FY 2020 marks the first year of the new SNF payment system. On October 1, 2019 the Patient-Driven Payment Model (PDPM) will replace the Resource Utilization Groups (RUG) payment methodology and is intended to reimburse providers based on patient characteristics and services needed rather than volume of therapy provided. For FY 2020, CMS proposes a net market basket update of 2.5 percent. CMS also proposes to revise the SNF group therapy definition to align with the definition used in the IRF setting. Specifically, the definition of group therapy would change to sessions involving two to six participants doing the same or similar activities, rather than exactly four participants. CMS will likely closely monitor the provision of group therapy going forward to ensure that SNFs are not inappropriately incentivized to increase group therapy participation without justification.

2020 Medicare Inpatient Rehabilitation Facility Proposed Rule Highlights

CMS proposes to update IRF payment rates by 2.5 percent for FY 2020. In addition, CMS proposes to revise the IRF case-mix groups using more recent quality indicator data and revise case mix group assignment by applying a weighting methodology to the motor score. CMS also proposes to rebase the IRF market-basket from 2012 data to 2016 data and increase the IRF labor share from 70.5 percent to 72.6 percent. As required by statute, CMS proposes to include two new IRF quality measures in FY 2022 which improve data interoperability by assessing the ability of IRFs to transfer health information to PAC providers and patients.

2020 Medicare Long Term Care Hospital (LTCH) Proposed Rule Highlights

CMS proposes to update LTCH payment rates for standard cases in FY 2020 by 2.7 percent. It is noteworthy that FY 2020 marks the end of the transition period between the single-rate LTCH PPS and the new LTCH dual-rate PPS. Beginning in 2020, LTCH site neutral payment rate cases will begin to be paid fully on the site neutral payment rate, rather than a transitional blended rate as they were in FY 2019. CMS estimates payment rates for site neutral payment rate cases will decrease by approximately 4.9 percent. In addition, CMS proposes other policies intended to make quality reporting across LTCHs and other PAC provider systems consistent. For example, CMS proposes to include two new LTCH Quality Reporting Program (QRP) measures which assess the interoperability of LTCH data systems.

2020 Medicare Hospice Proposed Rule Highlights

CMS proposes to update hospice payment rates by 2.7 percent. In addition, CMS proposes to rebase the continuous home care, general inpatient care, and inpatient respite care per diem payment rates to better align these payments with provider costs. In order to maintain overall budget neutrality, CMS proposes to reduce routine homecare payment amounts. The proposed rule also includes a request for information (RFI) about the use of hospice within the Medicare Advantage (MA) program, Accountable Care Organizations (ACOs), and other payment models. In addition, CMS seeks comments on how hospice care delivery under the current FFS system impacts the provision of supportive and palliative care services before hospice eligibility and election. This RFI follows recent demonstration announcement from the Center for Medicare and Medicaid Innovation which allows MA plans to test hospice benefits.

2020 Medicare Inpatient Psychiatric Facility Proposed Rule Highlights

CMS proposes to update IPF payment rates by 1.85 percent for FY 2020. CMS also proposes to adopt one new claims-based quality measure beginning in FY 2021, which will measure whether patients admitted to IPFs with diagnoses of Major Depressive Disorder, schizophrenia, or bipolar disorder filled at least one evidence-based medication within two days prior to discharge or during the 30-day post-discharge period.

HMA continues to analyze these proposed rules and will also analyze the final rules when they are released by CMS. For more information or questions about HMA’s Medicare Practice, please contact Mary Hsieh or Jon Blum.