CMS' final inpatient payment rule for 2020: 8 things to know

CMS released its annual Inpatient Prospective Payment System final rule Aug. 2, which includes changes to the hospital wage index and raises Medicare payment rates for acute care hospitals.

Eight things to know about the final IPPS rule:

Payment rate update

1. Acute care hospitals that report quality data and are meaningful users of EHRs will receive a 3.1 percent increase in Medicare rates in fiscal year 2020, compared to fiscal 2019.

2. CMS projects the rate increase, together with other changes to inpatient payment policies, will boost total IPPS payments by roughly $3.8 billion.

Disproportionate Share Hospital payments

3. CMS will distribute nearly $8.4 billion in DSH payments in fiscal 2020, an increase of approximately $78 million from fiscal 2019.

CAR-T therapy payment update

4. CMS will increase the maximum add-on payment for new technology, including CAR-T cancer therapy, from 50 percent of estimated costs to 65 percent. The agency finalized a 75 percent new technology add-on payment for certain antimicrobials.

5. In a statement, American Hospital Association Executive Vice President Tom Nickels said the AHA is pleased CMS increased the add-on payment rate. However, additional solutions are needed "to address the long-term sustainability of providing these expensive therapies," he said.

Wage index changes

6. CMS will increase the wage index for hospitals with a wage index value below the 25th percentile. The agency will adjust the standardized amounts for all hospitals to make this policy budget neutral.

7. CMS finalized changes to the "rural floor" calculation, which requires the wage index values for urban hospitals to be no lower than the wage index values for rural hospitals in the same state.

8. "It appears that hospitals in a limited number of states have used urban to rural hospital reclassifications to inappropriately influence the rural floor wage index value," CMS said in a fact sheet. "To address the unanticipated effects of rural reclassifications on the rural floor and the resulting wage index disparities created by urban to rural hospital reclassifications, CMS will remove urban to rural hospital reclassifications from the calculation of the rural floor wage index value beginning in FY 2020."

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