CMS' proposed inpatient payment rule for 2020: 9 things to know

CMS released its annual Inpatient Prospective Payment System proposed rule April 23, which includes changes to the hospital wage index and would raise Medicare payment rates for acute care hospitals.

Nine things to know about the 2020 proposed rule:

Payment rate update

1. Under the proposed rule, acute care hospitals that report quality data and are meaningful users of EHRs will receive a 3.2 percent increase in Medicare rates in fiscal year 2020, compared to fiscal 2019.

2. CMS projects the rate increase, together with changes in uncompensated care payments, new technology add-on payments and other changes to inpatient payment policies, will boost total IPPS payments by 3.7 percent in fiscal 2020.

Disproportionate Share Hospital payments

3. CMS proposes distributing roughly $8.5 billion in DSH payments in fiscal 2020, an increase of approximately $216 million from fiscal 2019.

CAR-T therapy payment update

4. Under the proposed rule, CMS would increase the maximum add-on payment for new technology, including CAR-T cancer therapy, from 50 percent of estimated costs to 65 percent.

5. CMS said the two CAR-T therapies on the market — Gilead Sciences' Yescarta and Novartis AG's Kymriah — have price tags of $373,000. Under the proposed rule, the maximum add-on payment would increase from $186,500 to $242,450.

6. The American Hospital Association said the payment update would help hospitals in the short term.  

"Based on our initial review, we are pleased that the agency has increased the new technology add-on payment rate, including for CAR-T therapies," AHA Executive President Tom Nickels said in a news release. "Hospitals and health systems have been taking on this financial burden to ensure access to these life-saving treatments for patients, and while this proposal is not a permanent solution, it will help in the short-term."

Wage index changes

7. The proposed rule includes several changes to the inpatient hospital wage index. Under the proposal, hospitals with wage index values below the 25th percentile would see an increase, while hospitals with wage index values above the 75th percentile would see a decrease. The rule would cap decreases at 5 percent for fiscal 2020.

8. CMS is proposing 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.

"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 this, CMS proposes removing urban to rural hospital reclassifications from the calculation of the rural floor wage index beginning in FY 2020."

Comment period

9. CMS will accept comments on the proposed IPPS rule through June 24.

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