MedPac Comments on Inpatient PPS Proposed Rules – FY 2016

From: MedPac – 6/9/15

MedPac submitted their comments on the FY 2016 Inpatient PPS proposed rules earlier this week.  Their comments focused on the following areas:

  • Changes to the LTCH PPS
  • Quality measurement and value-based payment
  • Computing and distributing uncompensated care payments
  • The hospital readmission reduction program
  • The wage index system

Based on my brief review of the document regarding the topics that impact the acute PPS reimbursements I found:

  • MedPac support CMS‘s proposal to decrease the number of process measures and increase the number of outcome measures, but have concerns about proposed condition-specific efficiency/cost measures.
  • MedPac does not like the current Uncompensated Care Payment DSH distribution system. Here is an excerpt of their comments on this issue:

“We continue to see two problems with the proposal for distributing uncompensated care dollars. The first problem is the metric used to estimate each hospital‘s uncompensated care costs. CMS proposes to continue using each hospital‘s number of Medicaid and Medicare SSI (Supplemental Security Income) inpatient days as a proxy for uncompensated care costs. This is a poor proxy as we explain in this letter. Data from worksheet S-10 in hospitals‘annual Medicare cost reports provides a better estimate of uncompensated care costs. We urge CMS to transition toward using the S-10 to estimate uncompensated care costs. Second, the proposal to distribute the uncompensated care payments as a per-discharge add-on payment is problematic because the per-discharge add-on distorts prices used by Medicare managed care (MA) plans. The add-on can add over $10,000 to the price per discharge at some hospitals and $0 at others.”

  • MedPac approves of the impact of the Hospital Readmission programs impact. However there are changes that need to be made.
  • CMS requested comments regarding the Hospital Wage Index. MedPac reiterated that the current wage index system be replaced and that a new system be implemented based on their 2007 recommendations.

MedPac Comments on Inpatient PPS Proposed Rules – FY 2016 


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