FFY 2020 Medicare IPPS Final Rule – Correction Notice

CMS-1716-CN2 Published in the Federal Register on 10/8/2019
On October 8, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a correction to the recent FFY2020 IPPS Final Rule in order to address errors in the V. 37 MS-DRG assignments and relative
weights. In addition, CMS is correcting technical errors in the calculation of Factor 3 of the Uncompensated Care DSH. These changes required a recalibration of the IPPS and LTCH PPS base rates, budget neutrality factors, final wage indices, and final outlier threshold, as well. As a result, CMS issued revisions to Tables 1-5, 7, and 18, as well as the DSH Supplemental File and the Impact File.

Because all the changes are effective for discharges on or after October 1, 2019, CMS will be holding IPPS and LTCH PPS claims with discharges on or after October 1 through October 21, 2019.

Overall, the corrected Final Rule is projected to result in an immaterial change in payments to providers from the original Final Rule. The Federal base rate is expected to decrease by 0.1% and the median change in UC DSH payments to most hospitals is favorable by 0.0819%. However, some
specific hospitals will see significant increases or decreases based on the adjustments made to the UCC costs by CMS and its contractors.

Medicare IPPS Base Rates 
CMS is increasing the base rate 2.7% for hospitals, mostly driven by a market basket increase of 3.0%.
FFY2020 Medicare IPPS Final Rule
MS-DRG v 37 Changes
As noted, CMS has revised the MS-DRG weights for FFY2020.
Click here for a table of the MS-DRG v36 to v37 comparison.

UC DSH Payments

CMS also revised the UC DSH Supplemental file and related Table 18 for Factor 3 values, in order to correct for hospitals where a MAC had accepted an amended report and/or adjusted cost report data but for which revisions had been inadvertently omitted from the HCRIS data used. UC DSH payments were materially corrected for nine California hospitals as a result of CMS agreeing to remove “expected payments” from the cost of charity care in FFY2015.
Toyon’s Take: Hospitals should continue to work with their MACs to ensure that the latest revised data has been incorporated into the HCRIS data used by CMS for the publication of any rules. We anticipate that FFY2017 data will be used next to establish the FFY2021 UC DSH payments. This data will be gathered from FYE 9/30/2017, 12/31/2017, 3/31/2018, or 6/30/2018 cost report Worksheet S-10.
For FFY2017 uncompensated care amounts, there is a new set of reporting instructions. There is considerable industry agreement that these instructions are less challenging than instructions in place for FFY2015.
Recommended Action: If your hospital has revisions to its FFY 2017 WS S-10 data, Toyon strongly urges that these revisions be submitted to your MAC before December 31, 2019. This is the deadline for MACs to submit FFY 2017 S-10 revisions for hospitals under audit.
Click here for the DSH Supplemental PUF data.
Toyon has a new national analysis tool to assist hospitals with the evaluation of uncompensated care and the relationship to current and projected DSH UC payments. For additional information, please contact Fred Fisher at fred.fisher@toyonassociates.com.
Rate Updates for Sole Community (SCH) and Medicare-Dependent Hospitals (MDH)
CMS did not revise the update factors for the hospital-specific rates of SCHs and MDHs noted below:  
FFY2020 Medicare IPPS Final Rule
However, you will need to be sure to apply the updated recalibrated budget neutrality adjustment factor of 0.996859 to your factor updates.
Other Updates
New Billing Requirements for Periodic Interim Payment (PIP) Providers
For those few hospitals that receive bi-weekly PIP payments, in lieu of operating IPPS DRG payments, CMS issued an update to Pub. 100-04, Chapter 1, Section 80.4. This revision, effective February 19, 2019, requires that providers bill timely and accurately.
In order to remain on PIP, providers must submit 85% of their bills timely and accurately. To meet this standard, bills must be submitted within 30 days of discharge and pass front-end edits for consistency and completeness. Evaluation by the MAC will occur in 4-month intervals for hospitals.
Note: If the provider does not meet these criteria, the MACs are instructed to discontinue PIP immediately.
Evaluation of the 30-day timeline will be based on the difference between the date on Form CMS-1450 FL6 (“Through Date”) and the date received by the MAC. A bill is not considered received unless it can pass MAC edits.
The evaluation of accurate bills excludes the following:
  • MSP cases
  • Special situations beyond the provider’s control that are documented by the MAC and approved by the RO
  • Bills that have not passed MAC front-end edits for acceptance. (Such bills are counted only when acceptable to the shared system edit processes.)
The tabulation of the error percentage is calculated in the following manner:
              Timely and Accurate %  =  Number of non-excluded bills received in 30 days or less
                                                                Total number of bills received
Toyon’s Take: MACs have started to send monthly “PIP Compliance Review Result” letters to providers as warnings when they’re not in compliance for any given month. You should review this manual section and work with your revenue cycle team to ensure that they are aware of these rules, understand the implications for failure to meet these criteria, and are continually monitoring for compliance.
Toyon Associates Healthcare Finance


Receive a no obligation consultation on how Toyon can help make your cost reporting simpler, easier, and trusted.