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Category: Featured

FFY 2023 IPPS PROPOSED RULE COMMENTS DUE JUNE 17, 5 PM EDT

This Friday June 17th at 5 PM, comments are due on CMS’s proposed FFY 2023 IPPS rate setting.   In commenting – 

  • Refer to file code CMS–1771–P.  
  • Submit electronically through this regulation link then select the COMMENT button at left, below the title; or
  • Submitted by mail to: Centers for Medicare &Medicaid Services, Department of Health and Human Services, Attention: CMS–1771–P, P.O. Box 8013, Baltimore, MD 21244–1850.

Please feel free to see Toyon’s comments here on our website.  Providers may also download a word version of these comments with designated [highlighted] areas to populate for your hospital or health system.  

Toyon’s comments are focused on reimbursement issues, as well as cost reporting proposals requiring additional clarification, as summarized in the table below.

# Issue FFY 2023 Proposal Summarized  Comment
1

Market Basket

2.7% Update

3.1% Market Basket -0.4% ACA Adjustment

8.0% Update

Based on recent Medicare cost increases[1]

2 Outliers

$43,214 

Fixed Loss Threshold  (40% increase from PY)

Reduce threshold in anticipation of fewer COVID-19 hospitalizations in FFY 2023
3

UC DSH Factor 1

-$542M

Reduction to FFY 2023 UC DSH Payments

-$542M

Reduction to FFY 2023 UC DSH Payments

Increase Factor 1 discharge adjustment considering forecasts of increased Medicare utilization

4 UC DSH Factor 2

65.71%

-0.03 from prior yr

-0.07 from penultimate yr

65.71%

-0.03 from prior yr

-0.07 from penultimate yr

Increase Factor 2 to reflect projections of increases to the national uninsured population

5 Empirical DSH Section 1115 Waiver Days Medicaid patients regarded as eligible from 1115 Waiver w/ essential health benefits (EHB) Clarification on premium assistance days “for which the premium assistance is equal to or greater than 90 percent of the cost of the coverage”
6 NP95 Respirator Payments Reimbursement for the incremental cost of using wholly domestically produced N95 respirators Supported and request CMS reimburse for all patients (not only Medicare) in bi-weekly lump sum payments

Please feel free to email Fred Fisher at fred.fisher@toyonassociates.com with any questions.

[1] Analysis of Medicare cost per discharge change from FFY 2019 to FFY 2020 per Medicare cost report data from the Healthcare Cost Report Information System (HCRIS).  Medicare cost per Worksheet D-1 Part II, Line 49, Column 1.  Medicare discharges per Worksheet S-3 Part I L14.00 C13.00.

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Measuring Healthcare – Uncompensated Care DSH

The Affordable Care Act (ACA)
According to the ACA, Medicare’s Uncompensated Care Disproportionate Share (DSH) recognizes “the amount of uncompensated care for…treating the uninsured.”

“Uninsured” – as opposed to “charity” (or similar for low-income patients) – presents the following questions:

  • When is a patient considered uninsured? 
  • What is the difference between low-income uninsured patients and all other patients? 
  • How does a comprehensive process identifying all categories of uninsured patients affect hospital operations and the financial assistance policy?

This article looks at CMS’s proposed cost report instructions to provide more insight to these questions, while providing recommendations for hospital teams.

Notable Proposed Cost Report Changes
In November 2020, CMS proposed new cost reporting instructions for FFY 2021uncompensated care cost reporting on Worksheet S-10.[1] These proposed instructions include changes and clarifications in reporting noteworthy categories of uncompensated care cost:

  • Allowed: Liability for patients with insurance but determined to be uninsured.
    More under “Other Uninsured Charity Care”
  • Not Allowed: Charge discounts from inferred contractual relationships.
    More under “Inferred Contracts and Significant Losses”…
  • Allowed: Implicit Price Concessions[2] are reportable as bad debt costs.
    More under “Bad Debt and Discovery”
  • Not Allowed: Sub-acute care costs outside general short term hospital inpatient and outpatient services (not billable under the hospital CCN). This is a major shift in reimbursement.
    More under “Short Term Hospital Services Only”

[1] Federal Registers, Vol 85 No 218


[2] Accounting Standards Update, Topic 606



 

Other Uninsured Charity Care
CMS’s proposed language clarifies providers may report other forms of “charity” related to insured patients, provided this care is in the financial assistance policy.  Specifically, CMS states providers may report:

  • the “…portion of total charges for insured patients that were determined uninsured for the entire hospital stay;”[1] and
  • “charges other than deductible, coinsurance and copay (C+D) amounts that represent the insured patient’s liability for medically necessary hospital services”[2]

Both instructions relate to insured patients with charges that are not covered by the patient’s insurance carrier. Therefore, providers may consider reporting non-covered charges and exhausted benefit charges from all payers as forms of charity care, provided these discounts are specified in a hospital’s financial assistance policy. 

But what does it mean to specify non-covered charges from all payers as charity care in a financial assistance policy? For tax exempt providers, how does allowing non-covered charges from all payers relate to IRS 501 (r) requiring hospitals to include amounts and methods for patients to receive free or discounted care?

Contrary to complex cost reporting instructions, the financial assistance policy is a public facing document designed to help patients navigate the healthcare system. As more cost reporting instructions are dependent on this policy, it becomes muddied with caveats, as opposed to a concise, easy-to-read, patient-centered document. An internal policy – apart from the patient financial assistance policy – delineating the accounting of charity care may be prudent to 1) maintain a separate patient friendly policy; and 2) present evidence of compliance with cost report instructions.

When it comes to financial assistance policy governance, generally CMS does not regulate how providers articulate charity care in their policies (one notable exception relates to Medicare FFS bad debts, whereby CMS does not allow presumptive charity eligibility determinations).  For all other forms of charity, CMS states:

“(CMS) does not set charity care criteria policy for hospitals, and within reason, hospitals can establish their own criteria forwhat constitutes charity care in their charity care and/or financial assistance policies.[3]

CMS has not further elaborated on what constitutes “within reason,” to be considered as charity care. However, as presented above, the proposed cost report instructions indicate a broad definition including charges from a remaining patient liability.

Recommendation: Evaluate the reporting of non-covered and exhausted charges from all payers against current hospital procedure.  Hospital teams are encouraged to assess:

  • If patients are billed the outstanding amount. 
    For instance, a provider may pursue payment from secondary and tertiary payers, and then the patient for non-covered services.
  • When and where these transactions are reported in the patient financial system (i.e., account adjudication). 
    For instance, after collection attempts, and a payment is not received, the resulting “write-off” can end up in various transaction types including 1) bad debt – recognized as uncompensated care cost; 2) contractual allowance – not recognized as uncompensated care cost; or 3) denial | non-covered transaction code – recognition of uncompensated care cost depends (typically, providers report charges related to non-covered Medicaid from these codes). 
  • and 3) the benefit of changing policy and procedures so these amounts may be recognized as charity care.  

A statistic to help this evaluation: Providers are reimbursed approximately $250,000 for every $1M in charity cost.[4] 

A thought on policy variation and Section 501(r) – For reporting as uncompensated care cost, it is important to include financial assistance policy language discussing non-covered charges as patient financial assistance.  This helps ensure the policy includes the basis and method patients may receive financial assistance.  In question is the appropriateness of two beneficiaries with the same plan, whereby one is responsible for the coinsurance, while the other received charity related to a non-covered service.  This is an important question that must be considered and continuously evaluated.


[1] Reported on Worksheet S-10 Line 20, Column 1

[2] Reported on Worksheet S-10 Line 20, Column 2 and Line 25.01 Column 1

[3] FFY 2021 IPPS Final Rule


[4] Charges reduced by the cost to charge ratio.



 

Inferred Contracts and Significant Losses
As discussed above, non-covered charges and exhausted benefits charges from all payers are forms of charity care.  Okay got it.  However, CMS also proposes providers cannot report charges from insured patients under contract, or inferred contract with the hospital.  In the proposed cost report instructions for FFY 2021, CMS states providers may report:

“the portion of total charges for patients with coverage from an entity/insurer that does not have a contractual or inferred contractual relationship (a contractual relationship between an insurer and a provider will be inferred where a provider accepts an amount from an insurer as payment, or partial payment, on behalf of an insured patient) with the provider.” 

Separate from a “non-covered charge,” this proposed language seemingly follows the principle that payment shortfalls are not a form of charity care, focusing on insured patients not under contract with the hospital (e.g., “out of network”).   Consider the following example:

  • Charges: $200,000
  • Cost: $50,000
  • Payment from Auto Policy: $5,000
  • Unreimbursed Cost = $45,000

sizable charitable discount, the $45,000 shortfall may not be considered a form of charity care. 

However, this brings back the question – at what point does this patient become uninsured? 

Recommendation: Evaluate the out of network population, and determine if “splitting the account” is appropriate to break-apart the insurance portion from the patient portion.  If the $45,000 is considered as the patient portion, this may be the practical approach for recognizing the amount as charity care.[1]  As discussed above, this accounting exercise may be another reason an internal policy is beneficial to hospitals, while maintaining a separate patient centered document.  

It does not go unnoticed developing an internal policy may become a “Pandora’s box” identifying all types of charity care – resulting in variation of DSH hospitals across the country.  To address this issue, it is recommended CMS and other industry leaders develop a payment to cost ratio for out of network reimbursement.   Amounts below a threshold of “normal and customary” rates should be considered and re-evaluated as charity care eligible. 


 


[1] Provider would report $195,000 in charges, netting to approximately $45,000 in uncompensated care cost. 



 

Bad Debt and Discovery
After years of industry contemplation, CMS’s cost report instructions for reporting bad debt includes implied price concessions.[1]  Essentially, this is business as usual for reporting bad debts on Worksheet S-10 of the cost report.  Due to the change in bad debt reporting for audited financial statements, during audit providers may not be able to produce a bad debt “roll forward” schedule.[2]  In these cases, it is recommended providers disclose how “bad debts” relate to financial statements and request to be waived from the requirement of producing this reconciliation. 

Although it is business as usual for reporting bad debts, providers continue to discover anomalies with prior year bad debt accounts.  More specifically, providers are discovering old bad debt accounts that qualify for charity care. 

Why is this important?  Because when patient C+D amounts are reported as bad debt, they are reduced to an amount less than cost.  However, when patient C+D amounts are reported as charity care, the full amount is recognized as uncompensated care cost.  CMS has employed this calculation since the inception of uncompensated care cost for Uncompensated Care DSH payments (starting FFY 2018). 

Consider the impact to uncompensated care cost from thousands of accounts like the example below:

Reported as Charity Care

  • Amount Written Off to Charity Care: $5,000
  • Charity Cost: $5,000 (amount of recognized uncompensated care cost on Worksheet S-10)

The question that looms for providers discovering charity care in aged bad debt accounts – may old bad debt accounts be reversed and reclassified as charity care?  In a system of write-offs and reversals, this seems like a real possibility – especially considering the practice of “smoothing” costs so that the true answer is achieved over time. Another example of “smoothing” in reimbursement is in the wage index – providers report salaries from the general ledger (accrual-based accounting) and hours associated with paid salaries from the payroll file (cash-based accounting).[3] 

Ultimately, the ability to reclassify bad debt accounts may come back to how the amounts relate to a hospital’s financial statement in prior years.  A reclassification of bad debts may require a restatement of financial statements.  For optimization of Uncompensated Care DSH payments, these efforts certainly can be worth the time and resources. 

Recommendation: Hospitals are encouraged to evaluate prior year bad debt write-offs to determine if any amounts are truly charity care.


[1] Accounting Standards Update, Topic 606.

[2] Scheduling showing bad debts relationship in accounts receivable at the beginning of the hospital fiscal year vs. the end of the fiscal year.


[3] Per CMS 2552-10 instructions for wage index – “Although this methodology does not provide a perfect match between paid costs and paid hours for a given year, it approximates a match between costs and hours.”



 

Short Term Hospital Services Only
CMS’s proposal shifting Uncompensated Care DSH to only recognize short-term hospital services is a major change, especially for safety net hospitals providing essential sub-acute care services to low-income patients (e.g., behavioral health, rehabilitation, SNF, etc.).   Providers with subacute care need to prepare for significant decreases in Uncompensated Care DSH payments, estimated to be effective in FFY 2025.  This change emphasizes the importance of identifying all other uninsured costs, as discussed throughout this article.   In FFY 2021, providers with subacute care received $5.3bn (63%) of the $8.3bn in national Uncompensated Care DSH funding.

Recommendation: Hospitals providing subacute care[1], billed under a CMS Certification Number (CCN) apart for the Hospital CCN, should evaluate the portion of uncompensated care cost (Charity and Bad Debt), as well as the cost-to-charge structure, to determine the amount of uncompensated care cost CMS is proposing to exclude from future Uncompensated Care DSH payments.  This information can help hospitals prepare for this a potentially large swing in Medicare reimbursements. 

Uncompensated Care DSH and COVID-19

There is no doubt COVID-19 has changed access to healthcare and the amount of uncompensated care provided during 2020 and 2021.  Under CMS’s current method, these years would be the baseline driving Uncompensated Care DSH payments in FFY 2024 and FFY 2025. However, the data is atypical and with an uncertain future, recognizing these uncompensated care costs comes with consequences.  For instance, there will be variation in the amount of uncompensated care delivered at hospitals in states with longer stay at home mandates vs. hospitals in states with-out these restrictions (or less restrictions).  

Recommendation: As the industry moves forward, we should do so with caution, carefully evaluating the appropriateness using data from the public health emergency.  Last Federal Year, FFY 2020, CMS applied a COVID related adjustment to Uncompensated Care DSH, using a more current estimate of unemployment in determining “Factor 2,” resulting in an additional $500M in national funding.

The ACA mandates Uncompensated Care DSH is based on “appropriate data” or other “alternative data” that is “a better proxy for the costs. . . of treating the uninsured.”  As we adapt to life during and after COVID-19, the industry may also have to discover the alternative data that best measures uncompensated care provided during this extraordinary time.    


[1] Billed under a CMS Certification Number (CCN) apart from the Hospital CCN


 



Thank You

Toyon Associates, Inc. appreciates the opportunity to present and discuss reimbursement issues with thought leaders in the healthcare industry.  For more discussion and information, please contact Fred Fisher at 888.514.9312 or fred.fisher@toyonassociates.com.

Respectfully,

Toyon Associates, Inc.

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FFY2020 Final Rule

IPPS Final Rule – FFY2020

CMS-1716-F drafted on 8/2/2019; Published in the Federal Register on 8/16/2019

On August 2, 2019, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that focuses the agency’s efforts on a singular objective: transforming the healthcare delivery system through competition and innovation to provide patients with better value and results. The final rule updates Medicare payment policies and rates for hospitals under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS), effective for discharges on or after October 1, 2019.

The policies in the IPPS and LTCH PPS final rule would represent historic changes to the way rural hospitals are paid and help ensure access to a world-class healthcare system with access to potentially life-saving diagnostics and therapies by unleashing innovation in medical technology and removing barriers to competition.

Overall, the final rule is projected to result in an estimated increase of $3.8B (or 3%) in payments to providers, ranging from 0.8% increases for urban hospitals in the New England Region up to 3.4% increases for smaller, rural hospitals.Medicare IPPS Base Rates 
CMS is increasing the base rate 2.7% for hospitals, mostly driven by a market basket increase of 3.0%.

Click here for the full base rate calculation table and comparison to prior year.

Medicare IPPS Base Rates 
CMS is increasing the base rate 2.7% for hospitals, mostly driven by a market basket increase of 3.0%.

Click here for the full base rate calculation table and comparison to prior year.

MS-DRG v 37 Changes
As expected, CMS is recalibrating the MS-DRG weights for FFY2020. Heart transplants and extensive burn DRGs appear to be getting a boost, while external heart assist devices and pancreas transplants are seeing significant reductions in weighting. DRG 319 and 320 (Endovascular Cardiac Valvular Disorders) are new in FFY2020. Below is a listing of the largest changes in weighting between v36 and v37 of the MS-DRGs:
Click here for a table of the MS-DRG v36 to v37 comparison.

Post-Acute Care Transfer Policy Changes

Effective 10/1/2019, DRGs 273 & 274 (Percutaneous Intracardiac Procedures) will no longer be subject to the transfer policy.

 New Technology Add-On Payment Calculation

In an effort to recognize the rising costs of new technology, CMS has finalized that the existing new technology add-on payment calculation (currently at a 50% limit) be increased to equal the lesser of:

1.)    65% of the cost of the new medical device or technology; OR

2.)    65% of the amount by which the cost of the case exceeds the standard DRG payment

3.)    75% for antimicrobials designated by the FDA as Qualified Infectious Disease Products (QIDPs)

Note: Unless the discharge qualifies for an outlier payment, the additional Medicare payment would be limited to the full MS-DRG payment plus 65% of the estimated costs of the new technology or device.

As a result of this increase, the maximum payment for CAR-T Cell Therapies (KYMRIAHTM and YESCARTATM) would increase from $186,500 to $242,450, which may help to increase the use of this new technology.

Wage Index Changes

CMS has calculated an occupational-mix adjusted national average hourly wage of $44.15. Of note, 164 hospitals will receive the rural floor in FY 2020. This is approximately 99 fewer hospitals receiving the rural floor in FY 2020 than in FY 2019. This is due to the revised calculation for FY 2020 (and subsequent fiscal years) that excludes the wage data of hospitals that have reclassified as rural under 42 CFR 412.103. Eleven urban providers in Massachusetts are expected to receive the rural floor wage index value, which will increase payments overall to the hospitals in Massachusetts by an estimated $25M. This is in comparison to FFY2019 where twenty-nine urban providers in Massachusetts received its rural floor wage index value, increasing payments overall to the hospitals in Massachusetts by an estimated $123M.

CMS remains concerned that the current wage index system exacerbates disparities between high and low wage index hospitals. In addition, CMS also wants to address concerns that the rural floor calculation has been manipulated by a limited number of states to achieve higher wage index factors at the expense of hospitals in other states. As a result, CMS has finalized several significant changes to the wage index calculation.

CMS is finalizing their proposal to reduce disparities by increasing the values for low wage index hospitals below the 25th percentile (or a WIF of 0.8457). The increases for the low wage index hospitals would be equal to half the difference between the original final wage index value for the hospital and the final 25th percentile value (e.g., 0.756 = 0.6663 + (0.8457 – 0.6663)/2). CMS would like this policy to be effective for a period of at least 4 years in an effort to allow employee compensation increases sufficient time to be reflected in the wage index calculation. CMS intends to visit the duration of this policy in future rulemaking as it gains experience under the policy.

CMS has also finalized their proposal to change the rural floor calculation, including the removal of urban-to-rural reclassifications under 42 CFR 412.103. Beginning in FFY2020, state rural floors would be calculated without including the wage data of urban hospitals that have reclassified as rural.

In order to mitigate the negative impacts to hospitals with significant decreases as a result of CMS policy changes, CMS will place a cap of 5% on the decrease of any hospital’s wage index from FFY2019 to FFY2020, allowing the effect of these policy changes to be phased in over 2 years. However, no such cap to limit the decrease in a hospital’s wage index would be applied during the second year.

Overall Medicare spending will not increase as a result of this policy. CMS is accomplishing this through a budget neutrality adjustment of .998838 to the standardized amount that is applied across all IPPS hospitals, rather than a decrease to the wage index for hospitals above the 75th percentile as proposed.

Click here for a comparison of current and prior WIFs for each hospital. These tables are an estimate compiled from Table 2 of the IPPS Final Rule, as CMS has noted that there are errors in Table 3.

Toyon’s Take:

In recent years, CMS has hinted at addressing what it describes as “wage index disparities;” however, no specific changes were proposed and finalized until this year. The finalized changes are noteworthy and were heavily commented on by hospital associations and the provider community in the Final Rule. The finalized changes have significant reimbursement benefit to states that fall below the 25th percentile in terms of its wage index value as well as negative impacts to the standardized amount for all IPPS hospitals. Hospitals should challenge the AWI policies finalized in the FFY 2020 IPPS Final Rule. Hospitals should first appeal to the Medicare Provider Reimbursement and Review Board (PRRB). All appeals are due within 180 days of issuance of the final rule, which is January 29, 2020. Subsequent appeals must be filed annually to preserve appeal rights for each year the policy is in place. CMS has noted its intent to keep the reduction in the standardized amount in effect for a minimum of 4 years (FFYs 2020 – 2023); the rural floor policy is final. Toyon has developed a model analyzing the finalized changes to the wage index using FFY2020 Final Rule data sources. We are happy to share our analysis specific to your hospital.

Other Finalized Changes Impacting Wage Index

  • The overhead rate calculation would now be equal to the following:
    • (Lines 26 through 43 – Lines 28, 33, 35) / ((((Line 1 + Lines 28, 33, 35) – (Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, and 26 through 43)) – (Lines 9 and 10)) + (Lines 26 through 43 – Lines 28, 33, 35)).
    • The change made by CMS was to eliminate the removal of the sum of overhead contract labor (Lines 28, 33, 35) from the Revised Total Hours calculation in the denominator
      • So (Lines 9, 10, 28, 33, and 35) will now simply be (Lines 9 and 10).
  • The rounding of values for the wage index calculation would be changed as follows:
    • “Raw data” from any individual line item or field would not be rounded.
    • Summed or averaged wage amounts would be rounded to 2 decimals.
    • Hours would be rounded to the nearest whole number.
    • Ratios, percentages, or inflation factors would be rounded to 5 decimals.
    • Actual unadjusted and adjusted wage indexes would continue to be rounded to 4 decimals.
  • A new methodology for calculating the wage index for urban areas without wage data would be calculated by dividing the total urban salaries plus wage-related costs in the state by the total urban hours in the state, all of which would then be divided by the national average hourly wage.
  • Applications to the Medicare Geographic Classification Review Board (MGCRB) for FFY2021 reclassifications, as well as cancellations and terminations, were due by September 3, 2019. All applications and supporting documents must be submitted via the Office of Hearings Case and Document Management System (OH CDMS). Because this new system is available, CMS is eliminating the requirement to copy CMS on these MGCRB filings. More information can be found at https://www.cms.gov/regulations-and-guidance/review-boards/MGCRB/electronic-filing.html.
  • Likewise, applications to CMS for rural redesignations may also now be submitted electronically, by fax, or by other electronic means, as well as by mail.
  • Rural redesignation cancellation requirements specific to RRCs previously required that the hospital be paid as a rural hospital for at least one 12-month cost reporting period before the status can be cancelled. CMS believes that these requirements are no longer relevant, now that hospitals may have simultaneous MGCRB and 42 CFR 412.103 reclassifications. As a result, CMS is revising these provisions to make any cancellations effective for all hospitals at the beginning of the next Federal fiscal year following the cancellation request, if requested within 120 days of the Federal fiscal year end, which is June 2 of each year.

For additional information, please contact Ryan Sader at ryan.sader@toyonassociates.com.

UCC DSH Payments

CMS has finalized a modest increase to Medicare DSH UC payments by $78M, to $8.35B in FFY2020. This increase is partially driven by a statutory elimination of the 0.2% reduction factor in the determination of DSH UC funding.

After consideration of the public comments on whether to use FY2015 or FY2017 uncompensated care data from W/S S-10 as the base year for FFY2020 DSH UC payments, CMS determined that the best available data on uncompensated care costs is from FY2015, in part because CMS has conducted audits of the data. CMS will use a single year of data as opposed to the prior method that used an average of three years of data.

Toyon’s Take: During the CMS and MAC reviews of FY2015 W/S S-10 uncompensated care data, many issues were identified, resulting in hospitals having to entirely resubmit data. This was primarily due to the cost reporting instructions in place during FY2015, which can be challenging to understand and are often subject to interpretation. This points to an industry-wide issue (beyond the hospitals selected for review) and indicates that FY2015 may continue to include aberrant data.

For FY2017 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 FY2015.

Recommended Action: If your hospital has revisions to its FFY 2017 WS S-10 data, Toyon strongly urges these revisions are 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.

Click here for the Analysis of UCC DSH Factor 1.

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.

Graduate Medical Education Changes

In an effort to address barriers to training residents in rural areas, CMS will allow hospitals to include residents training in a Critical Access Hospital (CAH) in its FTE count, as long as the nonprovider setting requirements at 42 CFR 413.78(g) are met.  This represents a change in CMS’s policy since it was initially implemented in FFY2014.  CMS is updating the definition of a “nonprovider” setting to include CAHs.

Effective with portions of cost reporting periods beginning October 1, 2019, hospitals may include FTE residents training at a CAH, on the condition that the hospital incurs the residents’ salaries and fringe benefits.  This change does not impact the continuing ability of CAHs to alternatively incur the costs of training residents in an approved program and receive payment based on 101% of their reasonable cost.

In addition, CMS announced an additional round of Section 5506 FTE cap redistributions (Round 15):

Applications for these additional FTE slots are due to CMS by October 31, 2019.

For additional information, please contact Tom Hubner at tom.hubner@toyonassociates.com.

Low Volume Hospitals

CMS is revising the regulations at 42 CFR 412.101 to add a subsection (e), which will now allow Indian Health Services (IHS) hospitals to qualify by measuring only the distance between other IHS and Tribal hospitals when assessing the mileage criterion. CMS is also allowing these hospitals to reopen cost reports in order to apply for the low volume adjustment back to FFY2011, subject to the reopening rules at 42 CFR 405.1885.

Rate Updates for Sole Community Hospitals (SCH) and Medicare-Dependent Hospitals (MDH)

CMS is finalizing the updates to the hospital-specific rates for SCHs and MDHs by the following percentages, depending on the hospital’s ability to meet the different qualifying criteria:

Rural Referral Center (RRC) Annual Qualifying Data

Hospitalshave different options to meet the RRC criteria set forth at 42 CFR 412.96. For those that do not qualify under the 275-bed rule, other optional factors must be met. Those factors are updated annually by CMS and include the following finalized amounts:

PRRB Appeal Changes

In an effort to address the large number of cases before the PRRB, CMS is considering actions to assist in the reduction of the current PRRB case backlog:

  • Develop standard formats and more structured data for submitting cost reports and supporting documentation.
  • Create more clear standards for documentation to be used in auditing of cost reports.
  • Enhance the MCReF portal by creating more automation for letter notifications and increased provider transparency during the cost report submission and audits.
  • Utilize artificial intelligence (AI) protocols based on historical audit data to drive audit processes.
  • Triage the current PRRB case inventory and expand the providers’ options for resolving issues through the reopening process.

Procedural Changes Specific to Appealing Empirical DSH Updates

CMS has determined that a significant number of appeals are related to hospitals’ disproportionate patient percentage (DPP), specifically concerning updating the Medicaid fraction. To address this, CMS is proposing that regulations be developed to govern the timing of the data for determining Medicaid eligibility.

These routine updates would be handled via reopening, with CMS issuing directives to the MACs requiring them to reopen cost reports for this issue at a specific time and realistic period during which the provider could submit updated data.

CMS is also considering allowing hospitals a one-time option to resubmit cost reports with updated Medicaid eligibility information, similar to SSI realignments. CMS would need to undertake rulemaking in order to determine the timeframe for exercising this option.

CMS has reviewed public comments on these procedural changes and will take the comments into consideration in future rulemaking.

For additional information, please contact Karen Kim at

karen.kim@toyonassociates.com.

PRRB Appeal Changes

In an effort to address the large number of cases before the PRRB, CMS is considering actions to assist in the reduction of the current PRRB case backlog:

  • Develop standard formats and more structured data for submitting cost reports and supporting documentation.
  • Create more clear standards for documentation to be used in auditing of cost reports.
  • Enhance the MCReF portal by creating more automation for letter notifications and increased provider transparency during the cost report submission and audits.
  • Utilize artificial intelligence (AI) protocols based on historical audit data to drive audit processes.
  • Triage the current PRRB case inventory and expand the providers’ options for resolving issues through the reopening process.

Procedural Changes Specific to Appealing Empirical DSH Updates

CMS has determined that a significant number of appeals are related to hospitals’ disproportionate patient percentage (DPP), specifically concerning updating the Medicaid fraction. To address this, CMS is proposing that regulations be developed to govern the timing of the data for determining Medicaid eligibility.

These routine updates would be handled via reopening, with CMS issuing directives to the MACs requiring them to reopen cost reports for this issue at a specific time and realistic period during which the provider could submit updated data.

CMS is also considering allowing hospitals a one-time option to resubmit cost reports with updated Medicaid eligibility information, similar to SSI realignments. CMS would need to undertake rulemaking in order to determine the timeframe for exercising this option.

CMS has reviewed public comments on these procedural changes and will take the comments into consideration in future rulemaking.

For additional information, please contact Karen Kim at

karen.kim@toyonassociates.com.

Quality Program Changes

While CMS is finalizing several of the proposed changes to the hospital quality reporting and payment programs, none of these changes represent significant structural or procedural changes to the programs.

Hospital Inpatient Quality Reporting (IQR)

CMS is making the following adjustments to the program:

  • Adopt the Hybrid Hospital-Wide All-Cause Readmission (Hybrid HWR) measure, beginning with two voluntary reporting periods running from 7/1/2021 to 6/30/2022 and from 7/1/2022 to 6/30/2023.
  • Adopt the Safe Use of Opioids – Concurrent Prescribing electronic clinical quality measure (eCQM), with a clarification and update, beginning with CY 2021 reporting period/FY 2023 payment determination.
  • Remove the Claims-based Hospital-Wide All-Cause Unplanned Readmission measure (HWR claims-only measure) beginning with the FY2026 payment determination.
  • Extend current eCQM reporting and submission requirements for both the CY2020 reporting (FY2022 payment) and the CY2021 reporting (FY2023 payment) periods.
  • Change eCQM reporting and submission requirements for the CY2022 reporting (FY2024 payment) period, such that hospitals would be required to report one self-selected calendar quarter of data for three self-selected eCQMs and the proposed Safe Use of Opioids eCQM.
  • Continue requiring that EHRs be certified to all available eCQMs used in the Hospital IQR program for the CY2020 and subsequent reporting periods.

CMS is not finalizing its proposal to adopt the Hospital Harm – Opioid-related Adverse Events eCQM.

Hospital Value Based Purchasing (HVBP)

CMS will now require that the HVBP program use the same data used by the HAC program for purposes of calculating the Centers for Disease Control and Prevention (CDC) National Health Safety Network (NHSN) Healthcare-Associated Infection (HAI) measures beginning with the CY2020 data collection, when the hospital IQR program will no longer collect data on those measures.

CMS is not adding or removing any measures for the FY2022 and FY2023 program years. However, CMS will be establishing new performance standards for FY2024 and FY2025.

Hospital Readmission Reduction (HRR)

CMS will adopt the following adjustments to the program:

  • Establish the performance period for the FY 2022 program year.
  • Adopt a measure removal policy that aligns with the policies for other quality programs.
  • Update the definition of “dual-eligible” as a beneficiary who has full benefit status in both the Medicare and Medicaid programs for the month the beneficiary was discharged, except for those beneficiaries who die in the month of discharge, who will be identified using the previous month’s data.
  • Adopt a process to make nonsubstantive changes to the payment adjustment factors, which would include updated naming or locations of data file or minor discrepancies, but which would not include different methodologies to use data or the use of a different component in the methodology.
  • Update 42 CFR 412.152 and 412.154 to reflect policies finalized in previous Rules.

Hospital Acquired Conditions (HAC)

CMS will make the following adjustments to the program:

  • Adopt a measure removal policy that aligns with the policies for other quality programs.
  • Clarify policies for validating CDC NHSN HAI measures.
  • Adopt the collection periods for the FY2022 program year.
    • CMS PSI 90 measure – 24-month period from 7/1/2018 to 6/30/2020
    • CDC NHSN HAI measures – 24-month period from 1/1/2019 to 12/31/2020.

Update 42 CFR 412.172(f) to reflect policies finalized in the FFY2019 IPPS Final Rule.

Quality Program Changes

While CMS is finalizing several of the proposed changes to the hospital quality reporting and payment programs, none of these changes represent significant structural or procedural changes to the programs.

Hospital Inpatient Quality Reporting (IQR)

CMS is making the following adjustments to the program:

  • Adopt the Hybrid Hospital-Wide All-Cause Readmission (Hybrid HWR) measure, beginning with two voluntary reporting periods running from 7/1/2021 to 6/30/2022 and from 7/1/2022 to 6/30/2023.
  • Adopt the Safe Use of Opioids – Concurrent Prescribing electronic clinical quality measure (eCQM), with a clarification and update, beginning with CY 2021 reporting period/FY 2023 payment determination.
  • Remove the Claims-based Hospital-Wide All-Cause Unplanned Readmission measure (HWR claims-only measure) beginning with the FY2026 payment determination.
  • Extend current eCQM reporting and submission requirements for both the CY2020 reporting (FY2022 payment) and the CY2021 reporting (FY2023 payment) periods.
  • Change eCQM reporting and submission requirements for the CY2022 reporting (FY2024 payment) period, such that hospitals would be required to report one self-selected calendar quarter of data for three self-selected eCQMs and the proposed Safe Use of Opioids eCQM.
  • Continue requiring that EHRs be certified to all available eCQMs used in the Hospital IQR program for the CY2020 and subsequent reporting periods.

CMS is not finalizing its proposal to adopt the Hospital Harm – Opioid-related Adverse Events eCQM.

Hospital Value Based Purchasing (HVBP)

CMS will now require that the HVBP program use the same data used by the HAC program for purposes of calculating the Centers for Disease Control and Prevention (CDC) National Health Safety Network (NHSN) Healthcare-Associated Infection (HAI) measures beginning with the CY2020 data collection, when the hospital IQR program will no longer collect data on those measures.

CMS is not adding or removing any measures for the FY2022 and FY2023 program years. However, CMS will be establishing new performance standards for FY2024 and FY2025.

Hospital Readmission Reduction (HRR)

CMS will adopt the following adjustments to the program:

  • Establish the performance period for the FY 2022 program year.
  • Adopt a measure removal policy that aligns with the policies for other quality programs.
  • Update the definition of “dual-eligible” as a beneficiary who has full benefit status in both the Medicare and Medicaid programs for the month the beneficiary was discharged, except for those beneficiaries who die in the month of discharge, who will be identified using the previous month’s data.
  • Adopt a process to make nonsubstantive changes to the payment adjustment factors, which would include updated naming or locations of data file or minor discrepancies, but which would not include different methodologies to use data or the use of a different component in the methodology.
  • Update 42 CFR 412.152 and 412.154 to reflect policies finalized in previous Rules.

Hospital Acquired Conditions (HAC)

CMS will make the following adjustments to the program:

  • Adopt a measure removal policy that aligns with the policies for other quality programs.
  • Clarify policies for validating CDC NHSN HAI measures.
  • Adopt the collection periods for the FY2022 program year.
    • CMS PSI 90 measure – 24-month period from 7/1/2018 to 6/30/2020
    • CDC NHSN HAI measures – 24-month period from 1/1/2019 to 12/31/2020.

Update 42 CFR 412.172(f) to reflect policies finalized in the FFY2019 IPPS Final Rule.

Other Rules, Transmittals, and Articles Recently Published

Inpatient Psych Facility PPS Final Rule [CMS-1712-F]

(Display Copy available here 7/30/2019; FR Publish Date 8/06/2019)

Fact Sheet Link

Federal Register Link

  • Per diem base rate increase from $782.78 to $798.55.
  • Elimination of 1-year lag in WIF, aligning it with concurrent IPPS WIF.

Inpatient Rehab Facility PPS Final Rule [CMS-1710-F]

(Display Copy available here 7/31/2019; FR Publish Date 08/08/2019)

Fact Sheet Link

Federal Register Link

  • Standard payment conversion factor increase from $16,021 to $16,489.
  • Elimination of 1-year lag in WIF, aligning it with concurrent IPPS WIF.

Long-Term Care Hospital PPS Final Rule [CMS-1716-F]

(Display Copy available here 08/02/2019; FR Publish Date 8/16/2019) – Published as part of the IPPS Acute Care Hospital Final Rule

Fact Sheet Link

Federal Register Link

  • LTCH-PPS payments expected to increase by 1% or $43M.
  • Finalized the proposal to modify the “Discharge to Community” measure to exclude nursing home residents who already reside in the nursing home.

Skilled Nursing Facility PPS Final Rule [CMS-1718-F]

(Display Copy available here 7/30/2019; FR Publish Date 08/07/2019)

Fact Sheet Link

Federal Register Link

Increase in unadjusted Federal per diem rates of 2.4%.

 

 
 
 
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