|Based on the CMS proposed changes for FFY2020, the occupational-mix adjusted national average hourly wage is estimated to be $43.99. |
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 proposed several significant changes to the wage index calculation.
CMS has proposed to reduce disparities by increasing the values for low wage index hospitals below the 25th percentile (or a WIF of 0.8482) and decreasing the values for high wage index hospitals above the 75th percentile (or a WIF of 1.0351). The proposed increase 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., 0.7573 = 0.6663 + (0.8482 – 0.6663)/2). The proposed decrease for the high wage index hospitals would be equal to the full difference between the original final wage index value for the hospital and the final 75th percentile value, multiplied by the estimated budget neutrality factor for these adjustments, which CMS currently projects to be 4.3% (e.g., 1.8263 = (1.8619 – 1.0351) x 0.043). 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.
Note: The budget neutrality factor noted in the body of the rule mentions 3.4%. However, this appears to be a typo by CMS, as Table 2 (Proposed CMI and Wage Index by CCN) is calculated using 4.3%.
CMS has also proposed to change the rural floor calculation, including the removal of urban-to-rural reclassifications. 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, CMS plans to 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.
CMS Proposed Wage Index Alternatives
As instructed under Executive Orders 12866 (10/4/1993) and 13563 (1/21/2011), CMS is directed to assess all costs and benefits of available alternatives for significant regulatory actions that are likely to have an economic effect of $100M or more or that raise novel legal or policy issues that arise out of legal mandates or the President’s priorities, among other criteria. Consequently, CMS has proposed three alternative methods for adjusting the wage index. These alternatives are not described in the body of the Proposed Rule, but are mentioned in Section I.O.1. of the Appendix A and are calculated in the 13th data file posted to the Proposed Rule homepage on the CMS website.
The three alternatives to the Proposed Rule as posed by CMS are the following:
1. Applying a budget neutrality factor to the standardized amount, rather than focusing the adjustment on the wage index of high wage index hospitals (See III.N.3.d):
* Same as the Proposed Rule, but this alternative removes the reduction to the high wage index hospitals above the 75th percentile, as well as the 5% cap on any negative impacts.
* Budget neutrality factor would be higher, and therefore, the standard Federal rate would decrease for all hospitals, as this alternative would not be funded by reducing the wage index factor for the high wage index hospitals.
2. Mirroring the proposed approach of raising the wage index for low wage index hospitals in reducing the wage index values for high wage index hospitals:
* The proposed increase for the low wage index hospitals would be equal to half the difference between the otherwise applicable final wage index for these hospitals and the 25th percentile wage index value [e.g., (0.8482 – Hosp WIF)/2].
* The proposed decrease for the high wage index hospitals would be equal to half the difference between the otherwise applicable final wage index value for these hospitals and the 75th percentile wage index value [e.g., (Hosp WIF – 1.0351)/2].
* The 5% cap on negative impacts to the high wage index hospitals would be removed.A budget neutral adjustment factor would be made to the standardized amount.
3. Creating a single national rural wage index and elimination of the individual state rural floors.
Click here for a comparison of current and prior WIFs for each hospital, as well as the estimated WIFs for each of the alternative CMS proposals.
In recent years, CMS has hinted at addressing what it describes as “wage index disparities;” however, no specific changes were proposed until this year. The proposed changes are noteworthy and will be heavily commented on by hospital associations and the provider community in the Final Rule. Should the proposed changes be made final, it will have significant reimbursement benefit to states that fall below the 25th percentile in terms of its wage index value and conversely, significant reimbursement reduction to states that have wage index values above the 75th percentile, notably California, New York and New Jersey. Toyon has developed a model analyzing the proposed changes to the wage index using FFY2020 proposed data sources. We are happy to share our analysis specific to your hospital.
Other Proposed 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 MGCRB for FFY2021 reclassifications, as well as cancellations and terminations, are due by 9/3/2019. 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 require 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 Section 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 45 days of the date of public display of the Proposed Rule prior to the applicable Federal fiscal year end.
For additional information, please contact Ryan Sader at email@example.com.
Category: Industry News
CMS-1695-P drafted on 7/25/2018; Published in the Federal Register on 7/31/2018
To increase the sustainability of the Medicare program and improve quality of care for seniors, CMS is moving toward site neutral payments for clinic visits (which are essentially check-ups with a clinician). Clinic visits are the most common service billed under the OPPS. Currently, CMS often pays more for the same type of clinic visit in the hospital outpatient setting than in the physician office setting. If finalized, this proposal is projected to save patients about $150 million in lower copayments for clinic visits provided at an off-campus hospital outpatient department. CMS is also proposing to close a potential loophole through which providers are billing patients more for visits in hospital outpatient departments when they create new service lines.
As part of active efforts to reduce the cost of prescription drugs, CMS is issuing a Request for Information to solicit public comment on how best to leverage the authority provided under the Competitive Acquisition Program (CAP) to get a better deal for beneficiaries as part of a CMS Innovation Center model. CMS believes a CAP-based model would allow the program to introduce competition to Medicare Part B, the part of Medicare that pays for medicines that patients receive in a doctor’s office.
In 2018, CMS implemented a payment policy to help beneficiaries save on coinsurance on drugs that were administered at hospital outpatient departments and that were acquired through the 340B program-a program that allows hospitals to buy certain outpatient drugs at a lower cost. Due to CMS’s policy change, Medicare beneficiaries are now benefiting from the discounts that 340B hospitals enjoy when they receive 340B-acquired drugs. In 2018 alone, beneficiaries have saved an estimated $320 million on out-of-pocket payments for these drugs. For 2019, CMS is expanding this policy by proposing to extend the 340B payment change to non-excepted off-campus departments of hospitals that are paid under the Physician Fee Schedule.
CMS is also seeking comment through a Request for Information asking whether providers and suppliers can and should be required to inform patients about charge and payment information for healthcare services and out-of-pocket costs, what data elements would be most useful to promote price shopping, and what other changes are needed to empower healthcare consumers.
Overall, the proposed rule is projected to result in an estimated decrease of $610M (or -0.1%) in payments to providers, ranging from 3.4% decreases for hospitals in the New England region up to 2.1% increases for non-teaching, non-DSH urban hospitals.
For more information regarding this Proposed Rule, see below:
Medicare OPPS Base Rates
CMS is proposing a base rate increase of 1.25% for hospitals that submit OQR quality data and 2.0% for ASCs that submit ASCQR quality data.
Changes to Quality Reporting
Off-Campus Payment Policy Changes
Changes to Drug Payment Policy
CMS Request for Information
CMS is seeking feedback as to how providers may safely and effectively transition EHR among other providers and thereby improve interoperability.
CMS is also interested in continuing the discussion as to how hospitals might improve access to charge information across providers in order to help patients understand their financial liability, including out-of-pocket costs.
Finally, CMS is soliciting comments on key designs for developing a potential model that would test private market strategies and introduce competition to improve quality of care for beneficiaries, while reducing both Medicare expenditures and beneficiaries’ out-of-pocket spending. They are seeking feedback that would accelerate the move to a value-based healthcare system building upon the Competitive Acquisition Program (CAP) for Part B drugs.
For additional information, please contact Ron Knapp at firstname.lastname@example.org.
Other Recently Published Proposed Rules
- Expected 2.1% increase in payments to HHAs in CY 2019
- Rural add-on payment extended for CYs 2019 through 2022 with new methodology
- Cost of remote patient monitoring will be allowable costs on the Medicare cost report
- Proposed ESRD
- Updates to ESRD QIP measures and codifying several previously finalized requirements
- Changes to the DMEPOS Competitive Bidding Program (CBP)
- Updates to PFS RVUs, including an increase in the conversion factor of 0.13% to $36.0463
- Elimination of payment distinction and documentation requirements E&M visit levels 2
- 50% multiple procedure payment adjustment when E&M visits and procedures with global periods are furnished together
- Moving forward with Appropriate Use Criteria (AUC) using a Clinical Decision Support Mechanism (CDSM)
>Effective 1/1/2020, physicians and other practitioners who order advance diagnostic
imaging must consult with AUC and report the consultation information on the claims.
From: STAT – 8/11/16
Hospitals across the United States are throwing away less-than-perfect organs and denying the sickest people lifesaving transplants out of fear that poor surgical outcomes will result in a federal crackdown.
As a result, thousands of patients are losing the chance at surgeries that could significantly prolong their lives, and the altruism of organ donation is being wasted.
“It’s gut-wrenching and mind-boggling,” said Dr. Adel Bozorgzadeh, a transplant surgeon at UMass Memorial Medical Center in Worcester, Mass.
He coauthored a recent study that showed a sharp uptick in the number of people dropped from organ transplant waiting lists since the federal government set transplant standards in 2007. These standards are tied to federal hospital ratings and Medicare funding, which is the main payer for transplants and a key source of income for hospitals. And hospitals’ ability to meet those standards helps determine their reputation within the medical community. Surgeries involving imperfect organs and extremely ill patients are more risky, so hospitals that do many of them run the risk of poor outcomes that may hurt their performance on the standards.
Soon after the study was published in April, the Centers for Medicare and Medicaid Services changed its benchmarks to give hospitals — and surgeries — more leeway to fail. But patients and doctors are still uneasy about the erosion of one of transplantation’s fundamental principles: the sicker you are, the higher you move up the waiting list for donated organs.
“This has been a nightmare, a very expensive nightmare,” said Kathy Barnes, whose husband, James, has been denied a liver transplant by three hospitals, but who is on the waiting list at UMass Memorial.
“Why won’t they do it?” she asked. “It seems like some of them are just looking for an excuse to say no, and I don’t understand that.”
The study by Bozorgzadeh, published by the American College of Surgeons, found that the increasing reluctance to perform transplants on the sickest patients is directly tied to the onset of the standards enforced by CMS.In the first five years after adoption of the standards, more than 4,300 transplant candidates were removed from waiting lists by hospitals.That’s up 86 percent from the 2,311 patients delisted in the five years prior to the regulation.
Bozorgzadeh said the federal regulations are turning transplantation into a numbers game that makes it harder to help patients who deserve a fighting chance.
“If you have young guy who has a 100 percent chance of dying, but only a 30 percent chance of dying with a transplant, you would say, ‘What the hell, give the guy a chance,’” even if the operation might be risky, he said. “But if I make an argument like that, I will be under pressure from all these other stakeholders who would penalize me.”
The number of organs being tossed out has also increased because of concerns that their imperfections could lead to bad outcomes. Last year, 3,159 donated kidneys were discarded, up 20 percent from 2007, according to federal data.
“To me, it just doesn’t make any sense,” said Howard Nathan, chief executive of a Gift of Life Donor Program based in Philadelphia. “We have hundreds of thousands of people on dialysis. And you have these kidneys available that would work … but transplant centers are afraid to use them because they might pull their results down.”
The trend also has a financial impact — not just on the patients, but on American taxpayers.
As federal regulators have noted, it costs the Medicare program more in the long run to keep patients with ailing kidneys on dialysis than to give them organ transplants. Transplant patients also tend to live longer and have a better quality of life.
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