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Tag: Value-based

FFY 2024 IPPS Proposed Rule – Value-Based Purchasing (VBP)

On April 10, the Centers for Medicare & Medicaid Services (CMS) published the FFY 2024 IPPS Proposed Rule (effective for discharges on or after October 1, 2023).” Toyon is pleased to provide our summary of:  Topic 10 – FFY 2024 IPPS Proposed Rule – Value-Based Purchasing (VBP) Program

Unlike FFY 2023, CMS does not propose to suppress the VBP adjustment in FFY 2024. Therefore, providers should prepare to receive the VBP adjustment (positive or negative) for inpatient discharges in FFY 2024. CMS published proxy VBP adjustment factors13 in Table 16A of the Proposed Rule (available here) using historical baseline and performance periods for the FY 2023 VBP program. These proxy factors will not be used for FFY 2024, and CMS will update the proxy VBP factors in Table 16A with more current data14 with the Final Rule release in August. The actual VBP factors will be published subsequently in the Fall 2023 as Table 16B.  
All IPPS hospitals are subject to a two percent contribution to the VBP pool, which is estimated to be $1.7B for FFY 2024. CMS is also proposing to modify the VBP scoring methodology beginning in FFY 2026 (based on 2024 activity) to provide an opportunity for 16 Health Equity Adjustment (HEA) bonus points (4 for each domain) based on hospitals’ quality performance with dual-eligibility status (Medicare-Medicaid) beneficiaries. The goal of the HEA bonus points is to provide incentive to hospitals aimed at improving the quality of care in underserved populations. 
For more information, please contact Robert Howey at
13 VBP proxy factors were calculated using the December 2022 update to the FY 2022 MedPAR file. 
14 VBP updates will use the March 2023 update to the FY 2022 MedPAR file.
Comments are due to CMS by Friday, June 9 via (see instructions under the “submit a comment” tab and reference file code “CMS-1785-P”). Toyon will share our comment letter in the coming weeks. 
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Estimated FFY 2023 IPPS Medicare Payments for Your Hospital(s)


Toyon is pleased to provide complimentary access to estimated hospital payments
per the Medicare
Federal Fiscal Year (FFY) 2023
IPPS Proposed Rule. 
  Please visit Toyon’s website to access a dashboard analysis of estimated FFY 2023 Medicare Fee for Service (FFS) IPPS payments for your hospital(s). Below is an animation on how to interact with the dashboard to see estimated payments and details on CMS IPPS rates for your hospital(s).   

Over the coming weeks, Toyon will provide a summary with further insight into the FFY 2023 IPPS Proposed Rule. You and your team are also invited to Toyon’s FFY 2023 IPPS Webinar on Friday, May 20, from 10 a.m. PDT to 11 a.m. PDT. To sign up for the IPPS Proposed Rule Webinar, please register here.    
Below are Toyon’s initial observations impacting Proposed FFY 2023 IPPS rates: 
  • Medicare discharges and Case Mix Indices (CMI) – For projecting future reimbursement, CMS provides discharges and CMI from 2021 (i.e., MEDPAR data) impacted by COVID-19. In FFY 2022, CMS provided Medicare discharges and CMI using pre-COVID-19 data (2019). In the dashboard reports, Toyon holds discharges and CMI constant using the values provided in the FFY 2023 Proposed Rule.   
  • Alternative Rates for FFY 2023 – CMS provides two separate sets of base rates and variables for FFY 2023 rate setting. CMS is proposing rates are updated by factors projecting fewer COVID-19 hospitalizations in FFY 2023 than in FFY 2021. In CMS’s alternative rates, CMS does not make an adjustment projecting a decline in COVID-19 hospitalizations from FFY 2021 to FFY 2023.   
  • Uncompensated Care (UC) DSH – CMS is proposing UC DSH payments of $6.6 billion, a reduction of $563M as compared to FFY 2022 ($1.8 billion reduction compared to FFY 2021). Decreasing UC DSH funding is an important area of focus for FFY 2023, and Toyon will be sending comments to providers and CMS, aimed at increasing this funding.    
  • Wage Index – CMS is proposing to cap wage indices so providers can experience a decrease of no more than 5% as compared to prior year (i.e., FFY 2022).   
  • Low Volume Adjustment and Medicare Dependent Hospital Status – Unless otherwise extended by law, these provisions are set to expire for FFY 2023. Therefore, CMS does not propose rate adjustments for these provisions in the FFY 2023 Proposed Rule. 
  • Value Based Purchasing (VBP) Adjustment – CMS is also proposing to not calculate a Total Performance Score (TPS) for any hospital and to instead award all hospitals a VBP amount for each discharge that is equal to the amount withheld, which is 2% of the base operating rate. Toyon’s estimated VBP amount for FFY 2023 is estimated at 2% of base rate payments.   
We look forward to our next update on the FFY 2023 IPPS Proposed Rule. In the meantime, please feel free to contact Fred Fisher at 888.514.9312, or with any questions or comments. 
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OPPS Final Rule – CY 2019

In This Edition:

  • CY 2019 Medicare OPPS Final Rule
  • Pricing Transparency Revisited
  • Hospital Value Based Purchasing Data Published
  • Hospital-Specific Rate Refresher

OPPS Final Rule – CY 2019
CMS-1695-FC drafted on 11/2/2018; Published in the Federal Register on 11/21/2018 and corrected notice issued on 11/30/2018

On November 2, 2018, the Centers for Medicare & Medicaid Services (CMS) finalized changes that remove unnecessary and inefficient payment differences between certain provider and supplier types so patients can have more affordable choices and options. The final rule with comment period updates and revises policies under the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System.

The polices in the calendar year (CY) 2019 OPPS and ASC Payment System final rule with comment period will further advance the agency’s priority of creating a patient-centered healthcare system by achieving greater price transparency, and significant burden reduction so that hospitals and ambulatory surgical centers can operate with better flexibility and patients have access to the tools they need to become active healthcare consumers.

Overall, the final rule is projected to result in an estimated increase of $360M (or 0.6%) in payments to providers, ranging from -1.6% decreases for rural hospitals in the New England region up to 1.6% increases for rural hospitals in the West South Central region.

For more information regarding this Final Rule, see below:

Fact Sheet Link

Federal Register Link

Medicare OPPS Base Rates
CMS is proposing a base rate increase of 1.35% for hospitals that submit OQR quality data and 2.1% for ASCs that submit ASCQR quality data.

APC Changes
As expected, CMS has finalized the weighting changes to APC weights for CY2019, along with new APC codes and new HCPCS codes.  Below is a listing of the largest changes in weighting between CY2018 and CY2019 APCs:

Click here for a table of the full APC weighting comparison between CY2018 and CY2019.
Click here for a table of the new HCPCS codes effective 7/1/2018.

Other APC Changes
CMS has created three new comprehensive APCs (C-APCs) for ears, nose, and throat (ENT) and vascular procedures.  CMS will also remove four procedures from the inpatient-only list and add one procedure to the list.

Click here for a table of the changes to the inpatient-only procedures.

Changes to Quality Reporting
CMS is finalizing several changes to the OQR reporting in an effort to reduce burdens on hospitals, including the removal of 8 measures from the OQR (1 from CY2020 and 7 from CY2021).  CMS will also remove the three recently revised pain communication questions, starting with services on Oct. 1, 2019, to address concerns that providers might feel pressure to offer opioids in order to raise survey scores.

Click here for a table of the 8 OQR measures proposed to be removed.
Click here for a table of the 26 OQR measures required for CY 2020 and here for a table of the 15 ASCQR measures required for CY2020.

Off-Campus Payment Policy Changes
CMS remains concerned with the shift of services from freestanding physician offices to hospital provider-based departments (PBDs).  As a result, they are proposing several significant changes that will negatively impact OPPS reimbursement for these facilities:

Expansion of PFS Rate for All Clinic Visits:  CMS will extend the reduced Physician Fee Schedule (PFS) rate for clinic visits (HCPCS code G0463) to all off-campus PBDs, even those excepted under Section 603.  (Note:  The PFS payment rate is approximately 60% less than the OPPS rate.)  CMS will phase in this policy by paying 70% of the OPPS rate in 2019, then reducing payment to 40% of the OPPS rate in 2020 and future years.  CMS estimates that the impact of this change is expected to reduce reimbursement to hospitals by $380M in FY2019 and $760M in FY2020 and beyond.

Restricting “Clinical Families of Services” – Cancelled:  CMS decided not to finalize its requirement that excepted off-campus PBDs be limited from expanding services to any clinical family of services from which it did not furnish and bill during the period from 11/1/2014 to 11/1/2015.  Such items and services would have been paid at the reduced PFS rate applied to non-excepted off-campus PBDs.  New items or services within a clinical family of service would have continued to be paid under OPPS, as this would be considered a “service expansion.”  Even though this policy was not finalized, CMS indicated that it has the authority to do so and will continue to monitor these PBDs and service growth.

New “ER” Modifier:  Finally, CMS will require a new “ER” modifier to identify services in off-campus ER departments.  The modifier would be reported on the UB-04 form and would be required on every line for outpatient services furnished in an off-campus provider-based emergency department.  This is meant to address the MedPAC recommendation for CMS to assess the extent to which OPPS services are shifting to off-campus ER departments.  (Critical access hospitals would be exempt from this reporting requirement.)

Changes to Drug Payment Policy
In response to the President’s Commission on Combating Drug Addiction and the Opioid Crisis, CMS has changed the packaging policy for certain drugs.  CMS will also change the payment for separately payable drugs for non-excepted off-campus PBDs to the same lower Average Sales Price (ASP) minus 22.5% (or 77.5% of ASP) that excepted off-campus PBDs receive.  Currently these non-excepted departments receive 106% of ASP for these drugs.  Rural SCHs, Children’s, and Cancer hospitals would be exempt.

Click here for a table of the drugs and biologicals with pass-through status expiring on 12/31/2018.

Other News

Pricing Transparency Revisited – Action Required by 1/1/2019
CMS is updating their guidelines regarding the requirements to comply with Section 2718(e) of the Public Health Service Act for hospitals to make public a list of the hospital’s standard charges. Previously issued guidelines required hospitals to 1) make public a list of standard charges (whether that be the chargemaster itself or in another form of the hospital’s choice), or 2) make known the hospital’s policies for allowing the public to view a list of those charges in response to an inquiry.

Effective January 1, 2019, CMS is revising their guidelines to remove the requirement to make known the hospital’s policies for allowing the public to view a list of those charges in response to an inquiry. Hospitals will now be required to make available a list of their standard charges via the internet in a machine-readable format and require that these lists be updated at least annually.

 In the proposed rule, CMS solicited comments on various questions to include defining standard charges, type of information beneficial to patients, informing patients of their out-of-pocket costs, and greater transparency around patient obligations. In the final rule, CMS did not respond directly to public comments but published a separate FAQ document, which can be accessed here.

Toyon’s Take:  Toyon recommends the following actions to comply with this change:

  • List the charges at gross amounts (i.e., not adjusted for discounts to third-party payers, charity, self-pay, etc.)
  • Calculate the average charge per case for each MS-DRG and include with the list of standard charges (Use FY 2011-2016 publicly available info as a guide at this link)
  • For services subject to variable pricing (e.g., drugs, supplies, and implants subject to an internal mark-up policy that are variable to acquisition price), develop an average charge from the most recent period (e.g., quarter, year)
  • Publish the list in a machine readable format (e.g., txt, csv, xlm, etc.). Note:  PDF is not considered an acceptable format.
  • Update at least annually the publicly available chargemaster
  • Include an advisory statement that the published charges are to be used as a guide and that actual charges incurred and patient obligation may differ
  • The format is at the hospital’s discretion, and CMS did not specifically address the inclusion of hospital charge codes and CPT/HCPCS

For additional information, please contact Robert Howey at

 Hospital Value-Based Purchasing Program Update for FFY 2019
On December 3, 2018, CMS released the final hospital value-based purchasing (VBP) incentive payment adjustment factors in Table 16B on its website for FFY 2019. The payment factors are effective for Medicare discharges on or after October 1, 2018, and are applied to the adjusted base operating MS-DRG payment. Each participating hospital’s payment rate is inclusive of a 2 percent contribution to the VBP payment pool ($1.9B) and adjustment factors greater than 1.0 represent those receiving payments above their contribution.

The payment factors are based on each hospital’s total performance score (TPS) measured on four equally weighted domains: Clinical Care (Mortality), Patient and Caregiver-Centered Experience, Patient Safety, and Efficiency/Cost Reduction. The breakeven TPS score for FFY 2019 was 35.15 (up from 34.60) and over 55 percent of hospitals will receive higher Medicare payments from the previous year. The highest performing hospital will receive a net increase in IPPS payments of 3.67 percent, and the lowest performing hospital will incur a net decrease in IPPS payments of 1.59 percent.

Click here for a table of estimated VBP payment impacts to each hospital.

For additional information, please contact Robert Howey at

Hospital-Specific Rate Updates – A Refresher
When calculating a Sole Community or Medicare Dependent Hospital’s hospital-specific rate (HSR) each year, remember that any hospital-specific adjustment factor (e.g., IQR or EHR reduction factor) is only applicable for discharges occurring during that Federal Fiscal Year.  Those reduction factors are not cumulative in nature and should not be carried forward.

The HSR should be tabulated each year by adjusting the hospital’s most recent base period rate by the full, non-reduced cumulative update factors applicable to all hospitals for each fiscal year since the latest rebasing.  And then only for the current Federal Fiscal Year should any hospital-specific adjustment factors be applied to the hospital for that one year.

For additional information, please contact Ron Knapp at

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