CMS released the FY 2019 Hospital Inpatient Prospective Payment System this afternoon. The operating rate will increase 1.75 percent, slightly less than our estimated 1.85 percent due to an upward revision in the Multifactor Productivity Adjustment.
Overall, payments will increase 2.1 percent after accounting for other provisions including a $1.5 billion increase in DSH payments. After accounting for a Congressionally mandated increase in payments to low-volume hospitals, total Medicare payments will increase 3.4 percent in FY 2019.
In conjunction with the FY 2019 IPPS, CMS also issued the FY 2019 update for the Long Term Care Hospital Prospective Payment System. The base rate for LTCHs will increase 1.15 percent in FY 2019. However, all Medicare payments, after accounting for certain other policy changes such as the extension of the blended site-neutral rate and the budget neutrality adjustment for elimination of the 25 percent rule, will increase just 0.20 percent.
Other major provisions:
DSH Payments. As we pointed out in our preview note, DSH payments were likely to increase in FY 2019. Indeed, CMS estimates that they will distribute $8.25 billion in Medicare DSH payments versus $7 billion last year.
Online posting of standard charges. CMS is asking for comment on a requirement that hospitals post their standard charges via the internet. Separately, CMS expressed concern about billing practices that result in unexpected out-of-network charges from anesthesiologists and radiologists providing services at in-network hospitals. They also raised the issue of facility fee charges for emergency room visits. CMS is asking for public comment on greater transparency in patient out-of-pocket expenses.
Providers that like to play the in-network/out-of-network reimbursment game, be warned. This is a preliminary thought but Medicare has a long reach when it comes to setting standards in this regard.
Meaningful Use. CMS is proposing to overhaul the EHR incentive programs to focus almost exclusively on interoperability. To that end they are re-naming the Meaningful Use program “Promoting Interoperability.” They are proposing to eliminate MU measures that do not emphasize interoperability and propose replacements such as a Query of the PDMP measure.
Additionally, and more significantly, CMS is Releasing an RFI to get feedback on ways to achieve interoperability. In particular, CMS is considering revising the Conditions of Participation under Medicare to require interoperability. Since virtually every hospital in the U.S. is covered by Medicare’s Conditions of Participation, this idea if it is formalize could be a significant headwind for EHR vendors like CERN and MDRX.
For FY 2019, CMS is reiterating that all eligible hospitals under the EHR incentive program are required to use the 2015 edition of CEHRT.
Elimination of 25 percent threshold policy. CMS is proposing to eliminate, in a budget neutral manner, the 25 percent threshold policy. The reason for the elimination is to reduce regulatory burden of keeping track of admission sources. Policy makers have also concluded that the goal of the 25 percent rule – to keep LTCHs from acting as step-down units – is achieved through the recently enacted but delayed site neutral payment system.
The elimination of the 25 percent rule removes an major irritant to the industry and provides greater flexibility for SEM and others that use the Hospital Within Hospital model.
Call with question. The rule is 1,882 pages long so we will be burning the midnight oil.
Emily Evans
Managing Director
Health Policy
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