Rule-A-Rama continues with the release last night of the IPPS and LTCH rules. As with other payment systems, the inpatient hospitals are getting a boost from the expiration of many ACA-mandated cuts. However, for LTCHs the site neutral payment policy will be fully implemented in 2020 and therefore overall payments are expected to increase less than 1%, listed payment update notwithstanding.
IPPS
CMS is also proposing to implement two new major policies for hospitals.
- New Technology Add-on Payments for devices. CMS has proposed that if a device is part of the FDA's Breakthrough Devices Program and received FDA marketing authorization it would be considered new and not substantially like an existing technology for purposes of a new technology add-on payments.
- Increase in New Technology Add-on Payment. CMS has proposed, beginning Oct. 1, 2019, to make new technology add-on payments equal to the lesser of 65% of the costs of the new medical service or technology or 65% of the amount by which costs of the case exceed the standard DRG payment.
- Address wage disparities between rural and urban hospitals. CMS is proposing to reduce the disparity between high and low index hospitals by increasing the wage index value for certain hospitals with low wage index values and decreasing them for high wage index values as well as changing the calculation of the rural floor.
The new technology add-on payments are quite obviously meant to address very expensive CART-T therapies. However, the policy will extend to new devices as well.
The change in the wage index is designed to adjust what Medicare pays for labor in rural communities which have struggled to staff facilities. While overall, Medicare payments to hospitals will increase 3.7 percent, after taking into account all rate increases and policy changes, the change will be higher in the south central region of the U.S.
LTCHs
The payment rate update for LTCHs will also get a lift from the elimination of some ACA-mandated cuts. However, the site neutral payment policy established by Congress in 2015 will be fully phased in FY2020. Discharges that do not meet certain patient-specific criteria such as ventilator use will be paid at the lower IPPS rate. For that reason, reimbursement for LTCHs will increase only 0.9 % in FY2020 or about $37 million.
CMS also made a few policy adjustments to the quality program but nothing significant. LTCHs are a policy orphan and are likely to remain so until Congress gets serious about PAC reform in after 2020.
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Emily Evans
Managing Director – Health Policy
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