- CMS is proposing a payment change that would boost rural hospitals but could ding facilities in urban areas. The plan, set forth in the annual inpatient payment rule, would raise the wage index for hospitals with a wage index value below the 25th percentile while decreasing the index for hospitals above the 75th percentile. For hospitals experiencing significant decreases, the agency is also proposing a transition period to help mitigate losses.
- The proposed Inpatient Prospective Payment System rule released Tuesday would increase hospital payments by about 3.7%, which Jefferies noted is the largest increase in a decade. Altogether, CMS projects the changes would increase Medicare spending by about $4.7 billion in fiscal year 2020. The agency is also proposing increasing payments for uncompensated care by $216 million, equating to roughly $8.5 billion in uncompensated care payments in fiscal 2020.
- CMS is also proposing changes to payments for the pricey cancer cell therapy CAR-T, including upping the add-on payments for the treatment from 50% to 65%. The changes would "help ensure adequate payments to hospitals administering this groundbreaking therapy," according to the agency. The proposed rule also seeks feedback regarding add-on payments for devices and posits changes to the "substantial clinical improvement" requirement.
Hospital groups have been relatively silent on the rule, with the American Hospital Association saying it is "strongly supportive" of the proposed EHR reporting period of any continuous 90-days, which it said "will reduce regulatory burden on hospitals." CMS has kept the 90-day period for the past two years after hospitals balked at longer windows being proposed.
America's Essential Hospitals said in a statement to Healthcare Dive it was still analyzing the rule.
Jefferies analysts said the payment rate increase should benefit publicly-traded hospitals. Medicare beneficiaries made up 30% of inpatient admissions for HCA last year, for example. The rate was 25% for Tenet and 26% for Community Health Systems, according to the investment bank.
The Medicare wage index, which adjusts hospital payments for geographic market differences like wages and cost of living, has been a contentious issue for struggling rural hospitals, and lawmakers have called the system unfair.
The proposed rule is the latest effort by CMS to address rural hospital closures. According to Stroudwater Associates, 102 rural hospitals have closed since 2010, and 144 have shuttered since 2005. Tweaking the hospital wage index, which has previously favored urban over rural hospitals, was teased in last year's proposed IPPS rule.
The policy would be in place for at least four years. The agency also proposed changes to the "rural floor" that kept urban hospital wage index values from dropping below the average values of rural hospitals in the same state. CMS is suggesting removing urban to rural reclassifications from the rural floor calculation, which CMS Administrator Seema Verma told reporters the agency believes some hospitals have used to "game the system" and receive higher payments.
The current hospital wage index creates disparity in payments between high wage index hospitals & low wage index hospitals, so CMS is proposing to increase the wage index of low wage index hospitals- ensuring access to high quality, affordable healthcare in rural areas.— Administrator Seema Verma (@SeemaCMS) April 23, 2019
To further mitigate payment decreases as a result of these proposed rules, CMS is proposing a 5% cap on any decrease in a hospital's wage index from fiscal year 2019.