Hospitals win on $2.4B raise, AO reports, 90-day meaningful use in final IPPS rule

CMS has finalized the Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) payment rules, lowering the total increase to $2.4 billion while removing a controversial proposal to require public release of previously confidential hospital inspections by accrediting organizations (AOs).

“This final rule will help provide flexibility for acute and long-term care hospitals as they care for Medicare’s sickest patients,” CMS Administrator Seema Verma, MPH, said in a statement. “Burden reduction and payment rate increases for acute care hospitals and long-term care hospitals will help ensure those suffering from severe injuries and illnesses have access to the care they need.”

Medicare spending on inpatient hospital services would’ve gone up by $3.1 billion in fiscal year 2018 under the proposed rule. The final rule lowered the increase to $2.4 billion, with the jump in IPPS operating payments falling from 2.9 percent to 0.7 percent.

The final rule lowered the increase in Medicare uncompensated care payments from $1 billion to $800 million compared to 2017. It also finalized an unpopular change in the calculation of those payments, use uncompensated care cost data from Worksheet S-10 of the Medicare cost report in its methodology. Hospital groups had strongly opposed this switch in public comments on the proposed rule.

“The agency is moving too quickly to use a form that remains unclear in its construction and instructions, not consistently prepared by hospitals, and not yet subject to audit for accuracy,” the Federation of American Hospitals said in a June 13 letter to CMS. “CMS simply has not done enough, many say very little, to fix the problems inherent in this form.”

The final rule did remove another change hospitals and other stakeholders didn’t want: making inspection reports from accrediting organizations, like the Joint Commission, available to the public. Located more than 1,400 pages into the regulation, the proposal would have required any organization seeking CMS approval if its Medicare provider or supplier accreditation to post the reports on their websites within 90 days of when hospitals received the information.

Hospitals and the AOs themselves opposed the change, arguing the reports are too technical to be of use to the general public and would likely result in quickly-corrected deficiencies being seen as major, ongoing safety issues. The supporters of the change were groups which would likely make use of the data, like the Association of Health Care Journalists and hospital safety grade publisher the Leapfrog Group.

In the end, however, CMS appears to have been swayed by the argument this was outside their authority. The short explanation withdrawing the proposal mentioned how the Social Security Act prohibits CMS from disclosing the survey reports or compelling the AOs to do so.

In another victory for hospitals, the rule finalized the change to a 90-day meaningful use period. Both new and returning hospitals attesting to meaningful use under the Medicare and Medicaid EHR Incentive Programs will now report on any continuous 90-day period during the calendar year, rather than the full year.

For long-term acute care hospitals, there was some relief from the proposed rule’s larger payment cut. CMS will reduce their payments by $110 million, or 2.4 percent, in 2018, lower than the proposed cut of $173 million or the $363 million reduction in the current fiscal year.