The Centers for Medicare & Medicaid Services late today issued a final rule that will increase Medicare inpatient prospective payment system rates by a net 3.1% in fiscal year 2020, compared to FY 2019, for hospitals that are meaningful users of electronic health records and submit quality measure data. Additionally, the rule makes changes to Disproportionate Share Hospital payments, new technology payments, the area wage index and quality incentive programs.
For FY 2020, the agency will make $8.35 billion in DSH payments, an increase of approximately $78 million compared to FY 2019. In addition, CMS finalizes its proposal to use FY 2015 cost report data to determine the distribution of DSH uncompensated care payments for FY 2020. The agency also notes that it has begun auditing FY 2017 cost report data, with the goal of using this audited data in future rulemaking.
CMS also finalizes its proposal to increase the marginal rate of the new technology add-on payments, including for Chimeric Antigen Receptor (CAR)-T therapies, from 50% to 65%. For certain antimicrobial new technologies, the agency finalizes a 75% new technology add-on payment.
“America’s hospitals and health systems are pleased that CMS has increased the new technology add-on payment rate, including for CAR-T therapies,” AHA Executive Vice President Tom Nickels said in a statement. “Hospitals and health systems have worked to ensure patients have access to these life-saving treatments, and this policy will provide some much needed short-term relief. However, further solutions must be put forth to address the long-term sustainability of providing these expensive therapies.”
As strongly advocated by the AHA, CMS is not finalizing severity level modifications for the vast majority of nearly 1,500 diagnosis codes for which the agency had proposed changes.
In addition, CMS finalizes changes to the area wage index. Among other policies, the final rule increases the wage index for hospitals with a wage index value below the 25th percentile. It will adjust the standardized amounts for all hospitals to make this policy budget neutral.
“We are concerned that CMS did not include our recommendation that the proposed area wage index policy designed to help certain low-wage rural hospitals be non-budget neutral,” Nickels said. “While we support improving the wage index values for many struggling rural hospitals, this should not be done by penalizing all hospitals, especially when Medicare already pays far less than the cost of providing care. That’s why we strongly urged the agency to use its existing statutory authority to increase the wage index in a non-budget neutral manner.”
The agency also adopts a number of updates to its hospital quality incentive programs. It will add one new electronic clinical quality measure related to the safe prescribing of opioids. Against the AHA’s recommendation, the agency also adopts a new hybrid hospital-wide all-cause readmission measure that hospitals would be required to report starting in 2023. CMS also finalizes updates to the Promoting Interoperability Program, including the continuation of a 90-day reporting period into calendar year 2021 and the removal of the Verify Opioid Treatment Plan measure beginning in CY 2020.

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