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Bill Shyne

Manager, Policy Analytics

Lauren Davis

Senior Healthcare Data and Policy Analyst

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Rule Overview

• Rate Updates

• DSH

• Wage Index

• GME

• Quality Programs

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Rate Update

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Operating Rate Update - MB

• Base Market basket: 3.0% (+$3.1 B)

– Reduced by:

• ACA Multifactor Productivity Adjustment of 0.4

percentage points (-$419 M)

• Predetermined ACA offset for FFY 2019 of 0.75

percentage points

– FFY 2020 Market basket Update: 2.6%

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FFY 2020 Update with EHR and IQR No

Penalty

IQR

Penalty

EHR

Penalty

Both

Penalties

Baseline MB Update +3.0%

Net of ACA Reductions +2.6%

IQR Penalty --0.75

PPT - -0.75 PPT

EHR Meaningful Use

Penalty - - -2.25 PPT -2.25 PPT

MB Update, less

EHR/IQR 2.60% 1.85% 0.35% -0.40%

• CAHs = cost-based payment reduced by up to -1.0% due to MU ®

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Compliance Update

• Solely Meaningful Use (EHR) (MB less 2.25%) – 171 hospitals projected to receive a penalty

• 12.5% increase vs FFY 2019 Final Rule (152)

– Estimated impact of $35.3 M

• Solely IQR (MB less 0.75%) – 48 hospitals penalized

– Estimated $1.4 M impact

• Both EHR and IQR (MB less 3.0%) – 30 hospitals

– Est. $3.9 M impact

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®

ATRA 3.9% IPPS Coding Adjustment 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

-0.8

%

-0.8

%

-0.8

%

-1.5

%IPPS Federal Rate

+0.4588%

+0.5%

+0.5%

+0.5%

+0.5%

+0.5%

0.9412%

3.4

4%

2.9

4%

2.4

4%

1.9

4%

1.4

4%

• FFY 2020: +0.5% (+$498 M) ®

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Rate Update

Operating Rate

Adjustment

FFY 2019 FFY 2020 %

Change

Operating Rate $5,646.08 $5,801.13 +2.75%

Capital Rate $459.41 $462.61 +0.70%

ACA-Adjusted Update (3.0% MB minus 0.4 PPT

productivity adjustment)

MACRA-Mandated Retrospective Coding Adjustment

Budget Neutrality Adjustments (WI Changes)

Budget Neutrality Adjustments (other)

Net Rate Change

+2.60%

+0.50%

-0.32%

-0.04%

+2.75%

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Medicare DSH

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Medicare DSH

DSH Payment Projections Under Traditional Formula

($16.583 B)

75% [FACTOR 1]

Dedicated to New Pool

Step 1:

Reduce Pool

[FACTOR 2: relative to national rates of

insurance]

Step 2:

Distribute Pool

[FACTOR 3: based on hospitals’

“uncompensated care”]

25%

Paid Under Traditional Method

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Medicare DSH Factors FFY 2019 FFY 2020 (Adopted)

Factor 1

(Base Funding) $12.254 B $12.438 B

Factor 2

(Available Pool)

32.49% reduction

($8.273 B pool)

32.86% reduction

($8.351 B pool)

Factor 3

(Distribution)

Average of Factor 3 values from three data

years

Low Income Patient Days

Year 1: FFY 2013 Medicaid Days + FFY

2016 SSI Ratios

Uncompensated Care Costs

Year 2: FFY 2014 S-10 Line 30 (Trimmed)

Year 3: FFY 2015 S-10 Line 30 (Trimmed)

Single year of data

Uncompensated Care Costs

Audited FFY 2015 S-10 Line 30

(Trimmed)

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-

FFY 2020 S-10 Transition • Phase in of Worksheet S-10, Line 30 (Charity Care and Non-Medicare

Bad Debt Expense), for FFY 2020 with solely audited FFY 2015 data

• Departure from the three-year Factor 3 averaging currently in place

– May return to the three-year average in the future

Proxy Data S 10 Data

FFY 2018 FFY 2012 Medicaid Days + FFY 2014 Medicare SSI Days

FFY 2013 Medicaid Days + FFY 2015 Medicare SSI Days FFY 2014 S-10, Line 30

FFY 2019 FFY 2013 Medicaid Days + FFY 2016 Medicare SSI Days FFY 2014 S-10, Line 30

FFY 2015 S-10, Line 30

FFY 2020

(adopted) Phased-out FFY 2015 S-10, Line 30

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Factor 3: Other Considerations

• All-Inclusive Rate Hospitals – These hospitals to remain excluded from trimming methodology

due to how different their CCRs tend to be

– CMS will use S-10 data, with trimming applied, for these hospitals instead of the prior Medicaid/Medicare SSI days, as the trimming will mitigate any aberrant CCRs

• New Hospitals – For CCNs created on or after October 1, 2015, hospitals will not

receive interim UCC payments, but instead paid at CR settlement • Factor 3 to be determined based on their individual FFY 2020 S-10 in

numerator with national FFY 2015 value as denominator

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2019 vs 2020 UCC Factors

Non-Expansion

Late Expansion ®

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Wage Index

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Wage Index Calculation

• Modify Overhead Rate calculation

– Cost Report Worksheet S-3 Part II

– CMS will no longer subtract the sum of overhead contract hours from Revised Total Hours as they are not included in the calculation of Revised Total Hours.

• CMS will round wage ($) data within WI calculation to 2 decimals, and hours to nearest whole number. Non-wage/hour data to 5 decimals – Will continue rounding calculated wage index values to 4 decimals

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Wage Index Calculation

• CBSAs without hospital wage data

– Wage index be set to average urban WI of state where those hospitals are located

• (Statewide Total Urban Hospital Wages / Statewide Total Urban Hospital Hours) / National AHW

• Carson City, NV (CBSA 16180) and Hinesville, GA (CBSA 25980)

• FFY 2021 Reclassifications were due to MGCRB by September 3

– Supporting documentation no longer needs to be copied to CMS, only to MGCRB

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Wage Index Reclassifications

• Rural Reclassification

– Hospitals will have until 120 days prior to end of a FFY to cancel a rural

reclassification for the upcoming FFY

– Change to allow rural reclassification applications to be sent to CMS

Regional Offices by fax or other electronic means

– RRCs

• Currently, RRCs must be paid as rural for at least one 12 month cost reporting

period before a rural reclassification cancellation may be granted, which would

not take effect until the following FFY

• As MGCRB and rural reclassifications may now be made simultaneously, CMS

will no longer require the 12 month CR period for FFYs 2020+

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Wage Index Reclassifications

• Lugar Status

– Clarification that if a county is no longer eligible for an outmigration

adjustment by release of IPPS final rule, that hospitals waiving Lugar status

to receive outmigration (due date 45 days after proposed rule release) will

automatically be reassigned their Lugar reclassification (deemed urban

status)

– Adopted proposal to include outlying counties in commuting analysis for

Lugar status

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Counties Affected by Lugar Change County Name

FIPS Code

Current Lugar CBSA

Current CBSA Name New Lugar CBSA New CBSA Name

Cleburne, AL 01029 11500 Anniston-Oxford-Jacksonville, AL

12060 Atlanta-Sandy Springs-Roswell, GA

Talladega, AL 01121 11500 Anniston-Oxford-Jacksonville, AL

13820 Birmingham-Hoover, AL

Polk, GA 13233 40660 Rome, GA 12060 Atlanta-Sandy Springs-Roswell,

GA

Pearl River, MS 28109 25060 Gulfport-Biloxi-Pascagoula, MS

35380 New Orleans-Metairie, LA

Champaign, OH 39021 44220 Springfield, OH 18140 Columbus, OH

Susquehanna, PA

42115 13780 Binghamton, NY 42540 Scranton—Wilkes-Barre— Hazleton, PA

Lee, SC 45061 44940 Sumter, SC 17900 Columbia, SC

Grimes, TX 48185 17780 College Station-Bryan, TX

26420 Houston-The Woodlands-Sugar Land, TX

Henderson, TX 48213 46340 Tyler, TX 19124 Dallas-Plano-Irving, TX

Madison, VA 51113 16820 Charlottesville, VA 47894 Washington-Arlington-Alexandria,

DC-VA-MD-WV

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Wage Index Disparities

• Comments on FFY 2019 RFI

– Pointed to common concern regarding current system perpetuating wage disparities

– Also concern over manipulation of rural floor calculation to increase wage index of state at the expense of other states

• For FFY 2020+, CMS will remove the wage index data of urban hospitals that reclassify as rural when calculating a state’s rural floor

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Impact of Rural Floor Change

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Wage Index Disparities

• Opportunity to Increase Employee Compensation – Adopted proposal to increase wage index for

hospitals in national bottom quartile of wage index (<0.8457) • New wage index = halfway point between base wage

index and 25th percentile value

– Eff. FFY 2020, for at least 4 years

– “Use it or lose it” ®

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Wage Index Disparities

• Budget Neutrality Offset

– CMS had proposed to apply a budget neutrality

offset to wage index values of hospitals in the

top national quartile of wage index (>1.0351)

– Instead adopted reductions of 0.20% to the

IPPS operating rate and approx. 0.23% to the

IPPS capital rate (-$237 M) ®

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Impact Bottom Quartile Change

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Wage Index Reduction Transition

• Transition Period for Wage Index Reductions

– A hospital’s FFY 2020 wage index will be no less than 95% of its final FFY 2019 wage index

• “5% stop-loss-adjustment”

• Applying reductions of 0.12% to the IPPS operating

rate and approx. 0.13% to the IPPS capital rate

(-$137 M)

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5% Stop Loss Impact

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All Newly Adopted WI Changes

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Other Changes

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Graduate Medical Education

• Resident FTE Slots at Nonprovider Sites – Currently, hospitals may include residents training in a

nonprovider setting if they meet certain criteria, including that they incur the cost of residents’ salaries and fringe benefits. The term “nonprovider” is not explicitly stated in statute.

– Adopted Proposal: Beginning with October 1, 2019, hospitals may include residents training at a CAH provided that all requirements are met for a nonprovider site. However, CAHs would continue to be paid at 101% of costs for the training of these residents, but would not be able to claim them for purposes of GME when treated as a nonprovider site.

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Additional Changes… • TEFRA Ceiling Rate of Increase Methodologies

• Payment for CAH Ambulance Services

• New Technology Add-on Cap to 65%, from 50%

• CAR T-cell Therapy Payments

• Available Teaching Slots (Provider 090006 closed; 50.50 IME, 52.12 DGME; Applications due 10/31/2019)

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Analysis Walkthrough

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IPPS Model – Hospital Report

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IPPS Model – DSH Breakout

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IPPS Model – Quality Breakout

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IPPS Model – Hospital Payments

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Quality Program Updates

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IPPS FFY 2020 Final Rule: VBP

• Beginning January 1, 2020, use of the

same data to calculate the HAI measures

and review/correct processes that the HAC

Reduction Programs currently uses to for

these measures

– Applies to the FFY 2022 program

performance period

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IPPS 2020 Final Rule: RRP

• Future program specifications – FFY 2022 program = July 1, 2017 – June 30, 2020

• Adoption of a measure removal policy (8 removal factors)

• Finalized process to address any potential future nonsubstantive changes outside of rule making

• Update to the definition of “dual eligible” beginning FFY 2021

• Confidential reporting of data by dual-eligible status as early as spring 2020

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IPPS 2020 Final Rule: RRP

• Beginning FFY 2021, CMS is adopting a 1-month look back period in the State Medicare Modernization Act data files to determine dual-eligible status for beneficiaries who die in the month of discharge

• Previous definition was underreporting the number of beneficiaries with dual-eligible status for the month in which the beneficiaries dies – Either dual-eligible status is not recorded in the month of

death; or

– Dual-eligible status changes from dual in the months prior to death to non-dual in the month of death

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IPPS 2020 Final Rule: RRP

• CMS plans to include data stratified by patient dual-eligible status for each individual measure in the RRP confidential hospital-specific reports as early as spring 2020, using two methodologies: – Within-Hospital Disparity Method: highlights differences

in outcomes for dual eligible versus non-dual eligible patients within a hospital

– Dual Eligible Outcome Method: comparison of performance in care for dual-eligible patients across hospitals

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IPPS FFY 2020 Final Rule: HAC

• Program specifications for FFY 2022

• Adoption of a measure removal policy,

similar to those previously adopted in

other quality programs (8 removal

factors)

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Questions?

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