United States: CMS Issues Final FY 2020 Medicare Ipps/Ltch Update, Including New Medical Device Technology Policies

Last Updated: August 30 2019
Article by Gail Daubert, Paul Pitts and Debra A. McCurdy

The Centers for Medicare & Medicaid Services (CMS) has finalized Medicare acute inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) rates and policies for fiscal year (FY) 2020, which begins October 1, 2019. Key provisions of the final rule are outlined below.

IPPS Payment Update

CMS projects total Medicare IPPS spending in FY 2020 will increase by about $3.8 billion under the final rule taking into account operating, capital, new technology, and low volume hospital payments. The IPPS market basket update is 3.0%, which is reduced by a 0.4 percentage point productivity adjustment and a +0.5 percentage point statutory adjustment. The final FY 2020 standardized amount is $6,263.74 for hospitals that submit quality data and are meaningful electronic health record (EHR) users, with reduced payment to hospitals that do not report quality data and/or are not meaningful EHR users. Specific hospital payments can be impacted by other factors, including penalties for excess readmissions under the Hospital Readmissions Reduction Program, poor performance under the Hospital-Acquired Condition Reduction Program, and adjustments under the Hospital Value-Based Purchasing Program.

Promoting Access to Innovative Devices and Antimicrobial Products

CMS adopted several policies intended to improve beneficiary access to innovative medical technologies in the IPPS setting for FY 2020.

  • CMS adopted an alternative IPPS new technology add-on payment (NTAP) pathway for certain "transformative" medical devices beginning in FY 2021. Specifically, if a new medical device is part of the Food and Drug Administration's (FDA) Breakthrough Devices Program and receives FDA marketing authorization, the device would be considered new for NTAP purposes and it would not need to demonstrate substantial clinical improvement (SCI). In other words, the device would only need to meet the NTAP cost criterion
  • In response to comments, CMS extended the alternative NTAP pathway to antimicrobial products designated by the FDA as a Qualified Infectious Disease Product (QIDP), but not to technologies approved under an FDA expedited program for drugs.
  • CMS adopted its proposed increase in NTAP payments for discharges beginning on or after October 1, 2019. Specifically, CMS is increasing the NTAP payment to the lesser of: (1) 65% (up from 50%) of the costs of the new medical service or technology; or (2) 65% (rather than 50%) of the amount by which the costs of the case exceed the standard DRG payment. In the case of a QIDP, the NTAP amount rises to 75%.
  • CMS clarified the SCI criterion for evaluating NTAP applications and provided examples of information sources and outcomes that may be used to demonstrate SCI. CMS will continue to consider comments received on the proposed rule's solicitation of input on longer-term changes to related CMS policies.

Note that CMS also has proposed similar proposals to promote innovative medical technologies as part of the pending calendar year 2020 Medicare hospital outpatient PPS proposed rule.

Wage Index Revisions

CMS finalized revisions to the wage index methodology that are intended to reduce the disparity between high and low wage index hospitals. CMS is increasing the wage index values for certain hospitals with low wage index values (below the 25th percentile wage index value). CMS will apply this adjustment for at least four years, beginning in FY 2020, "to allow employee compensation increases implemented by these hospitals sufficient time to be reflected in the wage index calculation." Under the final rule, CMS is offsetting this increase in IPPS payments through a uniform budget neutrality adjustment applied to the standardized amounts for all hospitals; CMS did not finalize its proposal achieve budget neutrality by decreasing the wage index for hospitals that currently have high wage index values. CMS adopted a one-year transition policy under which it cap at 5% the decrease in a hospital's wage index from the hospital's final wage index in FY 2019. CMS also adopted revisions to the calculation of the rural floor.

Other IPPS Policy Changes

The final rule also updates, among other things: Medicare inpatient hospital quality program policies; MS-DRG assignments; Medicare graduate medical education for teaching hospitals; payments to critical access hospital; uncompensated care payments; and limits on payment increases for certain hospitals exclude from the IPPS that are paid on a reasonable cost basis.

LTCH Rates and Policies

CMS expects LTCH-PPS payments to increase by about 1%, or $43 million, in FY 2020 under the final rule. The standard federal rate for LTCHs that submit required quality data is $42,677.64 for FY 2020, up from $41,558.68 for FY 2019, while the standard federal payment rate for LTCHs that fail to submit quality reporting data is $41,844.90 in FY 2020 (note that Table 1E appears to have a transposed number). The increase to the standard federal payment reflects a 2.5% annual update, offset by a one-time budget neutrality adjustment factor of 0.999858 for eliminating the "25-percent" threshold policy and an area wage budget neutrality factor of 1.0020203. CMS expects about 71% of LTCH cases to meet the established patient-level criteria to be paid based on the LTCH PPS standard federal payment rate, rather than the lower "site neutral" payment rate. CMS projects that payments for such PPS standard federal payment rate cases will increase by approximately $91 million (2.7%). On the other hand, CMS estimates that aggregate payments for LTCH site neutral payment rate cases will fall by approximately 5.9% (or -$49 million).

The final FY 2020 LTCH-PPS fixed-loss amount for high cost outlier cases is $26,778, down from $27,121 in FY 2019. The fixed-loss amount for high cost outlier cases paid under the site neutral payment rate is $26,473 in FY 2020, compared with $25,743 in FY 2019. In the final rule, CMS also adopted updates to LTCH Quality Reporting Program measures, data elements, and data collection and public reporting requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions