Summary
Extends this Medicare demonstration program through FY15 while expanding it to new sites and requiring adjustments to the payment methodologies used.
Implementation Status
This program began in May 2011 and is ongoing. For more information, see the CMMI website dedicated to the project.
On August 2, 2013, CMS issued its FY 2014 Medicare Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) PPS final rule under which gross hospital payments will be $1.2 billion higher in FY 2014 than they were in FY 2013 – much higher than the $27 million increase initially proposed. The final rule addresses a number of IPPS and LTCH payment and quality-related provisions authorized or amended by the ACA.
On May 1, CMS issued a proposed rule updating FY 2015 Medicare payment policies and rates for inpatient stays at general acute care and LTCHs. Under the proposed rule, hospitals that participate in the Hospital Inpatient Quality Reporting (IQR) Program and are ‘meaningful users’ of EHRs would receive a 1.3% payment update. However, the 1.3% rate increase, when coupled with the payment policy reductions – including those under the Hospital Readmissions Reduction Program, the Hospital Acquired Condition (HAC) Reduction Program, Medicare DSH changes as well as “the expiration of certain statutory provisions that provided special temporary increases in payments to hospitals and other proposed changes” – would ultimately decrease IPPS operating payments by approximately 0.8% or $241 million over FY 2015 payment levels. Also of note, gross LTCH payments under the proposed rule would increase by 0.8% or $44 million over FY 2014 payments, with a delay (pursuant to the statutory mandate) in the full application of the 25% Rule patient threshold, among other key LTCH policy changes denoted further below. Comments are due by June 30, 2014. CMS fact sheets are available here and here. A CMS press release is available here.
On August 4, CMS issued a final rule updating FY 2015 Medicare payment policies and rates for inpatient stays at general acute care and LTCHs. The final rule also codifies “two interim final rules with comment period relating to criteria for disproportionate share hospital [DSH] uncompensated care payments and extensions of temporary changes to the payment adjustment for low-volume hospitals and of the Medicare-Dependent, Small Rural Hospital (MDH) Program.”
Under the final rule, hospitals that participate in the Hospital Inpatient Quality Reporting Program and are ‘meaningful users’ of EHRs would receive a 1.4% payment update – up slightly from the agency’s 1.3% proposed increased. However, the 1.4% rate increase, when coupled with payment policy reductions enumerated further below – including reductions under the Hospital Readmissions Reduction Program, changes to Medicare DSH payments, and so forth – are projected to decrease IPPS operating payments by approximately 0.6%” (compared to the net decrease of 0.8% under the proposed rule) – or by roughly $756 million in FY 2015.
CMS also finalized its proposal to continue its slow phase-in of the ATRA’s coding intensity adjustment, leaving ~$8 billion to be recouped in FYs ‘15 and ‘16.
Gross LTCH payments under the final rule would increase by 1.1% – up from the 0.8% CMS put forward in its proposed rule, with a delay (pursuant to the statutory mandate) in the full application of the 25% Rule patient threshold, among other key LTCH policy changes denoted further below.
CMS fact sheets are available here and here. An agency press release is available here.
On Apr. 17, as part of a proposed rule updating FY 2016 Medicare payment policies and rates for inpatient stays at general acute care and LTCHs, CMS proposed to use the established methodology used in FY 2015, with some modifications, for determining the budget neutrality offset amount to be applied to the FY 2016 national IPPS rates to reflect the costs of the demonstration.
On July 31, CMS released the FY 16 inpatient prospective payment system (IPPS) and long-term care hospital PPS final rule affecting discharges beginning on Oct. 1, 2015. The rule also includes an embedded interim final rule with comment period effectuating the statutory extension of the Medicare-dependent, small rural hospital Program and changes to the low-volume payment adjustment. The rule addressed this provision of the ACA.
2016
On Apr. 19, CMS released the FY 2017 inpatient prospective payment system (IPPS) and long-term care hospital PPS and policy proposed rule that, once, finalized, will apply to discharges beginning on or after Oct. 1, 2016. Under the rule, CMS estimates a net average payment increase of 0.7 percent (a roughly $539 million increase in spending, including capital) in FY 2017 for the IPPS. For LTCH’s, and stemming largely from the application of statutory site-neutrality provisions in the Pathway for SGR Reform Act, CMS estimates that FY 2017 payments will decrease by an estimated $355 million or -6.9 percent in FY 2017.
2017
On April 27, CMS released its proposal to revise the Medicare IPPS/LTCH PPS for FY 2018. This provision of the ACA is addressed in the rule.
On Aug. 3, CMS finalized a rule to revise the Medicare hospital inpatient prospective payment system (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System for FY 2018. This provision of the ACA is addressed in the rule.
Statutory Text
SEC. 3123. EXTENSION OF THE RURAL COMMUNITY HOSPITAL DEMONSTRATION PROGRAM. (a) ONE-YEAR EXTENSION.—Section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2272) is amended by adding at the end the following new subsection: ‘‘(g) FIVE-YEAR EXTENSION OF DEMONSTRATION PROGRAM.— øReplaced by section 10313(a)¿ ‘‘(1) IN GENERAL.—Subject to the succeeding provisions of this subsection, the Secretary shall conduct the demonstration program under this section for an additional 5-year period (in this section referred to as the ‘5-year extension period’) that begins on the date immediately following the last day of the initial 5-year period under subsection (a)(5). ‘‘(2) EXPANSION OF DEMONSTRATION STATES.—Notwithstanding subsection (a)(2), during the 5-year extension period, the Secretary shall expand the number of States with low population densities determined by the Secretary under such subsection to 20. In determining which States to include in such expansion, the Secretary shall use the same criteria and data that the Secretary used to determine the States under such subsection for purposes of the initial 5-year period. ‘‘(3) INCREASE IN MAXIMUM NUMBER OF HOSPITALS PARTICIPATING IN THE DEMONSTRATION PROGRAM.—Notwithstanding subsection (a)(4), during the 5-year extension period, not more than 30 rural community hospitals may participate in the demonstration program under this section. ‘‘(4) HOSPITALS IN DEMONSTRATION PROGRAM ON DATE OF ENACTMENT.—In the case of a rural community hospital that is participating in the demonstration program under this section as of the last day of the initial 5-year period, the Secretary— ‘‘(A) shall provide for the continued participation of such rural community hospital in the demonstration program during the 5-year extension period unless the rural community hospital makes an election, in such form and manner as the Secretary may specify, to discontinue such participation; and ‘‘(B) in calculating the amount of payment under subsection (b) to the rural community hospital for covered inpatient hospital services furnished by the hospital during such 5-year extension period, shall substitute, under paragraph (1)(A) of such subsection— ‘‘(i) the reasonable costs of providing such services for discharges occurring in the first cost reporting period beginning on or after the first day of the 5-year extension period, for ‘‘(ii) the reasonable costs of providing such services for discharges occurring in the first cost reporting period beginning on or after the implementation of the demonstration program.’’. (b) CONFORMING AMENDMENTS.—Subsection (a)(5) of section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2272) is amended by inserting ‘‘(in this section referred to as the ‘initial 5- year period’) and, as provided in subsection (g), for the 5-year extension period’’ after ‘‘5-year period’’.øAs revised by section 10313(b)¿ (c) TECHNICAL AMENDMENTS.— (1) Subsection (b) of section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2272) is amended— (A) in paragraph (1)(B)(ii), by striking ‘‘2)’’ and inserting ‘‘2))’’; and (B) in paragraph (2), by inserting ‘‘cost’’ before ‘‘reporting period’’ the first place such term appears in each of subparagraphs (A) and (B). (2) Subsection (f)(1) of section 410A of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108–173; 117 Stat. 2272) is amended— (A) in subparagraph (A)(ii), by striking ‘‘paragraph (2)’’ and inserting ‘‘subparagraph (B)’’; and (B) in subparagraph (B), by striking ‘‘paragraph (1)(B)’’ and inserting ‘‘subparagraph (A)(ii)’’.