ACA Now

Implementation Status

Formal guidance regarding implementation of this provision is expected in the FY14 regulation cycle for Medicare hospital inpatient services.

2013

On January 8, CMS hosted a National Provider Call on the implementation of this provision.

On April 26, 2013, CMS issued a proposed rule updating FY 2014 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs).  Both the Medicare Inpatient Prospective Payment System (IPPS) and LTCH proposals, following CMS’ consideration of public comments and upon finalization, take effect October 1, 2013.  Under the proposed rules, CMS estimates that gross hospital payments will be $27 million higher in FY14 than they were in FY15 (which reflects the ACA Medicare DSH cuts, which are expected to result in a -0.9% cut to hospital payments).  Gross LTCH payments under the proposed rule will increase by 1.1% or $62 million, with the proposed implementation of the 25% Rule costing the sector $190 million.  CMS fact sheets on the rule are available here and here. Comments on the proposal are due by June 25, 2013.

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 September 30, CMS issued an interim final rule with comment delineating certain changes to certain cost reporting procedures related to Medicare DSH uncompensated care payments under the FY 2014 Medicare IPPS.  Comments are due by November 29. 

2014

On February 21, 2014, CMS issued the CY15 Advanced Call Letter, which would produce a 6-7% cut from CY14. But the Agency adjusted the “normalization factor,” which could soften the blow by over 3%. But some analysts have suggested that, if CMS’ analysis is correct, then enrollee risk scores will dip in the coming years, negating the benefit of this change. Most other components of MA reimbursement are driven by statute, and CMS took no steps to alleviate those. While the combined growth factor is -1.9%, additional rate cuts from the ACA, the expiration of the 3-star bonus demonstration, and other changes further reduce MA plan comp. Comments are due March 7 at 6pm EST. The final rates will be released April 7.

On February 21, 2014, CMS issued the CY15 Advanced Call Letter, which would produce a 6-7% cut from CY14. But the Agency adjusted the “normalization factor,” which could soften the blow by over 3%. But some analysts have suggested that, if CMS’ analysis is correct, then enrollee risk scores will dip in the coming years, negating the benefit of this change. Most other components of MA reimbursement are driven by statute, and CMS took no steps to alleviate those. While the combined growth factor is -1.9%, additional rate cuts from the ACA, the expiration of the 3-star bonus demonstration, and other changes further reduce MA plan comp. Comments are due March 7 at 6pm EST. The final rates will be released April 7.

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 Sept. 24, HHS’ ASPE released a report estimating that hospital uncompensated care costs will decrease by $5.7 billion in 2014. Specifically, ASPE estimates that 74% of that impact ($4.2 billion; 25% of the states’ baseline uncompensated care spending) will be concentrated in the 25 states (plus DC) participating in ACA-authorized Medicaid expansion as of the beginning of FY14 (note: PA and NH were not included in the estimate).

In August 2014, CMS released a Medicare DSH fact sheet, which provides an overview of this provision of the ACA that delineates revisions to the Medicare DSH adjustment computation methodology.

2015

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 provide that the 75 percent of what otherwise would have been paid for Medicare DSH is adjusted to approximately 63.69 percent of the amount to reflect changes in the percentage of individuals that are uninsured and CMS-1632-P 70 additional statutory adjustments.”

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.

On July 18, CMS notified MACs about the availability of updated data and instructions on how to access such data for determining the disproportionate share adjustment for IPPS hospitals and the low income patient (LIP) adjustment for IRFs as well as payments as applicable for LTCH discharges. Specifically, CMS notes “it is essential for MACs to accept amended cost reports due to revisions to Worksheet S-10 submitted by hospitals (or initial submissions of Worksheet S-10 if none had been submitted previously) and to upload them to the Health Care Provider Cost Report Information System (HCRIS) timely. For revisions to be considered, hospitals must submit their amended cost report containing the revised Worksheet S-10 (or a completed Worksheet S-10 if no data had been included on the previously submitted cost report) no later than September 30, 2016.”

On Aug. 2, CMS released the FY 2017 inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) PPS and policy final rule. The final rule governs FY 2017 payments to approximately 3,330 acute care hospitals and 430 LTCHs through the IPPS and LTCH PPS, respectively, and effectuates key policy changes. Under the rule, net payments to inpatient hospitals will increase by 0.95 percent on average compared with FY 2016. For the IPPS, the rule finalizes the 1.5 percent documentation and coding recoupment cut, as proposed, and delays the proposed incorporation of S-10 data into uncompensated care calculations. LTCH PPS payments will decrease by 7.1 percent under the LTCH PPS amid the ongoing implementation of site neutrality and will increase by 0.7 percent for cases qualifying for the higher standard rate. The aforementioned provisions are addressed in this regulation.

2017

On April 27, CMS released its proposal to revise the FY 2018 Medicare IPPS/LTCH PPS. 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.