May 2, 2018

In keeping with the current administration’s emphasis on increasing price transparency in healthcare (see our March 28, 2018 eAlert), the fiscal year 2019 Inpatient Prospective Payment System (IPPS) proposed rule of the Centers for Medicare and Medicaid Services (CMS), issued on April 24, 2018, proposes that hospitals begin publishing their standard charges online each year.  The proposal would take price transparency a step farther than the current requirement that hospitals make the information publicly available.

Also chief among the proposed provisions in the 2019 IPPS are an increase of 1.75 percent in inpatient operating payment rates, and an estimated $1.5 billion increase from 2018 in payments for Disproportionate Share Hospitals (DSH) to, among other things, address an increase in the percentage of uninsured Americans.

CMS outlines a proposed methodology for calculating Medicare DSH payments based on Medicare cost report data to determine each hospital’s share of uncompensated care (UC) costs.  The methodology would use two years of UC data from worksheet S-10 of the Medicare cost report and one year of low-income insured days data to calculate each hospital’s UC payments.  (One year of S-10 data and two years of low income insured days data are being used for 2018.)

The IPPS rule also proposes to implement in 2019 a methodology, finalized in 2018, for the Hospital Readmissions Reduction Program (HRRP).  The HRRP, established by the Affordable Care Act and amended by the ACA and the 21st Century Cures Act, requires a reduction in payments for excess readmissions during a three-year period for acute myocardial infarction, heart failure, pneumonia, chronic obstructive pulmonary disease, total hip arthroplasty/total knee arthroplasty and coronary artery bypass graft surgery.

The methodology stratifies hospitals into five groups (quintiles) based on the proportion of hospital stays by patients who are dually eligible for Medicare and Medicaid (a measure of socioeconomic status) and assesses hospital performance relative to hospitals within the same quintile.  The rule proposes to establish the applicable periods for 2019, 2020 and 2021, and to codify the definitions of dual-eligible patients, the proportion of dual-eligibles and the applicable period for dual eligibility.

As part of what are now called the Promoting Interoperability Programs (formerly the EHR Incentive Programs), CMS proposes to remove seven electronic Clinical Quality Measures (eCQMs) in which the costs associated with implementation have been deemed to outweigh the benefits.

The proposal reflects the goals of the Meaningful Measures Initiative, launched by CMS last year, to reduce the administrative burden for hospitals, reduce health information technology costs and enable hospitals to select the measures most meaningful to them for tracking patient outcomes.  As in 2018, hospitals would submit one self-selected calendar quarter of data on four self-selected measures.  The intent of the measure reduction is to enable hospitals to focus on a smaller, more specific subset of eCQMs and give hospitals more flexibility in selecting which eCQMs best reflect their patient populations and support their quality improvement efforts.

Comments on the proposed rule are being accepted until June 25, 2018.