March 24, 2021

In a song released in 2009, celebrated lyricist Bob Dylan used the repeated refrain, “I feel a change comin’ on.” In an earlier era, the late great Sam Cooke assured us that “a change is gonna come.” These remarkable musicians knew that, despite the present situation and the seeming status quo, new realities were inevitable; and so it is with the ever-shifting nature of government rule-making. Changes are always ahead, and certain hospitals will be facing such changes very soon.

The Affected Facilities

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) published a Medicare Learning Network (MLN) article addressing changes to the IPPS rules that will take effect April 5 of this year. The changes are specifically directed at the following entities that will be submitting claims to Medicare Administrative Contractors (MACs) for services provided to Medicare beneficiaries:

Rural Referral Centers (RRCs)
Medicare Dependent Hospitals (MDHs)
MDH RRCs
Sole Community Hospital (SCH) RRCs
Essential Access Community Hospital (EACH) RRCs
Facilities that fall under these categories should note that the MACs will be reprocessing certain claims based on the changes in the IPPS, which are described in greater detail below.

The New Provisions

The following will act to summarize some of the key changes to be implemented next month:

Add-on Payments

The changes set for April affect certain payment calculations. Pursuant to 42 CFR 412.88, Medicare makes an add-on payment for discharges involving approved new technologies, if the total covered costs of the discharge exceed the diagnosis-related group (DRG) payment for the case—including adjustments for Indirect Medical Education (IME) and the disproportionate share hospital (DSH) payment but excluding other payments). Medicare’s Pricer software will calculate the total covered costs by applying the cost-to-charge ratio to the total covered costs of the discharge.

Drug Codes

The changes for April also act to update the FY 2021 IPPS PPS Pricer to allow for up to 10 National Drug Codes (NDCs) to be passed to the IPPS PPS Pricer. This will allow for further payment consideration based on new technologies and emerging medical services.

COVID Payment

Section 3710 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act directed the Secretary of the U.S. Department of Health and Human Services (HHS) to increase the weight factor of the assigned DRG by 20 percent for an individual diagnosed with COVID-19 discharged during the COVID-19 Public Health Emergency (PHE) period. CMS implemented the provision of Section 3710 of the CARES Act in CR 11764 (Transmittal 10058, April l24, 2020). CR 11764 established that discharges of an individual diagnosed with COVID-19 will be identified by the presence of the following ICD-10 diagnosis codes:

B97.29 (Other Coronavirus as the cause of diseases classified elsewhere) for discharges occurring on or after January 27, 2020, and on or before March 31, 2020.
U07.1 (COVID-19) for discharges occurring on or after April 1, 2020, through the duration of the COVID-19 PHE period.
The April revision to the IPPS also updates the Pricer logic related to the 20-percent increase to the DRG weight applicable to COVID-19 discharges in FYs 2020 and 2021, implemented under Section 3710 of the CARES Act. This change allows Part A MACs to update impacted cost reports with the correct Hospital Specific (HSP) rate payment for SCHs and MDHs.

DSH Calculation

The DSH payment calculation has been adjusted so that it will begin correctly applying payment for RRCs and MDH providers with a Core-Based Statistical Area (CBSA) location that is not rural. The DSH payment updates are applicable for claims processed between October 8, 2020 and November 20, 2020, with discharges occurring on or after October 1, 2018, through September 30, 2020.

Upon successful implementation of the updated FY 2021 IPPS Pricer, MACs will reprocess claims meeting all the following criteria, no later than June 1, 2021:

For correction of the DSH payment:
Discharge date between October 1, 2018, and September 30, 2020 (FYs 2019 and 2020 claims)
You are an RRC, MDH, MDH RRC, SCH RRC, or Essential Access Community Hospital (EACH) RRC
Medicare’s Provider Specific File contained a non-Rural (five-digit) CBSA code in the Standard Amount Location CBSA field at the time of discharge
Medicare processed the impacted claims between October 8, 2020, and November 20, 2020
For change related to the HSP rate:
Discharge date is on or after January 27, 2020, and on or before March 31, 2020, and diagnosis code B97.29 is reported, OR the discharge date is on or after April 1, 2020, and diagnosis code U07.1 is reported
You are an MDH, MDH RRC, SCH, SCH RRC, EACH, or EACH RRC
The impacted claims were processed prior to the implementation date of the updated IPPS Pricer
Note: For admissions occurring on or after September 1, 2020, claims reporting Condition Code ZA may be excluded from the reprocessing criteria.

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For a copy of the full MLN advisory, please go to the following link: MM12062 (cms.gov). We want to continue to keep you informed and to provide solutions to your business needs. You can reach us at info@miramedgs.com.