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CMS Releases 2018 Inpatient PPS Proposed Rule

Medicare and Medicaid ServicesOn April 14, 2017, the Centers for Medicare & Medicaid Services issued its 2018 Medicare Inpatient Prospective Payment System proposed rule (the “Proposed Rule”). The Proposed Rule was published in the Federal Register on April 28, 2017, and comments will be accepted through June 13, 2017.

The Proposed Rule suggests a number of changes that would affect hospital rates, inpatient quality reporting and readmissions reduction programs. Some of the most significant changes are highlighted below.

Rate Increase

The Proposed Rule would increase payment rates to acute care hospitals by 1.6 percent in 2018 as compared to 2017. This increase reflects a projected 2.9 percent market basket update for hospitals that report quality data and are also meaningful users of electronic health records (“EHRs”), adjusted by a -0.4 percent productivity adjustment, a -0.6 percent adjustment to offset the estimated costs of the two midnight policy, a -0.75 percent update for cuts under the Affordable Care Act ("ACA"), and a +.46 percent adjustment to partially restore cuts made as a result of the American Taxpayer Relief Act of 2012.

Disproportionate Share Hospital Payments

Disproportionate share hospital ("DSH") adjustments are designed to compensate hospitals serving a disproportionate share of low-income inpatients. Each year, CMS distributes a specified amount to Medicare disproportionate share hospitals based on their relative share of uncompensated care nationally. The Proposed Rule includes changes to the ACA-required Medicare DSH reductions. In 2018, CMS proposes to use data from National Health Expenditure Accounts, instead of from the Congressional Budget Office, to estimate the percent change in the rate of uninsurance, which is used to calculate uncompensated care payments available to disproportionate share hospitals. CMS is proposing to distribute roughly $7.0 billion in uncompensated care payments in 2018, an increase of approximately $1.0 billion from the 2017 amount. CMS also proposes using Worksheet S-10 data to determine the amounts and distribution of uncompensated care payments.

Hospital Readmissions Reduction Program

The Hospital Readmissions Reduction Program ("HRRP") requires a reduction to a hospital’s payments to account for excess readmissions associated with certain conditions. CMS is proposing to implement changes to the HRRP in accordance with the 21st Century Cures Act. Under this proposal, CMS would assess penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for both Medicare and Medicaid.

Hospital Value-Based Purchasing ("VBP") Program

The Hospital VBP Program is a program under which CMS adjusts Medicare payments to hospitals for inpatient services based on their performance on certain quality measures. CMS is proposing changes to the Hospital VBP Program, including the removal of one measure and the adoption of two measures.

If you have any questions about the Proposed Rule, and would like to discuss how it impacts your organization, please contact a member of our health care practice group.

Categories: Compliance, Medicare/Medicaid, Providers


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