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On September 2, 2020, the Centers for Medicare & Medicaid Services (CMS) published updates to the Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2021. The IPPS final rule includes updates to Medicare payment policies and payment rates for most acute care and long-term care hospitals (LTCH). The policies and payments go into effect October 1.
The Final Rule promotes CMS key priorities, which consist of strengthening Medicare and fostering innovation. Also, according to CMS, the rule ensures access to potentially life-saving testing and treatments by releasing innovation in medical technology and eliminating hurdles to competition.
Key Changes
Acute care inpatient hospital services are expected to increase Medicare spending about 2.7 percent for next calendar year (CY 2021).
Change in Methodology for Calculating MS-DRG Relative Weights
- Currently, DRG relative weights are calculated using a cost-based methodology that primarily uses hospital charges from MedPAR claims data and hospital cost report data from the Healthcare Cost Report Information System. In recent years CMS has tries to reduce the Medicare program’s dependence on hospital charge data, believing that charge-master rates may not reflect true market costs. Beginning in FY 2024 that will utilize a new methodology to calculate MS-DRG, one based on payer-specific negotiated charge information collected on Medicare cost reports.
Market-Based Rate Data Collection
- By law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in cost of services and products used by these hospitals in treating Medicare patients, as well as for other factors. This is known as the hospital “market basket”. To begin to prepare for the implementation of the new MS-DRG calculations, CMS will collect market-based rate information on the Medicare cost report beginning with cost reporting periods ending on or after January 1, 2021.
Fostering Innovation
In this final rule, 24 technologies are eligible to receive add-on payments for FY 2021:
CMS permitted 13 technologies that applied for new technology add-on payments for FY 2021.
- Two technologies are included under the alternative pathway for new medical devices that are part of the FDA Breakthrough Devices Program.
- Five technologies approved under the alternative pathway for products that received FDA Qualified Infectious Disease Product (QIDP) designation.
- CMS temporarily permitted one technology selected as a QIDP that otherwise meets the alternative pathway criteria but has not yet received FDA approval.
- After deliberation of public comments, CMS also accepted six technologies submitted under the traditional new technology add-on payment pathway criteria.
Furthermore, CMS is continuing the new technology add-on payments for approximately 56 percent of the 18 technologies currently receiving the add-on payment. The other 44percent will no longer be considered new. CMS has estimated Medicare spending on new technology add-on payments for FY 2021 will be approximately a 120% rise over the FY 2020.
Other topics discussed in the proposal includes:
New Technology Add-On Payment Pathway for Certain Antimicrobial Products
- The alternative new technology add-on payment pathway for antimicrobial products selected by FDA as QIDPs to include products approved under FDA’s Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD pathway) has been expanded. The LPAD pathway reassures the manufacturing of safe and effective drug products that focus on unmet needs of patients with severe bacterial and fungal infections. In order to permit qualified antimicrobial products to begin getting the new technology add-on payment sooner, CMS has adopted a policy to offer conditional approval for antimicrobial products that meet the NTAP alternative pathway criteria but do not receive FDA consent in time for consideration in the final rule. Those antimicrobial products that otherwise meet the applicable add-on payment criteria will begin receiving the new technology add-on payment, effective for discharges the quarter after the date of FDA marketing authorization instead of waiting until the next fiscal year, provided FDA marketing authorization is received by July 1 of the year for which the claimant applied for new technology add-on payments.
New MS-DRG for Chimeric Antigen Receptor (CAR) T-cell Therapy
- CMS formed a new Medicare Severity-Diagnosis Related Group (MS-DRG) precisely for cases relating to CAR T-cell therapies. The new payment group aids to unsurprisingly reimburse hospitals paid under the IPPS for their costs in providing essential care to Medicare beneficiaries and offer payment flexibility for the future as new CAR T-cell therapies become available.
Medicare Uncompensated Care Payments
- “Medicare disproportionate share hospitals” receive an imminent amount of uncompensated care payments based on their relative share of uncompensated care nationally dispersed from CMS. Obligatory under law, the sum is equivalent to an approximation of 75 percent of what otherwise would have been paid as Medicare disproportionate share hospital payments, adjusted for the change in the rate of uninsured people. In this rule, CMS will distribute roughly $8.3 billion in uncompensated care payments for FY 2021, a decrease of approximately $60 million from FY 2020. For FY 2021, CMS will use a single year of data on uncompensated care costs from Worksheet S-10 of hospitals’ FY 2017 cost reports to allocate these funds, because audits have already been conducted on the data.
Graduate Medical Education Policy
- These policy changes expand the current description of who is considered a displaced resident. Policies will offer more flexibility for the residents to transfer while the hospital operations or residency programs are winding down and will permit funding to be shifted for certain residents who are not actually at the closing hospital/closing program.
Hospital-Acquired Condition (HAC) Reduction Program
- The HAC Reduction Program generates an incentive for hospitals to decrease the occurrences of hospital-acquired conditions by requiring the Secretary to decrease payment by one percent for applicable hospitals, which are subcategory (d) hospitals that status rank in the worst-performing percentile on selective measures of hospital-acquired conditions.
Hospital Readmissions Reduction Program (HRRP)
- The Hospital Readmissions Reduction Program (HRRP) condenses payments to hospitals with excessive readmissions. The program comprises six claims-based outcomes measures. The 21st Century Cures Act guides CMS to evaluate payment reductions based on a hospital’s performance relative to other hospitals with a similar proportion of patients dually eligible for Medicare and full-benefit Medicaid.
Hospital Inpatient Quality Reporting (IQR) Program
- The Hospital IQR Program is a pay-for-reporting quality program that condenses payment to hospitals that neglect to meet program requirements. Make changes to the Hospital IQR Program validation process includes chart abstracted measure validation, the use of electronic file submissions via a CMS-approved secure file transmission process, and no longer permitting the submission of paper copies of medical records or duplicates on digital transferrable media, and reducing the number of hospitals selected for validation from up to 800 to up to 400 hospitals.
Hospital Value-Based Purchasing (VBP) Program
- The Hospital VBP Program submits adjusted payments to hospitals under the IPPS for inpatient services based on their performance. CMS is providing newly established performance standards for certain measures for the FY 2023, FY 2024, FY 2025, and FY 2026 program years.
PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
- The PCHQR Program gathers and publishes data on a publicized set of quality measures. CMS is finalizing proposals to: Improve two current National Healthcare Safety Network (NHSN) measures; Catheter-Associated Urinary Tract Infection (CAUTI) and Central Line-Associated Bloodstream Infection (CLABSI), to integrate an efficient policy developed by the Centers for Disease Control and Prevention that uses updated HAI baseline data that is risk-adjusted to stratify results by patient location. CMS will begin to publicly report the updated versions of the CLABSI and CAUTI measures in fall CY 2022.
Medicare and Medicaid Promoting Interoperability Programs
- In 2011, the Medicare and Medicaid Electronic Health Records (EHR) Incentive Programs (now known as the Medicare and Medicaid Promoting Interoperability Programs) were created to encourage appropriate professionals, qualified healthcare facilities, and critical access hospitals (CAHs) to accept, execute, advance, and prove meaningful use of certified EHR technology (CEHRT). CMS is confirming changes to create an EHR reporting period of a minimum of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and CAHs) indicating to CMS for the Medicare Promoting Interoperability Program. CMS is finalizing the proposal to continue the Query of Prescription Drug Monitoring Program (PDMP) measure as optional and worth five bonus points in CY 2021. CMS is finalizing a change to rename the Support Electronic Referral Loops by Receiving and Incorporating Health Information measure. The finalized name will read: Support Electronic Referral Loops by Receiving and Reconciling Health Information measure. The final name precisely reflects the actions vital in the measure’s quantity.
Final Changes to Payment Rates under IPPS
- The increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) operators is roughly 2.9 percent. This mirrors the projected hospital market basket update of 2.4 percent and a 0.0 proportion point efficiency modification. This also reflects a +0.5-percentage point modification required by legislation. Other considerations to the rates include: Consequences for excessive readmissions, which reflect an adjustment to a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid, Penalty (1 percent) for worst-performing quartile under the Hospital-Acquired Condition Reduction Program, and upward and downward adjustments under the VBP.
Overall, for FY 2021, CMS expects LTCH-PPS payments to decrease by $40 million, which reflects the continued statutory implementation of the revised LTCH PPS payment system. LTCH PPS payments for FY 2021 for discharges paid using the standard LTCH payment rate are expected to increase by 2.2 percent primarily due to the annual standard Federal rate update for FY 2021 of 2.3 percent. LTCH PPS payments for instances that will complete the legal changeover to the lower payment rates under the dual rate system are likely to decline by approximately 24 percent. This accounts for the LTCH site neutral payment rate cases that will no longer be paid a combined payment rate with the end of the legal changeover period, which embody roughly 25 percent of all LTCH cases and 10 percent of all LTCH PPS payments.
The GIRS Payer Advocacy Compass PAC® team that includes a team of reimbursement lawyers, payer policy and payer advocacy experts has over 17 years of experience tracking payer policies and educating providers and stakeholders about changes to the policies to ensure coverage and reimbursement for our clients. We can assist you to analyze the impact of the IPPS & LTCH final rule for your #medtech.
For more information, email us at info@girsinc.com or call us at 901-834-9119.
Disclaimer: The information in this blog is based on payer information which is dynamic. It is accurate at the time of posting but should not be construed to be reimbursement or legal advice. CPT® is the trademark of the American Medical Association (AMA).
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For more than 17 years, GIRS has been assisting medical technology manufacturers with their market uptake and reimbursement strategies so that patients can have access to the care that they need. To implement successful market access strategies, the GIRS Value Discovery Landscape Assessments® team and the Payer Advocacy Compass® team work together to develop and implement foundation reimbursement landscape and payer advocacy strategies to obtain positive coverage, appropriate payment, and innovative payer contracting arrangements to improve market uptake. For more information, email us at info@girsinc.com or call us at 901-834-9119.