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CMS Releases FY 2021 IPPS Proposed Rule

On May 11, the Centers for Medicare & Medicaid Services (CMS) released its proposed fiscal year (FY) 2021 Inpatient Prospective Payment System (IPPS) rule, which includes payment and quality reporting provisions. Included below are the major provisions proposed in this rule.

Payment Rates Under IPPS

CMS proposes to increase operating payment rates for general acute care hospitals by approximately 3.1 percent. This payment update is a result of a market basket increase of 3 percent reduced by a 0.4 percentage point productivity adjustment, and increased by a 0.5 percentage point adjustment required by legislation.

Medicare DSH Payments

For FY 2021, CMS estimates total Medicare disproportionate share hospital (DSH) payments will be $11.6 billion, or $0.9 billion less than FY 2020. Of these payments, $7.8 billion will be uncompensated care (UC)–based payments, or $500 million less than UC payments in FY 2020.

CMS proposes to continue using one year of UC data from worksheet S-10 of the Medicare cost report to calculate each hospital’s share of UC in the DSH calculation. For FY 2021 UC-based DSH payments, CMS proposes to use FY 2017 cost report data, which the agency says has been audited. In subsequent years, CMS proposes to continue using one year of S-10 data from the most recent audited cost reports.

Proposed Data Collection, Change in Calculating MS-DRG Relative Weights

CMS proposes to collect a summary of certain data already required to be disclosed pursuant to last year’s hospital price transparency final rule, released in conjunction with the calendar year (CY) 2020 Outpatient Prospective Payment System final rule. Specifically, hospitals would report median payer-specific negotiated inpatient services charges for Medicare Advantage organizations and for all third-party payers by Medicare severity diagnosis related group (MS-DRG).

The agency also seeks comment on the potential use of these data to set relative Medicare payment rates for hospital procedures, in place of the use of hospital chargemaster and cost data reported on Medicare cost reports.

Graduate Medical Education

Due to the occasional closing of teaching hospitals and residency programs, CMS is proposing policies to assist residents attempting to find alternative hospitals to complete their training and to continue graduate medical education (GME) funding to the receiving teaching hospital or residency program without hassle. The proposed policies, including expanding the definition of who is considered a displaced resident, aim to provide greater flexibility for residents and ease the burden associated with transferring GME funds.

New MS-DRG for CAR T-cell Therapy

CMS proposes creating a chimeric antigen receptor (CAR) T-cell therapy MS-DRG to help appropriately reimburse hospitals for their costs in delivering necessary care to Medicare beneficiaries and provide payment flexibility as new CAR T-cell therapies become available.

Quality Reporting

CMS proposes minor updates to the quality reporting programs, including changes to the reporting of electronic clinical quality measures (eCQMs) in the Inpatient Quality Reporting (IQR) Program. The agency also proposes providing estimated and newly established performance standards for certain measures in the Hospital Value-Based Purchasing (VBP) Program for FYs 2023 through 2026 program years.

Promoting Interoperability Program

CMS includes several proposals for the Medicare Promoting Interoperability Program, such as:

  • a minimum reporting period of any continuous 90-day period in CY 2022 for new and returning participants (eligible hospitals and critical access hospitals);
  • continuing the the query of prescription drug monitoring program measure as an optional measure worth five bonus points in CY 2021 (originally proposed and finalized in the IPPS 2020 rule); and
  • increasing the length of eCQM reporting periods and requiring public reporting of eCQM data, to align with the Hospital IQR Program.

Hospital Star Ratings

CMS does not propose any updates to the overall hospital quality star rating methodology, as previously announced. In light of the COVID-19 pandemic, and the limited capacity of health care providers to review and provide comment, the agency will look to future rulemaking to address this topic.

America’s Essential Hospitals is analyzing the proposed rule for comment and will send members a detailed Action Update. Comments are due to CMS by July 10.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Abigail Painchaud is a policy associate at America's Essential Hospitals.

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