CMS tweaks hospital wage index change in final rule

By | August 4, 2019

Dive Brief:

  • CMS has finalized some proposed changes to the hospital wage index but is heeding some concerns from national groups like the American Hospital Association and Federation of American Hospitals that facilities in urban areas would be unfairly dinged in the original plan.
  • The final Inpatient Prospective Payment System rule released late Friday will increase the wage index for hospitals below the 25th percentile for at least four years starting in fiscal year 2020. The agency will not, as it had originally suggested, lower the wage index for hospitals above the 75th percentile. It will instead keep the change budget neutral by adjusting the standardized amount applied across all IPPS hospitals.
  • AHA, however, said it was still concerned that the adjustment penalized all hospitals, “especially when Medicare already pays far less than the cost of providing care,” and suggested CMS “use its existing statutory authority to increase the wage index in a non-budget neutral manner.”

Dive Insight:

Rural hospitals are certainly in need of some assistance. More than 100 of the facilities have closed since 2010 and numerous others are on the brink.

In a call with reporters, CMS Administrator Seema Verma said the current wage index was making it difficult for rural hospitals to attract employees, limiting access to care in some of the areas that need it the most.

“With this change, low-wage and rural hospital will be able to increase employee compensation and have sustainability,” she said.

In comments on the proposed IPPS rule, national hospital groups said they supported changing the wage index to better support rural hospitals but did not agree with the redistributive method CMS put forward.

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AHA said a “policy that penalizes certain hospitals simply because of where they fall in the wage index distribution is not based on evidence — it is based on an arbitrary cut-off point. This contradicts the efforts that both hospitals and CMS make in order to have consistent and accurate wage data reporting, including regular data submissions, revisions and audits.”

CMS is also going forward with its proposal to use uncompensated care data from fiscal year 2015 Worksheet S-10 forms, a policy AHA and FAH agreed with. The agency said it will distribute about $ 8.4 billion in uncompensated care payments for FY 2020, up by about $ 78 million from the year prior.

The agency said total Medicare spending on inpatient hospital services will increase by about $ 3.8 billion, or 3%, for fiscal 2020.

Elsewhere in the final rule, CMS said it will use an EHR reporting period of any continuous 90-day period in calendar year 2021 for new and returning participants in the Promoting Interoperability Program (previously called Meaningful Use).

It also finalized an increase to new technology add-on payments, including for cancer cell therapy CAR-T, from 50% to 65% and up to 75% for certain antimicrobials.

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