On May 11, 2020, the Centers for Medicare & Medicaid Services (CMS) issued its Fiscal Year (FY) 2021 hospital inpatient prospective payment system (IPPS) and long term care hospital (LTCH) prospective payment system (PPS) proposed rule. Under the proposed rule Medicare IPPS payment rates would increase an estimated net 3.1 percent for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users. CMS projects that the rate increase, together with other proposed changes to IPPS payment policies, would increase IPPS operating payments by approximately 2.5 percent. In addition, proposed changes in uncompensated care payments (including a $534 million decrease in Medicare disproportionate share payments to $7.82 billion), new technology add-on payments, and capital payments would decrease IPPS payments by about 0.4 percent. Therefore, CMS estimates that under the proposed rule there would be a total increase in overall Medicare IPPS payments of approximately 1.6 percent. CMS proposes to create a new Medicare Severity-Diagnosis-Related Group (MS-DRG) for Chimeric Antigen Receptor (CAR) T-cell therapy. CMS also proposes significant changes to Medicare graduate medical education (GME) payment policy related to closing teaching hospitals and closing residency programs. These policy changes would include expanding the definition of who is considered a displaced resident in order to provide increased flexibility for residents who transfer while the teaching hospital or residency program is winding down operations. Under the proposal Medicare GME funding could be transferred for certain residents who are not present at the hospital and training in the program on the day prior to or day of the hospital or program closure.

Under the proposed rule LTCHs would receive $36 million less in LTCH PPS payments in FY 2021 compared to FY 2020 (a decrease of approximately 0.9 percent). This LTCH PPS payment reduction would be mostly due to a reduction in payment for site neutral cases.

The proposed rule will be published in the Federal Register on May 29. Public comments on the proposed rule are due to CMS by July 10. The proposed rule can be downloaded from the Federal Register at link here. The CMS Fact Sheet summarizing the proposed rule is available at link here.