On Wednesday, September 2, the Centers for Medicare & Medicaid Services (CMS) issued the FY 2021 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) final rule. The final rule is scheduled to be published in the Federal Register on September 18 and most of its provisions will be effective for discharges occurring on or after October 1, 2020.
Under the final rule Medicare IPPS rates will increase by a net 2.9 percent in FY 2021 compared to FY 2020 for hospitals that are meaningful users of electronic health records and submit quality measure data. In this final rule CMS approves 13 technologies that applied for new technology add-on payments for FY 2021 and continues the new technology add-on payments for 10 of the 18 technologies currently receiving the add-on payment. These 10 technologies include Chimeric Antigen Receptor (CAR) T-Cell Therapy, for which CMS also created a new Medicare Severity-Diagnosis Related Group (MS-DRG). In the final rule CMS implements a policy effective for cost reporting periods ending January 1, 2021 or after under which hospitals are required to report on the Medicare cost report the median payer-specific negotiated rates for inpatient services, by MS-DRG, rather than charge-based data, for Medicare Advantage organizations. The agency explains that it will use this data in developing the methodology for calculating IPPS payments beginning in 2024. CMS stated that because hospitals are already required to publically report payer-specific negotiated charges, in accordance with the Hospital Price Transparency final rule, the additional calculation and reporting of the median payer-specific negotiated charge will be less burdensome. CMS estimates that Medicaid disproportionate share hospital payments (DSH) will total approximately $8.3 billion in FY 2021, a decrease of approximately $60 million from FY 2020. In addition, CMS will use a single year of data on uncompensated care (UC) costs from Worksheet S-10 of hospitals’ FY 2017 Medicare cost reports to determine the distribution of DSH UC payments for FY 2021. CMS is revising its Medicare graduate medical education (GME) regulations to expand the definition of who is considered a displaced resident beyond residents who are physically present at the hospital training on the day prior to, or the day of, hospital or program closure. This policy change will provide greater flexibility for residents to transfer while hospital operations or residency programs are winding down, and enable GME funding to be transferred for certain residents who are not present at the closing hospital/closing program on the day prior to, or day of, closure.
For FY 2021 CMS expects LTCH PPS payments to decrease by about 1.1 percent, which reflects the continued implementation of the LTCH PPS payment system.
The final rule is available at link here.
The CMS press release announcing the final rule is available at link here.
The fact sheet describing certain provisions of the final rule is available at link here.