CMS Issues Payment Rates Final Ruling

08/21/14  Portland, Ore.

CMS has issued a final ruling on FY 2015 IPPS and LTCH PPS.

On Monday, August 4, the Centers for Medicare and Medicaid Services (CMS) put on display the fiscal year (FY) 2015 Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital Prospective Payment System (LTCH PPS) final rule, updating Medicare's payment rates for care in acute inpatient and long term care hospitals. The final rule is scheduled to publish on August 22, 2014 and has an effective date of October 1, 2014.

The final rule also addresses quality reporting requirements for specific providers; reasonable compensation equivalents for physician services in excluded teaching hospitals; provider administrative appeals and judicial review; enforcement provisions for organ transplant centers; and the Electronic Health Record (EHR) Incentive Program.

Listed below are highlights from the final rule that are relevant for rural stakeholders:

  • FY 2015 Payment Updates: CMS projects that the payment rate update to general acute care hospitals will be 1.4 percent in FY 2015. However, IPPS operating payments overall are expected to decrease by 0.6 percent after adjustments for documentation and coding, the Hospital Readmissions Reduction Program, the Hospital Acquired Conditions Reduction Program, Medicare disproportionate share hospitals changes, and other changes to IPPS payment policies finalized in this rule. For rural hospitals, IPPS operating payments are expected to decrease by 0.7 percent overall after making the aforementioned adjustments. CMS projects that total Medicare spending on inpatient hospital services will decrease by about $756 million in FY 2015.
  • Changes to Graduate Medical Education (GME)Payments: The final rule also makes certain adjustments to GME. Effective October 1, 2014, a rural hospital that has been redesignated as urban (as a result of the implementation of new OMB delineations), can receive a permanent cap adjustment for a new program, if it received a letter of accreditation for the new program, and/or started training residents in the new program, prior to being redesignated as urban. In addition, CMS finalized changes to the participation of redesignated hospitals in rural training tracks. CMS is also updating its policies to make the FTE resident caps, rolling average, and IRB ratio cap effective simultaneously. In response to public comment, CMS is finalizing a modified version of its proposal so that these policies will be effective beginning with the applicable hospital's cost reporting period that coincides with or follows the start of the 6th program year of the first new program started.
  • Extension of Rural Payment Adjustments: In accordance with the Protecting Access to Medicare Act of 2014, the final rule extends the Medicare Dependent Hospital (MDH) program and the expansion of the Medicare inpatient hospital payment adjustment for low-volume hospitals for an additional year (through March 31, 2015).
  • Change to Requirements for Physician Certification of CAH Inpatient Services: CMS finalized its proposal to amend the regulations for FY 2015 and subsequent years to allow CAHs until no later than 1 day before the date on which the claim for payment for the inpatient CAH service is submitted, to complete all certification requirements except the admission order.
  • Update to Medicare Disproportionate Share Hospital (DSH) Payment Calculation: In the FY 2015 rule, CMS will distribute $7.65 billion in uncompensated care payments, a decrease from the $8.56 billion estimate in the proposed rule. This decrease is due to changes in the Office of the Actuary's estimate of payments that would otherwise be made for Medicare DSH in FY 2015 (due to lower projected hospital inpatient spending) and also the change in the percentage of individuals that are uninsured as estimated by the CBO. The rule also proposes to adopt a process to identify hospitals that have merged so that data from all hospitals involved in the merger may factor into the calculation of the remaining provider's uncompensated care payment.

The final rule is on display now in the Federal Register. CMS has also posted a press release, a policy and payment fact sheet, and a quality fact sheet on the final rule.