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CMS Releases FFY 2020 IPPS Proposed Rule

This week the Centers for Medicare & Medicaid Services (CMS) released its federal fiscal year (FFY) 2020 inpatient prospective payment system (IPPS) proposed rule. In addition to annual payment updates, including changes to Medicare disproportionate share hospital (DSH) payments, CMS proposes significant changes to the hospital area wage index.

Key highlights of the proposed rule include:

  • Area Wage Index: CMS proposes to increase wage index values for low-wage hospitals in the bottom 25th percentile and to reduce wage index values for high-wage hospitals in the top 75th percentile to make the policy budget neutral. CMS proposes the policy would be effective for at least four years, beginning in FFY 2020. In addition, CMS proposes to no longer include wage index data from urban hospitals that reclassify as rural when calculating each state’s rural floor. CMS proposes to phase in its proposal by capping any decrease in a hospital’s wage index to 5 percent in FFY 2020 compared to FFY 2019.
  • Medicare DSH Payments: CMS proposes to use a single year of uncompensated care data from Worksheet S-10 to determine the distribution of DSH uncompensated care payments for FFY 2020. Specifically, the agency proposes using S-10 data from the FFY 2015 audited cost report, but also requests comments on an alternative proposal to use FFY 2017 cost report data.
  • Quality Reporting Programs: CMS proposes several changes to the hospital quality reporting programs, including three new measures for the Inpatient Quality Reporting Program. For the FFY 2023 payment period, CMS would require two new opioid-related electronic clinical quality measures (eCQMs) and beginning with the FFY 2026 reporting period CMS would require hospitals to report the currently voluntary “Hybrid Hospital-Wide All-Cause Readmissions” measure. CMS does not propose any changes to the measure sets for the Hospital Readmissions Reduction Program, Hospital-Acquired Conditions Reduction Program, or the Hospital Value-Based Purchasing Program.

SDAHO is currently analyzing the proposed rule and will provide members with a summary brief and impact analysis in the coming weeks. Additional information is available in a CMS fact sheet. Comments on the proposed rule are due June 24. ​

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