HomeLatest NewsFederal NewsFY2021 Medicare Inpatient Prospective Payment System and Long Term Care Acute Care...

FY2021 Medicare Inpatient Prospective Payment System and Long Term Care Acute Care Hospital Final Rule

On September 2, the Centers for Medicare & Medicaid Services (CMS) issued a final rule for acute care and long term care hospitals. The final rule will update Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year 2021. CMS estimates total Medicare spending on acute care inpatient hospital services will increase by about $3.5 billion in FY 2021, or 2.7 percent.

The increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 2.9 percent. This reflects the projected hospital market basket update of 2.4 percent and a 0.0 percentage point productivity adjustment. This also reflects a +0.5 percentage point adjustment required by federal legislation.

CMS will distribute roughly $8.3 billion in uncompensated care payments for FY 2021, a decrease of approximately $60 million from FY 2020. CMS is making policy changes related to closing teaching hospitals and closing residency programs to address the needs of residents attempting to find alternative hospitals in which to complete their training.

In the rule, CMS approved 13 technologies that applied for new technology add-on payments for FY 2021. Additionally, CMS is continuing the new technology add-on payments for 10 of the 18 technologies currently receiving the add-on payment. CMS estimates that FY 2021 Medicare spending on new technology add-on payments will be approximately $874 million, nearly a 120% increase over the FY 2020 spending.

CMS also created a new Medicare Severity-Diagnosis Related Group (MS-DRG) specifically for cases involving CAR T-cell therapies. The new payment group helps to predictably compensate hospitals paid under the IPPS for their costs in delivering necessary care to Medicare beneficiaries.

CMS also made updates to the Hospital-Acquired Condition (HAC) Reduction Program to automatically adopt performance periods beginning with the FY2023 program year and refine the validation procedures for data beginning with the FY2024 program year to align with the Hospital Inpatient Quality Reporting (IQR) program.

CMS is also proposing various updates to the Hospital Readmissions Reduction Program (HRRP), Hospital Inpatient Quality Reporting (IQR) Program, Hospital Value-Based Purchasing (VBP) Program, PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program, and Medicare and Medicaid Promoting Interoperability Programs.

The full rule is available here.

A CMS fact sheet on the rule is available here.

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