Federal FY 2018 IPPS Proposal

Proposed FY18 IPPS Update Highlights

Good news with the adjustment! Payments are proposed to increase 1.6% overall for acute care hospitals. This rate was arrived at through the usual calculations, but with and added benefit: the American Taxpayer Relief Act of 2012 is expiring and all the recoupments along with it.

Disproportionate share hospital (DSH) payments are proposed to have an overhaul also. CMS is proposing to change where the data comes from that is used to calculate these payments. Using the numbers from the National Health Expenditures Accounts rather than the Congressional Budget Office has the potential to raise DSH payments by $1,000,000,000 (that’s a billion!).

The readmissions reduction program is proposed to be adjusted to compensate for those hospitals with a high number of Medicare/Medicaid dually eligible beneficiaries. The readmission rates (and therefore penalties) will be based on the rates of hospitals with a similar proportion of these patients. These hospitals have long lobbied they have a higher rate of readmissions because their patients are more medically complex and have socio-economic risk factors that prevent appropriate follow-up care.

Readmissions, hospital acquired conditions reduction and value based purchasing requirements are slated to continue with the risk of losing 6% of payments. Changes to quality reporting are recommended in addition to possible use of patient risk factors to make adjustments.

CMS is also proposing eligible providers who provided “substantially all” of their professional services in an ASC setting receive no payment adjustment. “Substantially all” is proposed to be defined as either 75% or 90% of services. In conjunction, a new Place of Service (POS) code of 24 will need to be established to identify those services more easily.

In addition to the proposals above, there are the usual ICD-10 and MS-DRG updates, but that’s a story for another day. The full proposed rule can be found here: CMS IPPS Page