CMS proposes dropping the -0.2% offset from CMS-1599F

No changes in the Two-Midnight Rule

Cause of confusion in C-Suites

It's a classic case of misunderstanding.

It’s a classic case of misunderstanding.

The Centers for Medicare & Medicaid Services (CMS) issued CMS-1655P, the FY2017 Inpatient Prospective Payment System (IPPS) Proposed Rule on April 18, 2016. CMS also published the proposed rule for the Long Term Acute Care Hospital Prospective Payment System (LTCH PPS). The proposed rule will affect discharges occurring on or after October 1, 2016, and comments on the rule may be submitted by June 17, 2016.

We’ve heard that many providers have misunderstood the news reports about this proposed rule, thinking that the infamous Two-Midnight Rule has been recalled by CMS, which is far from the truth. That rule is safe and secure, in CMS’ eyes. The rule has not be touched, at all, by this new proposed rule.

What’s Hidden in All the New Changes?

Common reaction to the realization that the -0.2% may still be in there, somewhere...

Common reaction to the realization that the -0.2% may still be in there… somewhere…

A more detailed analysis of the Proposed Rule is forthcoming in a future “Finally Friday!” show, but here are some highlights to be aware of, including proposals to:

  • Permanently remove the -0.2 percent offset implemented in the FY2014 IPPS/LTCH PPS final rule to account for an estimated increase in Medicare expenditures due to the Two Midnight policy, by removing the adjustment itself and also removing its effects for FYs 2014, 2015 and 2016 (with a one-time payment boost of 0.6 percent), which would result in an increase in FY2017 payment rates of approximately 0.8 percent
  • Increase inpatient payment rates by approximately 0.4 percent
  • Complete a series of documentation and coding recoupments via implementation of a final -1.5 percent adjustment to complete recoupments required by the American Taxpayer Relief Act (ATRA)
  • Decrease uncompensated care payments by $400 million USD from the FY2016 amount
  • Change methodology for uncompensated care payments calculations by using data from three cost-reporting periods instead of just one cost-reporting period
  • Beginning FY2018, phase in the use of uncompensated care cost data from Worksheet S-10 of the Medicare Cost report into the uncompensated care payment methodology over a three-year period
  • Create new regulations related to the Medicare Outpatient Observation Notice (MOON), a notice required by the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act) to be given to patients receiving observation services for more than 24 hours.

CMS-1655P also includes provisions related to:

  • the Hospital-Acquired Condition (HAC) Reduction Program,
  • the Hospital Readmissions Reduction Program (HRRP),
  • the Electronic Health Record (EHR) Incentive Programs,
  • the Hospital Inpatient Quality Reporting (IQR) Program and
  • the Hospital Value-Based Purchasing (VBP) Program.

Register for “Finally Friday!” emails to be notified of the the free webinar with a more complete analysis.

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