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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

CMS Releases FY 2018 IPPS Proposed Rule and Request for Information

April 21, 2017—The Centers for Medicare and Medicaid Services (CMS) April 14 released the Inpatient Prospective Payment System (IPPS) proposed rule containing changes to Medicare payment policies and rates under the IPPS and the Prospective Payment System (PPS) payment update for fiscal year (FY) 2018.

CMS is proposing a 0.4588 percent positive adjustment in documentation and coding for FY 2018, a decrease from the intended 0.5 percentage point adjustment for each of FYs 2018 through 2023.  However, Section 15005 of the 21st Century Cures Act (P.L. 114-255) reduced the adjustment for FY 2018 to 0.4588 percentage points. 

In the FY 2017 final rule, CMS made a temporary one-time increase in payment rates in FY 2017 to offset the effects of the 0.2 percent reduction from FYs 2014-2016 from the Two-Midnight policy. CMS is proposing to remove this increase for FY 2018.

CMS continues to implement changes to Medicare disproportionate share hospital (DSH) payments. Beginning in FY 2014, hospitals started receiving 25 percent of what they would have received under the former statutory Medicare DSH formula. The remaining 75 percent was adjusted and redistributed to hospitals as uncompensated care payments. 

In the FY 2018 proposed rule, CMS proposes to distribute $7.0 billion in uncompensated care payments in FY 2018, an increase of approximately $1.0 billion from the FY 2017 amount. For FY 2018, CMS proposes to start incorporating uncompensated care data from the Worksheet S-10 of the Medicare cost report to include in the methodology for distributing these funds. To determine the distribution of these funds, CMS will combine data from Worksheet S-10 from the FY 2014 cost reports with insured low income days data from the two preceding cost reporting periods.

CMS makes several proposals to the Medicare and Medicaid EHR (Electronic Health Record) Incentive Program. The proposed rules modifies EHR reporting periods from one full year to a minimum of any continuous 90-day period during the calendar year for new and returning participants attesting to CMS or their state Medicaid agency. As mandated by the 21st Century Cures Act, CMS is proposing to add a new exception from the Medicare payment adjustments for eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) that demonstrate through an application process that compliance with the requirement for being a meaningful EHR user is not possible because their certified EHR technology has been decertified under ONC’s Health IT Certification Program. 

Additionally, CMS proposes to implement a policy, also mandated by the 21st Century Cures Act, of no payment adjustment for EPs who furnish “substantially all” of their services in an ambulatory surgical center (ASC).

Regarding changes to the Medicare quality programs, CMS proposes to remove the current version of the PSI-90 measure from the Hospital Value Based Purchasing Program (HVBP) beginning in FY 2019 and will add the modified version of the PSI-90 measure to the program in FY 2023. In addition, the agency requests feedback on accounting for social risk factors in the HVBP, Hospital Readmissions Reduction Program (HRRP), Hospital Acquired Conditions Reduction Program (HACRP), and the Inpatient Quality Reporting (IQR) program. CMS has also included a proposed methodology to implement the sociodemographic status (SDS) payment adjustment to the HRRP mandated by the 21st Century Cures legislation [see Washington Highlights, Dec. 2, 2016]. This payment adjustment will start in FY 2019.  

Finally, through a Request for Information (RFI), CMS is soliciting ideas to improve the health care delivery system by reducing burden for clinicians, providers, and patients and increasing quality and decreasing costs. CMS requests clear and concise proposals that include data and specific examples. The agency will not respond to the RFI comment submissions in the final rule, but will consider all input in developing future regulatory and sub-regulatory guidance.

The proposed rule will be published in the Federal Register on April 28. Comments are due by June 13 and CMS expects to issue the final rule on or about August 1.  The AAMC plans to hold a webinar on May 15 and will provide additional information on the webinar at a later date. The AAMC will submit a comment letter to CMS.

Contact:

Ayeisha Cox, J.D.
Hospital Policy & Regulatory Specialist
Telephone: 202-282-0482
Email: aycox@aamc.org

Scott Wetzel, M.P.P.
Lead, Quality Reporting
Telephone: 202-828-0495
Email: swetzel@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org