CMS Releases Final 2020 Inpatient Rule

Makes changes to Wage Index Proposal

August 06, 2019

On Friday, August 2, CMS released its final 2020 Inpatient Prospective Payment System (IPPS) rule. Overall, the rule will increase IPPS rates by a net 3.1% in fiscal year (FY) 2020 compared to FY2019. It also includes welcome changes to Medicare’s Promoting Interoperability Program and takes steps to restore fairness to the calculation of hospital wage index values, though in a significantly different manner than the proposed rule.

For the wage index, CMS is going through with its proposal to remove the impact of hospitals reclassifying from urban to rural when calculating each state’s rural floor. WHA supported this policy change in its comment letter noting the current policy has benefited coastal states at the expense of states like Wisconsin. CMS also made a significant change to its proposal to bring up wage index values for hospitals below the 25th percentile by bringing down wage index values for hospitals above the 75th percentile.

WHA had submitted comments urging CMS to focus on hospitals that have gamed the system by creating artificially high labor markets, while also urging CMS to hold harmless hospitals in naturally occurring high labor markets, which some Wisconsin hospitals operate in. In the final rule, CMS decided to instead spread out the wage index offset across all hospitals above the 25th percentile rather than just those above the 75th percentile. While this proposed change will negatively impact all hospitals above the 25th percentile, combined with the changes to the rural floor calculation, the wage index changes should have a positive net impact on Wisconsin hospitals.

WHA was also pleased to see CMS finalize its proposals to reduce electronic health record regulatory burden in its Promoting Interoperability Program. Specifically, CMS went ahead with its proposal to allow hospitals to select the 90-day time period for which they must attest to meaningful use of certified electronic health record (EHR) technology and removed both the “query of PDMP” and “verify Opioid Treatment Agreement” from the list of required measures, noting the increased burden they would have presented without meaningful improvements in quality.

WHA will be analyzing the final rule in the coming weeks and will provide additional updates as warranted. Contact WHA Director of Federal and State Relations Jon Hoelter with questions.

This story originally appeared in the August 06, 2019 edition of WHA Newsletter