Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

CMS Makes Revisions to Medicare Prospective Payment System

By Jacqueline DiChiara

The Centers for Medicare and Medicaid Services (CMS) is making changes to the Medicare hospital inpatient prospective payment systems (IPPS). CMS says it is modifying 2016’s IPPS Pricer to reflect a new payment calculation adjustment stemming from The Consolidated Appropriations Act of 2016 – H.R.2029. This act became a public law on December 18, 2015, as per President Obama’s signature.

Medicare hospital inpatient prospective payment systems

This law’s provisions include a two-year delay of the Cadillac Tax, a 40-percent excise tax on high-cost health insurance. Congress passed a two-year delay of the Cadillac Tax last December. Last week, the House passed a bill to repeal the Affordable Care Act (ACA).

“The cost of medical care is what truly drives health insurance premiums and the [tax] does very little to rein in healthcare costs," said Janet Trautwein, CEO of the National Association of Health Underwriters.

Regarding the Consolidated Appropriation Act of 2016, of particular concern to healthcare providers is Section 601, Modification of Medicare Inpatient Hospital Payment Rate for Puerto Rico Hospitals.

This segment alters payment calculation associated with the inpatient hospital services’ operating costs for Puerto Rico hospital discharges on or after January 1, 2016.

The law contains a newly added clause: “on or after January 1, 2016, the applicable Puerto Rico percentage is 0 percent and the applicable Federal percentage is 100 percent.”

“The amount of the payment with respect to the operating costs of inpatient hospital services of a subsection (d) Puerto Rico hospital for inpatient hospital discharges on or after January 1, 2016, will be based on 0 percent of the applicable Puerto Rico percentage and 100 percent of the applicable Federal percentage,” says CMS in last Thursday’s Provider eNews update. 

“In addition, the IPPS FY 2016 Pricer will include conforming changes to certain FY 2016 IPPS operating rates and factors that result from the application of the new Puerto Rico hospital payment calculation requirement, which are applicable to all IPPS hospital discharges on or after January 1, 2016.”

“We will also incorporate the revised IPPS rates into the Long-Term Care Hospital (LTCH) Pricer, as they are used for certain LTCH claims payments.”

CMS confirms it will implement the IPPS and LTCH pricers on April 4, 2016.

Medicare Administrative Contractors (MACs) will reprocess IPPS inpatient claims from both Puerto Rico and all other IPPS hospitals with a discharge date on or after January 1, CMS states.

Additionally, due to the change’s effects, the MACs will reprocess LTCH claims with the same discharge date.

Puerto Rico hospitals, all other IPPS hospitals, and all other LTCH hospitals) need to do nothing, CMS says.

CMS anticipates claims will be reprocessed by the end of June at the latest.

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