CMS Proposes to Increase Inpatient Medicare Reimbursement by 1.6%

CMS Proposes to Increase Inpatient Medicare Reimbursement by 1.6%

Inpatient Medicare reimbursement could increase by 1.6 percent in the fall, according to a newly proposed rule from CMS.


Announced earlier today, the proposed rule would update the Inpatient Prospective Payment System (IPPS) for the fiscal year 2021. Starting Oct. 1, 2020, CMS is proposing a 3.0 percent hospital market basket update less a 0.4 percentage point productivity adjustment. The new inpatient Medicare reimbursement rates would also reflect a proposed 0.5 percentage point adjustment required by legislation.


Notably, the rule would also:


  • Create a new Medicare Severity Diagnostic Related Group (MS-DRG) for Chimeric Antigen Receptor (CAR) T-cell therapy



  • Distribute roughly $7.8 billion in uncompensated care payments in FY 2021, a decrease of $0.5 billion compared to FY 2020



Together, the proposed changes in uncompensated care payments, new technology add-on payments, and capital payments will decrease inpatient Medicare reimbursement rates by 0.4 percent, resulting in a total increase in overall rates under the IPPS of approximately 1.6 percent in FY 2021.


Other proposed payment policies impacting the IPPS included changes to the graduate medical education policy, hospital star ratings, and the Medicare and Medicaid Promoting Interoperability Programs for hospitals.


The rule would also update several value-based purchasing efforts led by Medicare through the IPPS, including the Hospital-Acquired Condition Reduction Program, Hospital Readmissions Reduction Program, Hospital Value-Based Purchasing Program, and the Hospital Inpatient Quality Reporting Program.


Additionally, in the proposed rule, CMS is calling on stakeholders to comment on whether the agency should use data required to be disclosed by hospitals under new price transparency rules to be used to set relative Medicare payment rates for hospital procedures. The data that would be used is median payer-specific negotiated inpatient services charges for Medicare Advantage organizations and third-party payers.


“Today’s payment rate announcement focuses on what matters most to help hospitals conduct their business and receive stable and consistent payment,” CMS Administrator Seema Verma said in the proposed rule’s announcement.


In the announcement, Administrator Verma also released proposed updates to the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for FY 2021. Overall, Medicare reimbursement for LTCHs is slated to decrease by approximately 0.9 percent, or $36 million.


The proposed changes, which would apply to approximately 3,200 acute care hospitals and approximately 360 LTCHs, would affect discharges occurring on or after October 1, 2020, CMS reported.


To view the proposed rule in its entirety, please click here. CMS will accept comments on the proposed rule until July 10, 2020.






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