Rural health, innovation encompass two-pronged focus of 2020 IPPS proposed rule

CMS pledging improved healthcare quality and expanded access for patients.

The release of the Inpatient Prospective Payment System (IPPS) proposed rule for the 2020 fiscal year came with a bit of branding.

“Rethinking Rural Health” and “Unleashing Innovations” were the two catchy slogans unveiled by the Centers for Medicare & Medicaid Services (CMS) in a press release on the topic issued earlier this week, with the agency heralding what it said would constitute “historic changes” to federal involvement in healthcare.

“One in five Americans are living in rural areas, and the hospitals that serve them are the backbone of our nation’s healthcare system,” CMS Administrator Seema Verma said in a statement.

 “Rural Americans face many obstacles as the result of our fragmented healthcare system, including living in communities with disproportionally higher poverty rates, more chronic conditions, and more uninsured or underinsured individuals. The Trump Administration is committed to addressing inequities in healthcare, which is why we are proposing historic Medicare payment changes that will help bring stability to rural hospitals and improve patients’ access to quality healthcare.”

CMS noted that the inpatient hospital wage index specifies how inpatient payment rates are adjusted to account for local differences in wages that hospitals face in their respective labor markets, saying the proposed changes are “intended to measure differences in hospital wage rates across geographic regions” and will update “annually based on wage data reported by hospitals.”

“Hospitals located in areas with wages less than the national average receive a lower Medicare payment rate than hospitals located in areas with wages higher than the national average,” the CMS release explained. “For example, a hospital in a rural community could receive a Medicare payment of about $4,000 for treating a beneficiary admitted for pneumonia while a hospital in a high wage area (like many urban communities) could receive a Medicare payment of nearly $6,000 for the same case, due to differences in their wage index.”

As such, and in response to feedback it received in the form of comments, CMS said that to “address these disparities, (it) is proposing to increase the wage index of low wage index hospitals. This change would ensure that people living in rural areas have access to high-quality, affordable healthcare.”

The press release didn’t elaborate, saying it is “considering several ways” to implement the plan and adding that it plans to solicit additional comments.

CMS’s remarks on its plans on making “Unleashing Innovations” a top priority were more substantive, although still a bit light on specifics.

“To ensure that Medicare payment supports broad access to transformative technologies, CMS is proposing several payment policy changes. These include proposing to increase the new technology add-on payment, which provides hospitals with additional payments for cases with high costs involving new technologies, including potentially new antimicrobial therapies,” the press release read. “The increase would apply to all technologies receiving add-on payments starting on Oct. 1, 2019, so that when a physician determines that a patient needs a qualifying new therapy, the hospital at which the therapy is administered would be able to more completely cover its costs. This change would promote patient access and reduce the uncertainty that innovators face regarding payment for new medical technologies for Medicare beneficiaries.”

CMS also noted that it is proposing to modernize payment policies for medical devices that meet the FDA’s (Food and Drug Administration’s) Breakthrough Devices designation.

“For devices granted expedited approval, real-world data regarding outcomes for the devices in different patient populations is often limited. At the time of approval, it can be challenging for innovators to meet the requirement for evidence demonstrating ‘substantial clinical improvement’ in order to qualify for new technology add-on payments,” CMS said. “Therefore, CMS is proposing to waive for two years the requirement for evidence that these devices represent a ‘substantial clinical improvement.’ Waiving this requirement would provide additional Medicare payment for the technologies for a period of time while real-world evidence is emerging, so Medicare beneficiaries do not have to wait for access to the latest innovations.”

“Transformative technologies are coming to the private market, but Medicare’s antiquated payment systems have not contemplated these technologies,” Verma added. “I am particularly concerned about cases that have been reported to the agency in which Medicare’s inadequate payment has led hospitals to curtail access to needed therapies. We must continually update our policies in response to the rapid pace of advancement in medical science.”

The last topic covered by the press release was what CMS labeled “unique challenges” associated with paying for Chimeric Antigen Receptor T-cell (CAR-T) therapy, the first form of gene therapy ever to see the widespread implementation, currently being used to treat certain forms of cancer for which no other treatment options exist. 

“The agency is considering several changes to payment policies for CAR-T for 2020, including additional changes to new technology add-on payments for CAR-T and changes to the formula that is used to calculate payments to hospitals for CAR-T,” CMS said. “These changes may help ensure adequate payments to hospitals administering this groundbreaking therapy while CMS continues our work to ensure that we pay for innovative therapies appropriately.”

Dr. Ronald Hirsch (MD, FACP, CHCQM), vice president of the Regulations and Education Group at R1 Physician Advisory Services and a member of the Advisory Board of the American College of Physician Advisors and the American Case Management Association, described the proposed rule as a CFO’s dream.

“There is lots in the rule for finance folks, with changes to wage index calculations (big gains for rural hospitals and significant cuts for high-wage index hospitals), changes to new technology payments (up to 65 percent of cost, from 50 percent) … new quality measures, (a) new requirement for LTACHs (Long-Term Acute Care Hospitals) to get their special payment rate … (and) some DRG reassignments,” Hirsch said. “But these are all payment changes and not utilization changes.”

Indeed, Hirsch noted that there are no proposed changes to observation status, patient notifications, or the two-midnight rule. 

“Now, if you are looking for some fun, start reading on page 110 to see how CMS analyzes a request for a DRG change; here they look at Mitraclip,” Hirsch added. “It’s an amazing analysis.”

Hirsch further noted that the proposed rule includes changes to complications and comorbidities (CCs) and major CCs (MCCs) for nearly 1,500 diagnoses – and, of particular note, that homelessness is proposed to be listed as a new CC.

Programming Note:

Listen to Erica Remer, MD, and Laurie Johnson report on this story live during Talk Ten Tuesdays, April 30, 10-10:30 a.m. ET

For a fact sheet on the proposed rule, go online to: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2020-medicare-hospital-inpatient-prospective-payment-system-ipps-and-long-term-acute

To view the proposed rule in its entirety, go online to: https://www.federalregister.gov/documents/2019/05/03/2019-08330/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the