Reimbursement


Final Medicare Inpatient Rates for FY 2020

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August 20, 2019

Final Medicare Inpatient Rates for FY 2020

Medicare will increase spending on hospital inpatient care by 3.0%, or roughly $3.8 billion, in Fiscal Year 2020, according to the Centers for Medicare & Medicaid Services (CMS), while introducing a new pathway and new policies for covering breakthrough medical devices.

The changes are part of CMS updates to Medicare hospital inpatient payment policies and rates for FY 2020, which begins October 1, 2019. 

Highlights:

Breakthrough Devices: CMS made several significant changes in how it pays for transformative technologies.

 

  • CMS created an alternative pathway to pay for medical devices that the Food and Drug Administration (FDA) has okayed as part of its breakthrough devices program. Beginning with applications for FY 2021, CMS will automatically consider such devices as offering substantially improved clinical care—one of the criteria CMS uses in evaluating whether to provide add-on payments for this kind of device. 
  • CMS increased the amount if will pay for transformative devices; from 50% of the estimated excess cost of the case to 65%. 
  • CMS clarified its criteria for what constitutes “substantial clinical improvement” in evaluating whether a transformative device qualifies for add-on payments. Among the outcomes that will demonstrate such improvement are reduced length of stay or recovery time, better functioning in daily life, and better quality of life.


Rural Hospitals: CMS is changing how payments for rural hospitals are calculated, Among other things, it will change the wage index calculation—one of the factors in setting overall payment rates—to increase the index for certain low wage index hospitals, many of which are in rural areas.

Payment Updates: CMS will increase payment rates by 3.1% for hospitals that properly report quality performance and make meaningful use of electronic health records. When this increase is added to other payments (such as new technology add-ons and capital), overall inpatient payment will rise about 3.0% in FY 2020.

Pay-for-Performance: CMS made minor adjustments in its three primary pay-for-performance programs—the hospital-acquired conditions reduction program, value-based purchasing program, and hospital preventable readmissions program.