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Medicare Proposes Hospital Rates for FY 2020

April 29, 2019


Medicare will increase payments for inpatient hospital care by about $4.7 billion in Fiscal Year (FY) 2020, while making payment changes designed to help rural hospitals and to increase access to breakthrough medical technologies.

The planned changes are part of a proposed rule from the Centers for Medicare & Medicaid Services (CMS) that updates Medicare inpatient payment policies and rates for FY 2020, which begins in October 2019.  CMS will accept comments on the proposed rule until June 24, 2019, and is expected to issue a final regulation in August.




New Technology Add-on Payments: CMS plans to adjust its program that makes extra payments for breakthrough medical technologies that have been reviewed on an expedited basis by the Food and Drug Administration.


  • CMS will increase add-on payments for such technologies from 50% of the estimated excess cost of the case to 65%.
  • CMS is considering revisions to the “substantial clinical improvement criterion” currently used to evaluate applications for the new technology add-on payment, both for hospital inpatient care and for a similar pass-through payment under the hospital outpatient payment system. It is seeking public comments on the issue.

Rural Hospitals: CMS is proposing changes in how payments for rural hospitals are calculated, Among other things, it plans to 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 is planning to increase payment rates by 3.2% for hospitals that report quality performance and are meaningful users 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 3.7% in FY 2020.


Pay-for-Performance Programs: CMS will continue its three primary pay-for-performance programs—the hospital-acquired conditions reduction program, value-based purchasing program, and hospital preventable readmissions program.

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