Medicare inpatient payment rates finalized for Oct. 1

Posted on: 8/16/17


The Centers for Medicare and Medicaid Services (CMS) published the final payment rule for the Medicare Inpatient Prospective Payment System (IPPS) for federal fiscal year (FFY) 2018 on Aug. 2. The final rule reflects the annual updates to the Medicare fee-for-service inpatient payment rates and policies.  Most of the rule’s changes are effective Oct. 1, 2017.  

OHA distributed hospital-specific analysis reports to member IPPS hospitals today.

The Medicare federal operating rate will increase a net 1.05 percent, hospital-specific rates will increase 0.59 percent, and the federal capital rate will go up 1.61 percent. The rates are adjusted for area cost differences.

CMS finalized their proposal to transition Medicare Disproportionate Share Hospital (DSH) Uncompensated Care payments over three years to a calculation based on the amounts reported on Worksheet S-10 of hospitals’ cost reports, rather than on Medicaid days and SSI days. This change will benefit more Oklahoma hospitals than it will hurt, but causes very large cuts for hospitals whose Medicare DSH payments have subsidized psychiatric programs for Medicaid kids. CMS is developing audit protocols for Worksheet S-10 data. For the FFYs 2014 and 2015 cost reports, amended S-10s can be submitted to the MAC by Sep. 30, 2017 for use in FFY 2019 distributions.

For many small rural hospitals, OHA’s analysis shows a significant decrease from the expiration of the ACA’s expansion of the low-volume hospital adjustment, or the expiration of special payments for Medicare Dependent Hospitals (MDHs). Both of these rural programs have been extended by Congress several times, and AHA is advocating for further extensions as part of the fiscal cliff legislation that Congress will work on next month. In the absence of further extensions, on Sep. 30, 2017 MDH payments will end, and low-volume adjustment requirements will revert to the pre-ACA maximum of 200 total discharges, and 25 mile separation from the next hospital. Hospitals that will lose MDH status that intend to apply for SCH status for FFY 2018 must do so by Sep. 1, 2017.

OHA’s Payment Rule Brief for the Medicare IPPS final rule for FFY 2018 is on our website, here.  

OHA will be distributing similar reports for the FFY 2018 inpatient rehabilitation, psychiatric, and skilled nursing rules in coming days, as well as an updated Value Based Purchasing projection.

DataGen is offering a free national webinar to help you more fully understand what was covered in the final IPPS rule and the related analysis. DataGen is the Medicare analytics partner for OHA and nearly all the other state hospital associations. Registration for the webinar is required:
FFY 2018 IPPS Final Rule and Analysis Overview Webinar - Tuesday, Sep. 12, 2017, 2:00-3:00 CDT.  
The registration link is: IPPS Final Rule and Analysis Webinar

Please contact Rick Snyder with any questions.

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