4033: August 27, 2010
Medicare Federal Fiscal Year 2011 IPPS Final Rule
The Centers for Medicare and Medicaid Services (CMS) published the final Medicare Inpatient Prospective Payment System (IPPS) rule for federal fiscal year 2011 on August 16, 2010. The new rule will result in an actual decrease in rates.
WSHA’s Health Information Program (HIP) has analyzed the final rule. The analysis estimates year-over-year changes in individual hospital inpatient payments from 2010 to 2011, based on provisions in the rule compared to the 2010 final rule.
The HIP analysis estimates a decline of $8,655,000 or 0.6 percent for Washington hospitals, about the same as the 0.7 percent decrease projected nationally. This decrease is made up of a 0.5 percent decrease in the operating component and a 2.0 percent decrease in the capital component. It is important, however, that you review the impact on your facility as individual hospital total impacts range from a positive 3.3 percent to a negative 4.9 percent.
Key payment changes modeled in this analysis:
- Increase in the market basket update factor by 2.35 percent for 2011, which reflects a full market basket update of 2.6 percent minus 0.25 percentage points as mandated by federal health reform. However, this increase is offset by other factors, below.
- Decrease due to the coding adjustment: Despite strong opposition by WSHA and others, CMS adopted its proposal to recoup 5.8 percent of the increase in IPPS payments during 2008 and 2009. CMS will reduce both the 2011 and 2012 standard payment amount by 2.9 percent. These reductions also apply to sole community hospitals and Medicare dependent hospitals. This adjustment more than offsets the market basket update, causing a decrease in overall Medicare IPPS payments.
- Decrease in the outlier threshold from $23,140 in 2010 to $23,075 in 2011.
- Addition of four new quality measures in pay-for-reporting.
- Implementation of the low-cost county adjustment for qualifying hospitals in six Washington counties (Chelan, Clallam, Clark, Thurston, Walla Walla, and Yakima). Funds will be distributed as annual, one-time payments in 2011 and 2012. The exact timing of payments was not specified.
- Modifications to the “72-Hour Rule:” CMS clarified the Medicare payment policy regarding how hospitals may bill for outpatient non-diagnostic services related to an inpatient admission (other than ambulance and maintenance renal dialysis services) provided on the day of admission or during the three days prior to the admission. Effective for services furnished on or after June 25, 2010, such services must be bundled for payment. Outpatient non-diagnostic services unrelated to the hospital inpatient stay should be billed separately under Medicare Part B; hospitals will be required to attest to the fact that the services were unrelated. The law does not change the billing of diagnostic services during this period.
WSHA’s Health Information Program has developed several documents to help you analyze the rule’s impact. A report description provides the assumptions used in the analysis, a summary provides a detailed discussion of the rule, and the attached workbook provides tabs showing the impact and payment for your facility, Washington hospitals and U.S. hospitals.
This analysis does not include estimated rate reductions for non-reporting of quality data nor does it reflect estimates for outlier payments and indirect medical education payments for managed care patients. Dollar impacts may differ from those provided by other organizations/associations due to differences in source data and analytic methods.
If you need assistance in using these documents or have other questions, please contact me at jimc@wsha.org or (206) 216-2551.