CMS Finalizes IPPS Rule, Wage Index Changes

On August 2, CMS released its final Inpatient Prospective Payment System rule for 2020. The proposed rule finalizes CMS’s proposal to raise payment for the quartile of hospitals with lowest wage index by reducing the wage index adjustment for the hospitals in the top quartile and applying an additional budget neutrality adjustment reduction to all PPS hospitals. Because Washington state is not in the lowest quartile, WSHA estimates all 48 of Washington’s PPS hospitals would experience some reduction in wage index payment as a result of the change. WSHA and AHA had previously commented to CMS that increases to low wage index hospitals should not be funded by cuts to other hospitals, many of which also provide care in rural areas under difficult economic conditions. WSHA is preparing hospital-specific analyses of the final rule and will distribute them to hospital CFOs and finance leaders when they are available (Andrew Busz, andrewb@wsha.org).