WSHA Provides Analyses of Proposed Medicare Inpatient PPS, Inpatient Rehab, and Skilled Nursing Facility Rule, Wage Index Data

June 3, 2016

WSHA recently produced and sent analyses of several recent proposed Medicare rules issued by CMS along with hospital-specific impact reports to the Chief Financial Officer and/or other designated finance persons for each facility. This information is to help hospital finance leader understand the impacts of the various rules on your hospitals. If you have comments or questions, or need to be set up as a recipient of the reports for your hospital, please contact Jonathan Bennett at or Andrew Busz at

The following summarizes the reports mailed:

Federal Fiscal Year (FFY) 2017 proposed payment rule for the Medicare Inpatient Prospective Payment System. The IPPS analysis includes an explanation of changes in operating, capital, and uncompensated care for Inpatient Prospective Payment System payments. For FFY 2017 there is a market-basket update of 2.8 percent, which for many Washington hospitals will be more than offset by various ACA and ATRA required adjustments, as well as quality and wage area related adjustments.  Washington Prospective Payment System Hospitals are expected to receive for FFS 2017 on average, a negative update about a .7 of one percent ranging from a positive three percent to a negative 4.2 percent, with the majority of Washington hospitals receiving negative updates. The analysis also includes: potential payment penalties under the Inpatient Quality Reporting and Electronic Health Record Incentive Programs; value of the Medicare Dependent Hospital and Low Volume Hospital Adjustment programs; quality-based payment adjustments, in addition to the proposed change in Hospital Acquired-Conditions scoring; Disproportionate Share Hospital uncompensated care payments; and CMS’ proposals regarding the phase in of Worksheet S-10 for distribution of UCC payments.

The Medicare Hospital Occupational Mix Data Analysis / Wage Index Data Analysis – Final Data (April 21, 2016 Release).  This report is intended to provide hospitals with a comparative review of the data that will be used to develop the FFY 2017 Medicare hospital wage index.

FFY 2017 Inpatient Rehab Facility (IRF) PPS Proposed rule. Our IRF analysis  of the proposed rule shows providers the changes to Medicare fee-for-service (FFS) payments from FFY 2016 to FFY 2017.  The analysis includes the following information: Market-basket Update, ACA-Mandated Market-basket Reductions, Budget Neutrality, Wage Index, Rural Adjustment, and CMG Updates.

FFY 2017 Skilled Nursing Facility (SNF) PPS Proposed Rule. Our SNF analysis shows Medicare PPS payment changes from FFY 2016 to FFY 2017 based on the policies recommended in the FFY 2017 SNF PPS proposed rule, which includes marketbasket update of 2.6% increase offset by an ACA-Mandated Productivity Reduction of 0.5 percent reduction to the marketbasket. Also includes is the impact of the new CBSA delineations, new wage data, and a change to the labor-share from 69.1 percent  for FFY 2016 to 68.9 percent for FFY 2017. Increase/decrease in payments are a result of both the update to wage data and the second half of transition to the new CBSA delineations.


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