CMS Issues New Proposed Rule for 2010

Posted by sys on 05/10/2013 12:00 am  /   News from the Committees

CMS has issued a new proposed rule; 2010 Medicare Payment Changes for Acute Care Inpatient PPS Providers. This rule will become effective October 1, 2009. Key components of this new rule are listed below.

  1. Market Basket Adjustment Update: 
    CMS proposes to rebase and revise the market basket methodology using FY 2006. Based on this revision CMS is projecting a 2.1% market basket update for FY 2010. Hospitals that do not participate in the Reporting Hospital Quality Data for Annual Payment Update would receive the market basket update less 2%. This would mean a .1% update factor. CMS is proposing to use three additional new expense categories and revise several other price proxies.
  2. Behavioral Coding & Documentation Adjustment:
    CMS is proposing to change the average standardized amounts under section 1886(d) of the Act in FY 2010 by -1.9 percent, the difference between the changes in documentation and coding that do not reflect real changes in case-mix for discharges occurring during FY 2008 and the prospective adjustment applied under section 7 of Pub. L. 110-90. Although CMS has the authority to also adjust for an additional -2.5 percent relating to FY 2009, they are using their discretion to postpone this adjustment to FY 2011 and FY 2012.
  3. Outlier Threshold:
    CMS proposed to raise the outlier threshold to $24,240 for FY 2010. The FY 2009 final rule outlier threshold is currently $20,045. CMS states that they intend to keep outlier payments equal to 5.1% of total payment for FY 2010.
  4. National Adjusted Rate:
    Labor Related Portion: CMS has proposed to set the labor related share of the National Rate at 67.1% for FY 2010. This represents a 2.6% reduction from the FY 2009 labor related standard 69.7%. By means of this adjustment the Non-Labor portion of the National Rate will increase by the same amount to 32.9% for FY 2010.
  5. MS-DRG Relative Weights: 
    CMS did not propose policy changes for FY 2010. CMS is soliciting comments on options to improve the standard relative weights.
  6. DSH / Labor & Delivery Days:
    CMS proposes to count in the Medicare DSH calculation patient days associated with beds for labor & delivery days even when the patient did not occupy a routine bed prior to occupying an ancillary bed because L&D beds are inpatient beds and patient days spent in L&D beds are generally payable under IP-PPS.
  7. DSH / Observation Beds & Inpatient Days:
    CMS proposes to exclude all observation beds and patient days from the Medicare DSH calculation because a patient who is receiving observation services is considered an outpatient. CMS states that this change would also apply to the available bed count used for IME purposes.
  8. DSH / Counting of Inpatient Days:
    CMS proposes to allow hospitals to accumulate the number of days in the numerator of the Medicaid fraction of the Medicare disproportionate patient percentage by date of discharge, date of admissions or dates of service. CMS proposes to preclude hospitals from “double counting” IF the should change their counting methodology.
  9. Indirect Medical Education (IME) – Capital: 
    CMS began a two year phase-out of Capital IME reimbursement factor for FY 2009 (with a 50% reduction) and a 100% elimination of the factor for FY 2010. On February 17, 2009 Congress passed and the President signed into law the American Recovery and Reinvestment Act (ARRA) which overturned the FY 2009 first year reduction. Beginning in April the factor was returned to 100% reimbursable. The ARRA did not stop the elimination of Capital IME for FY 2010. Therefore, CMS under the proposed FY 2010 rule will totally eliminate reimbursement for Capital IME.
  10. Graduate Medical Education:
    CMS has proposed to clarify the definition of a new medical education training program. CMS proposed to specify that a new hospital that begins training residents for the first time after July 1 would be permitted to submit a Medicare Graduate Medical Education (GME) affiliation agreement prior to the end of its cost reporting period in order to participate in the Medicare GME affiliated group for the remainder of the academic year.
  11. Wage Index:
    In the FY 2009 IP-PPS final rule, CMS adopted a policy to apply the wage index budget neutrality adjustment to rural and imputed floors on a statewide basis rather than a national basis. A three year phase-in began for FY 2009. CMS continues the phase in with FY 2010 using a blended wage adjustment based on 50% national and 50% statewide. The transition period ends in FY 2011 when the wage index will be fully based on a statewide budget neutrality adjustment. 
    Although a study (Acumen) was initiated to review and come up with revisions to the wage index, this study has not be completed therefore no changes are being proposed for FY 2010.
  12. Geographic Reclassification - Average Hourly Rate Criteria: 
    CMS in FY 2009 final rule adopted the policy to adjust the reclassification average hourly wage standard, comparing a reclassifying hospital’s (or county hospital groups) average hourly wage relative to the average hourly wage of the area to which it seeks reclassification. CMS announced a two year transition. For FY 2010, the average hourly wage standard is set at 86% for urban hospitals and group reclassifications and 84% for rural hospitals. For FY 2011 the standard will rise to 88% for urban and 86% for rural hospitals.
  13. CBSA Changes:
    Three new CBSA’s were established - Cape Girardeau-Jackson, Missouri-Illinois (CBSA 16020); Manhattan, Kansas (CBSA 31740); Mankato-North Mankato, Minnesota (CBSA 31860). There were also six name changes to the CBSA designations.
  14. Proposed MSDRG Reassignment for Certain Orthopedic Procedures:
    CMS is proposing to reassign cases involving patients who have received hip or knee joint replacements, but have contracted an infection that requires removal of the prosthesis and inpatient hospitalization while the infection is treated and a new prosthesis implanted.
  15. New Technologies: 
    CMS discusses applications for the new technology add-on payments for FY 2010. The list includes: Auto Laser Interstitial Thermal Therapy (FDA approval expected in early 2009); Clolar Injection (FDA approval expected in early 2009); Downstream System (FDA approval anticipated in 2nd quarter 2009); LipiScan (FDA approved in 2008); Spiration (FDA approved in 2008 however not IRB, Institutional Review Board, therefore marketing cannot begin).
  16. Emergency Medical Treatment and Labor Act (EMTALA):
    CMS is proposing to amend the EMTALA regulations regarding the waiver of EMTALA sanctions in an emergency area during an emergency period to make the regulations more consistent with the Social Security Act section 1135. CMS is also proposing to waive EMTALA sanctions for an inappropriate transfer and for the redirection or relocation of an individual to receive a medical screening examination at an alternate location only if the hospital does not discriminate based on the source of the individual’s payment or ability to pay.
  17. Critical Access Hospital (CAH) Proposal:
    CMS is proposing that a CAH may receive reasonable cost-based payment for outpatient clinical diagnostic laboratory tests furnished, to an individual receiving services directly from the CAH even if the individual is not physically present in the CAH at the time the laboratory specimen is collected. CMS is proposing that in order for the individual to be determined to be receiving services directly from the CAH, the individual must either receive outpatient services in the CAH on the same day the specimen is collected or the specimen must be collected by an employee of the CAH.


    Medicare National Adjusted Operating Standard Amounts
    Based on Full Update Factor (2.1%)
    foot-noteProposed FY 2010Final FY 2009% Change
    Labor Related (1) $3,441.26 $3,574.50 -3.728%
    Nonlabor Related (2) $1,687.30 $1,553.91 8.584%
    Total Operating (3) $5,128.56 $5,128.41 0.003%
    Capital Amount $420.67 $424.17 -0.825%
    Total Standard Amounts: $5,549.23 $5,552.58 -0.060%

    Note these are the National Operating & Capital Standard Amounts.
    They are adjusted for Wage & Hospital Specific Factors.

    1. FY 2010 Labor represents 67.1% of rate; FY 2009 was 69.7
    2. FY 2010 Non- Labor is 32.9% of rate; FY 2009 was 30.3%
    3. FY 2010 includes 1.9% reduction for coding & documentation


    Contributions by Mike Sabo of Meridian Health and the Proaction Committee.

    Opinions expressed in articles or features are those of the author(s) and do not necessarily reflect the view of the New Jersey Chapter of the HealthCare Financial Management Association, or the Publications Committee. The HealthCare Financial Management Association and the Publications Committee assume no responsibility for the accuracy or content of any article or feature on the website.

Published 17 June 2009