IPPS Final Rule Provides Payment Update

Changes to the Inpatient Prospective Payment Systems (IPPS) for acute care and long-term care hospitals and 2010 payment rates were published in a final rule Aug. 27 in the Federal Register.

According to the Washington State Hospital Association (WSHA), two of the most important changes since the proposed rule are:

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  • Postponing the proposed documentation and coding payment reduction, and
  • Not eliminating indirect medical education (IME) payments for capital as originally proposed.

The Centers for Medicare & Medicaid Services (CMS) had proposed an additional 1.9 percent reduction to the 2010 standard amount for coding improvements in 2008.

According to the Aug. 26 WSHA bulletin, other major provisions of the 2010 IPPS final rule include:

A full marketbasket update factor of 2.1 percent.

A reduction to the wage index labor share for hospitals with an index over 1.0 in 2010 (labor share for hospitals with a wage index less than 1.0 is set by law at 62 percent). In the final rule, the CMS modified its proposal, and the labor share will decrease from 69.7 percent to 68.8 percent in 2010 rather than the proposed 67.1 percent.

For wage index reclassification applications, CMS increased the comparison benchmarks in 2010 for both urban and rural hospitals. For 2011, the comparison standards will be increased again.

Existing Section 508 reclassifications will sunset in 2010. CMS does not have the authority to extend Section 508 reclassifications beyond Sept. 30 without legislation.

Reporting is required for four additional quality measures for 2011 to receive a full marketbasket update — two new chart-abstracted measures and two new structural measures:

  • SCIP-Infection-9: Postoperative urinary catheter removal on postoperative Day 1-2;
  • SCIP-Infection-10: Perioperative temperature management;
  • Participation in a systematic clinical database registry for stroke care; and
  • Participation in a systematic clinical database registry for nursing sensitive care.

A 2 percent point reduction will continue to be applied for hospitals that do not submit quality data.

The outlier threshold is increased to $23,140 in 2010 to maintain outlier payments at 5.1 percent of total payments under the IPPS.

The Disproportionate Share Hospital (DSH) calculation has changed:

  • Labor and Delivery Patient Days: CMS adopted its proposal to include patient days associated with maternity patients admitted as inpatients and receiving ancillary labor and delivery services at the time of the inpatient routine census.
  • Medicaid Eligible Days: In recognition that states report Medicaid hospital days using different methodologies, CMS will allow hospitals to report days in the numerator of the Medicaid fraction of the DSH formula based on one of three methodologies; date of admission, date of discharge, or dates of service.
  • Observation Beds: CMS adopted its proposal to exclude patient days during which observation services are furnished for both the DSH calculation and the IME calculation.

Read a complete summary of the 2010 IPPS  final rule, courtesy of WSHA.

CMS also provides a summary of changes in transmittal 1815, change request 6634, issued Sept. 9.

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