FY 2018 Proposed IPPS Rule Overview

News | Published: Tuesday, May 9, 2017 5:00 am


CMS released its Inpatient Prospective Payment System (IPPS) Proposed Rule in April, 2017. We are pleased to provide you with the following summary of the major provisions of the proposed FY 2018 Hospital IPPS Rule that was recently published. Complete this short form to download a spreadsheet that provides details on the changes to MS-DRG payments rates from FY 2017 to 2018.

Please keep in mind that CMS is soliciting comments, and proposed policy changes as well as MS-DRG payment rates are subject to change. Below is a summary.

Hospital Inpatient Prospective Payment Systems (IPPS)


  • Publication of proposed rule – April 14, 2017
  • Comments due to CMS – June 13, 2017, 5:00 pm Eastern, , and can be submitted electronically at http://www.regulations.gov.

Overall Payment Changes

  • CMS projects that the rate increase for operating payments (+1.7%) and uncompensated care payments (+1.2%) will total 2.9%
  • In total, CMS projects that total Medicare spending on inpatient hospital services will increase ~$3.1 billion compared to last year
  • On average, MS-DRG payment rates for major categories of cardiovascular services increased from 0.6% to 3.7%

MS-DRG Changes (Cardiovascular Related)

  • TAVR and Left Atrial Appendage Closure (LAAC)
    • Request was made to create a new MS-DRG when these two procedures were performed in the same operative episode
    • CMS is proposing to deny this request based on extremely low volume – these scenarios would continue to map to TAVR MS-DRGs
  • Percutaneous Mitral Valve Replacement Procedures
    • Request received to map percutaneous valve replacement procedures to the same MS-DRGs (MS-DRGs 266-277) due to inconsistent mapping for percutaneous mitral valve replacement procedures
    • CMS agrees, and is proposing to map percutaneous mitral valve and tricuspid valve replacement procedures to MS-DRGs 266-267
  • Percutaneous Tricuspid Valve Repair
    • Request received to reassign these procedures to MS-DRGs 228-229
    • Includes the FORMA Tricuspid Transcatheter Repair System
    • CMS is proposing to deny this request based on clinical advisor input, and the cases would remain in MS-DRGs 216-221

Implantable Medical Device Credits

  • CMS policy states that if a hospital receives a credit for an implanted device equal to 50% or more of the cost of the device, CMS will reduce a hospital’s MS-DRG payment
  • This policy impacts ~50 MS-DRGs, and CMS is proposing no policy changes at this time

New Technology Add-On Payments (NTAP)

  • CMS provides incremental payment (in addition to the MS-DRG payment) for technologies and drugs that qualify for NTAP
  • Proposals for current NTAP technologies (cardiovascular related):
    • CardioMEMS HF System – NTAP discontinues effective October 1, 2017
    • Praxbind Idarucizumab (to reverse life-threatening bleeding events) – NTAP continues through FY 2018 (incremental payment cap of $1,750)
    • Drug Coated Balloons – NTAP discontinues effective October 1, 2017
  • Proposals for New Applications
    • Six applications evaluated – one is cardiovascular related
    • INTUITY and Perceval Aortic Valves
      • CMS is concerned that the mechanism of action for these valves is substantially similar to existing surgical valves
      • CMS is concerned about these valves meeting the substantial clinical improvement criteria

Medicare Value Initiatives

  • Hospital Readmission Reduction Program
    • No major policy changes are proposed
    • CMS estimates 2,591 hospitals will incur a payment reduction, totaling $564 million
  • Value Based Purchasing
    • Percentage of payments impacted remains at 2.0%, and CMS estimates that $1.9 billion will be redistributed among hospitals
    • Measure proposals:
      • Remove the current 8-indicator Patient Safety for Selected Indicators (PSI 90) measure from the Safety domain beginning with the FY 2019 program year
      • Adopt the 10-indicator modified Patient Safety and Adverse Events Composite PSI 90 measure beginning in the FY 2023 program year
      • Adopt the Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode of Care for Pneumonia measure for the Efficiency and Cost Reduction domain beginning with the FY 2022 program year
      • Revise the Efficiency and Cost Reduction domain weighting beginning with the FY 2021 program year to reflect the implementation of condition-specific payment measures in the Hospital VBP Program

Site Neutrality

  • CMS is seeking comments on identifying and eliminating inappropriate payment differentials for similar services provided in the hospital inpatient and outpatient settings
    • CMS is not making any proposals in this rule – only seeking input

Physician Owned Hospitals

  • CMS is seeking comments on the appropriate role of physician owned hospitals in providing care to Medicare patients
    • CMS is not making any proposals in this rule – only seeking input

Inpatient Quality Reporting (IQR) Program

  • CMS is not proposing any changes to the measures being collected
  • CMS is proposing voluntary reporting of one new measure, the Hybrid Hospital-Wide Readmission Measure with Claims and Electronic Health Record Data, for the CY 2018 reporting period – this measure does not impact payment adjustments
  • CMS is changing the reporting requirements for electronic clinical quality measure (eCQM)
    • Hospitals may report on at least 6 (instead of 8) of available eCQMs
    • Hospitals may submit two self-selected quarters of data, instead of one full calendar year

Changes to the Medicare and Medicaid EHR Incentive Programs

  • CMS is proposing to modify EHR reporting periods in 2018 for new and returning participants attesting to CMS or State Medicaid agency from the full year to a minimum of any continuous 90-day period within CY 2018
  • CMS is proposing to add a new exception for eligible professional (EP) who demonstrate (via application) that compliance under EHR program is not possible because the certified EHR technology has been decertified under ONC’s Health IT Certification Program
  • No payment adjustment may be made in the case of an EP who furnishes substantially all of their professional services in the ASC setting.  CMS is asking for comments on two proposed alternative definitions:
    • An EP who provides 75% or more of professional services in the ASC setting in the calendar year that is two years before the payment adjustment
    • An EP who provides 90% or more of professional services in the ASC setting in the calendar year that is two years before the payment adjustment
  • CMS is seeking comments on providing flexibility in CY 2018 with regard to EHR certification requirements
    • CMS is not proposing any policy changes

Request for Information

In addition to the payment and policy proposals, CMS is releasing a Request for Information to solicit feedback on solutions to better achieve transparency, flexibility, program simplification and innovation. This will inform the discussion on future regulatory action related to inpatient and long-term hospitals.

CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice and procedural changes to better accomplish these goals. Ideas could include: recommendations regarding payment system re-design; elimination or streamlining of reporting; monitoring and documentation requirements; operational flexibility; and feedback mechanisms and data sharing that would enhance patient care, support the doctor-patient relationship in care delivery, and facilitate patient-centered care within inpatient stays at general acute care and long-term care hospitals. Ideas could also include recommendations regarding when and how CMS issues regulations and policies and how CMS can simplify rules and policies for beneficiaries, clinicians, providers and suppliers.

In responding to the RFI, CMS should be provided with clear and concise proposals that include data and specific examples. If the proposals involve novel legal questions, analysis regarding CMS’ authority is welcome. CMS will not respond to RFI comment submissions in the final rule, but rather will actively consider all input in developing future regulatory proposals or future sub-regulatory guidance



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