Medicare Program; FY 2018 Inpatient Psychiatric Facilities Prospective Payment System–Rate Update
Notice with comment period.
RIN Number: "RIN 0938-AS97"
Citation: "82 FR 36771"
Document Number: "CMS-1673-NC"
Page Number: "36771"
"Notices"
SUMMARY: This notice with comment period updates the prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs), which include freestanding IPFs and psychiatric units of an acute care hospital or critical access hospital. These changes are applicable to IPF discharges occurring during the fiscal year (FY) beginning
DATES: The updated IPF prospective payment rates are effective for discharges occurring on or after
Comment Date: To be assured consideration, comments must be received at one of the addresses provided below, no later than
ADDRESSES: In commenting, refer to file code CMS-1673-NC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one of the ways listed):
1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the "Submit a comment" instructions.
2. By regular mail. You may mail written comments to the following address ONLY:
Please allow sufficient time for mailed comments to be received before the close of the comment period.
3. By express or overnight mail. You may send written comments to the following address ONLY:
4. By hand or courier. Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses:
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If you intend to deliver your comments to the
Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: The IPF Payment Policy mailbox at [email protected] for general information.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to view public comments.
Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the
Availability of Certain Tables Exclusively Through the
Tables setting forth the fiscal year (FY) 2018 Wage Index for Urban Areas Based on Core-Based Statistical Area (CBSA) Labor Market Areas and the Wage Index Based on CBSA Labor Market Areas for Rural Areas are available exclusively through the
In addition, tables showing the complete listing of ICD-10 Clinical Modification (CM) and Procedure Coding System (PCS) codes underlying the FY 2018 Inpatient Psychiatric Facilities (IPF) Prospective Payment System (PPS) for comorbidity adjustment, code first, and Electroconvulsive Therapy (ECT) are available online at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientPsychFacilPPS/tools.html. Addendum B to this notice with comment period only shows the table of changes to the ICD-10-CM/PCS codes which affect FY 2018 IPF PPS comorbidity categories.
To assist readers in referencing sections contained in this document, we are providing the following table of contents.
Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Impacts
II. Background
A. Overview of the Legislative Requirements of the IPF PPS
B. Overview of the IPF PPS
C. Annual Requirements for Updating the IPF PPS
III. Provisions of the FY 2018 IPF PPS Notice
A. Updated FY 2018 Market Basket for the IPF PPS
1. Background
2. FY 2018 IPF Market Basket Update
3. IPF Labor-Related Share
B. Updates to the IPF PPS Rates for FY Beginning
1. Determining the Standardized Budget-Neutral Federal Per Diem Base Rate
2. Update of the Federal Per Diem Base Rate and Electroconvulsive Therapy Payment per Treatment
C. Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
2. IPF-PPS Patient-Level Adjustments
a. MS-DRG Assignment
. Code First
b. Payment for Comorbid Conditions
3. Patient Age Adjustments
4. Variable Per Diem Adjustments
D. Updates to the IPF PPS Facility-Level Adjustments
1. Wage Index Adjustment
a. Background
b. Updated Wage Index for FY 2018
c. OMB Bulletins
d. Adjustment for Rural Location
e. Budget Neutrality Adjustment
2. Teaching Adjustment
3. Cost of Living Adjustment for IPFs Located in
4. Adjustment for IPFs with a
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
2. Update to the Outlier Fixed Dollar Loss Threshold Amount
3. Update to IPF Cost-to-Charge Ratio Ceilings
IV. Update on IPF PPS Refinements
V. Waiver of Notice and Comment
VI. Request for Information on CMS Flexibilities and Efficiencies
VII. Collection of Information Requirements
VIII. Response to Comments
IX. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Anticipated Effects
1. Budgetary Impact
2. Impact on Providers
3. Results
4. Effect on Beneficiaries
5. Regulatory Review Costs
6. Reducing Regulation and Controlling Regulatory Costs
D. Alternatives Considered
E. Accounting Statement
Addendum A--IPF PPS FY 2018 Rates and Adjustment Factors
Addendum B--Changes to the FY 2018 ICD-10-CM/PCS Code Sets Which Affect the FY 2018 IPF PPS Comorbidity Categories and the Code First List
Acronyms
Because of the many terms to which we refer by acronym in this notice with comment period, we are listing the acronyms used and their corresponding meanings in alphabetical order below:
ADC Average Daily Census
BBRA Medicare, Medicaid and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
CBSA Core-Based Statistical Area
CCR Cost-to-Charge Ratio
CPI Consumer Price Index
CPI-U Consumer Price Index for all Urban Consumers
CY Calendar Year
DRGs Diagnosis-Related Groups
ECT Electroconvulsive Therapy
ESRD End State Renal Disease
FTE Full-time equivalent
FY Federal Fiscal Year (
GDP Gross Domestic Product
GME Graduate Medical Education
HCRIS Healthcare Cost Report Information System
ICD-9-CM International Classification of Diseases, 9th Revision, Clinical Modification
ICD-10-CM International Classification of Diseases, 10th Revision, Clinical Modification
ICD-10-PCS International Classification of Diseases, 10th Revision, Procedure Coding System
IPF Inpatient Psychiatric Facility
IPFQR Inpatient Psychiatric Facilities Quality Reporting
IPPS Inpatient Prospective Payment System
IRFs Inpatient Rehabilitation Facilities
LOS Length of Stay
LRS Labor-related Share
LTCHs Long-Term Care Hospitals
MAC Medicare Administrative Contractor
MedPAR Medicare Provider Analysis and Review File
MFP Multifactor Productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003
MSA Metropolitan Statistical Area
NDAA National Defense Authorization Act
OPPS Outpatient Prospective Payment System
POS Provider of Services
PPS Prospective Payment System
RFA Regulatory Flexibility Act
RFI Request for Information
RPL Rehabilitation, Psychiatric, and Long-Term Care
RY Rate Year
SCHIP State Children's Health Insurance Program
SNF Skilled Nursing Facility
TEFRA Tax Equity and Fiscal Responsibility Act of 1982 (Pub. L. 97-248)
I. Executive Summary
A. Purpose
This notice with comment period updates the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by IPFs for discharges occurring during the FY beginning
B. Summary of the Major Provisions
In this notice with comment period, we are updating the IPF Prospective Payment System (PPS), as specified in 42 CFR 412.428. The updates include the following:
* For FY 2018, we adjusted the 2012-based IPF market basket update (2.6 percent) by a reduction for economy-wide productivity (0.6 percentage point) as required by section 1886(s)(2)(A)(i) of the Social Security Act (the Act). We further reduced the 2012-based IPF market basket update by 0.75 percentage point as required by section 1886(s)(2)(A)(ii) of the Act, resulting in an estimated IPF payment rate update of 1.25 percent for FY 2018.
* The 2012-based IPF market basket resulted in a labor-related share of 75.0 percent for FY 2018.
* We updated the IPF PPS per diem rate from
* We updated the ECT payment per treatment from
* We used the updated labor-related share of 75.0 percent (based on the 2012-based IPF market basket) and CBSA rural and urban wage indices for FY 2018, and established a wage index budget-neutrality adjustment of 1.0006. The FY 2018 IPF wage index includes minor updates to a few CBSA delineations based upon a
* We updated the fixed dollar loss threshold amount from
C. Summary of Impacts
Provision description Total transfers FY 2018 IPF PPS payment The overall economic impact of this notice with update comment period is an estimated$45 million in increased payments to IPFs during FY 2018.
II. Background
A. Overview of the Legislative Requirements for the IPF PPS
Section 124 of the Medicare, Medicaid, and SCHIP (State Children's Health Insurance Program) Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) required the establishment and implementation of an IPF PPS. Specifically, section 124 of the BBRA mandated that the Secretary of the
Section 405(g)(2) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) extended the IPF PPS to distinct part psychiatric units of critical access hospitals (CAHs).
Sections 3401(f) and 10322 of the Patient Protection and Affordable Care Act (Pub. L. 111-148) as amended by section 10319(e) of that Act and by section 1105(d) of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to jointly as "the Affordable Care Act") added subsection (s) to section 1886 of the Act.
Section 1886(s)(1) of the Act titled "Reference to Establishment and Implementation of System," refers to section 124 of the BBRA, which relates to the establishment of the IPF PPS.
Section 1886(s)(2)(A)(i) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the IPF PPS for the Rate Year (RY) beginning in 2012 (that is, a RY that coincides with a FY) and each subsequent RY. As noted in our previous IPF PPS notice (the FY 2017 IPF PPS notice), for the RY beginning in 2016 (that is, FY 2017), the productivity adjustment currently in place is equal to 0.3 percent.
Section 1886(s)(2)(A)(ii) of the Act requires the application of an "other adjustment" that reduces any update to an IPF PPS base rate by percentages specified in section 1886(s)(3) of the Act for the RY beginning in 2010 through the RY beginning in 2019. As noted in our previous (FY 2017) IPF PPS notice, for the RY beginning in 2016 (that is, FY 2017), section 1886(s)(3)(D) of the Act requires that the reduction currently in place be equal to 0.2 percentage point.
Sections 1886(s)(4)(A) and 1886(s)(4)(B) of the Act require that for RY 2014 and each subsequent rate year, IPFs that fail to report required quality data with respect to such a rate year shall have their annual update to a standard federal rate for discharges reduced by 2.0 percentage points. This may result in an annual update being less than 0.0 for a rate year, and may result in payment rates for the upcoming rate year being less than such payment rates for the preceding rate year. Any reduction for failure to report required quality data shall apply only to the rate year involved, and the Secretary shall not take into account such reduction in computing the payment amount for a subsequent rate year. More information about the IPF Quality Reporting Program is available in the
To implement and periodically update these provisions, we have published various proposed and final rules and notices in the
B. Overview of the IPF PPS
The
The IPF PPS established the federal per diem base rate for each patient day in an IPF derived from the national average daily routine operating, ancillary, and capital costs in IPFs in FY 2002. The average per diem cost was updated to the midpoint of the first year under the IPF PPS, standardized to account for the overall positive effects of the IPF PPS payment adjustments, and adjusted for budget-neutrality.
The federal per diem payment under the IPF PPS is comprised of the federal per diem base rate described previously and certain patient- and facility-level payment adjustments that were found in the regression analysis to be associated with statistically significant per diem cost differences.
The patient-level adjustments include age,
The IPF PPS provides additional payment policies for: Outlier cases; interrupted stays; and a per treatment payment for patients who undergo ECT. During the IPF PPS mandatory 3-year transition period, stop-loss payments were also provided; however, since the transition ended in 2008, these payments are no longer available.
A complete discussion of the regression analysis that established the IPF PPS adjustment factors appears in the
Section 124 of the BBRA did not specify an annual rate update strategy for the IPF PPS and was broadly written to give the Secretary discretion in establishing an update methodology. Therefore, in the
* Calculate the final federal per diem base rate to be budget-neutral for the 18-month period of
* Use a
* Allow the IPF PPS first update to be effective for discharges on or after
In RY 2012, we proposed and finalized switching the IPF PPS payment rate update from a rate year that begins on
C. Annual Requirements for Updating the IPF PPS
In
In that final rule, we explained the reasons for delaying an update to the adjustment factors, derived from the regression analysis, until we have IPF PPS data that include as much information as possible regarding the patient-level characteristics of the population that each IPF serves. We indicated that we did not intend to update the regression analysis and the patient-level and facility-level adjustments until we complete that analysis. Until that analysis is complete, we stated our intention to publish a notice in the
In the
Our most recent IPF PPS annual update occurred in an
III. Provisions of the FY 2018 IPF PPS Notice
A. Updated FY 2018 Market Basket for the IPF PPS
1. Background
The input price index that was used to develop the IPF PPS was the "
Beginning with the
Beginning with the RY 2012 IPF PPS final rule (76 FR 26432), IPF PPS payments were updated using a 2008-based RPL market basket reflecting the operating and capital cost structures for freestanding IRFs, freestanding IPFs, and LTCHs. The major changes for RY 2012 included: Updating the base year from FY 2002 to FY 2008; using a more specific composite chemical price proxy; breaking the professional fees cost category into two separate categories (Labor-related and Non-labor-related); and adding two additional cost categories (Administrative and
In the FY 2016 IPF PPS proposed rule, we proposed to create a 2012-based IPF market basket, using Medicare cost report data for both freestanding and hospital-based IPFs. We first expressed our interest in exploring the possibility of creating a stand-alone IPF market basket in the
2. FY 2018 IPF Market Basket Update
For FY 2018 (beginning
Section 1886(s)(2)(A)(i) of the Act requires the application of the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act to the IPF PPS for the RY beginning in 2012 (a RY that coincides with a FY) and each subsequent RY. For this FY 2018 IPF PPS Notice, based on IGI's second quarter 2017 forecast, the MFP adjustment for FY 2018 (the 10-year moving average of MFP for the period ending FY 2018) is projected to be 0.6 percent. We reduced the 2.6 percent IPF market basket update by this 0.6 percentage point productivity adjustment, as mandated by the Act. For more information on the productivity adjustment, please see the discussion in the FY 2016 IPF PPS final rule (80 FR 46675).
In addition, for FY 2018 the 2012-based IPF PPS market basket update is further reduced by 0.75 percentage point as required by sections 1886(s)(2)(A)(ii) and 1886(s)(3)(E) of the Act. This results in an estimated FY 2018 IPF PPS payment rate update of 1.25 percent (2.6-0.6-0.75 = 1.25).
3. IPF Labor-Related Share
Due to variations in geographic wage levels and other labor-related costs, we believe that payment rates under the IPF PPS should continue to be adjusted by a geographic wage index, which would apply to the labor-related portion of the federal per diem base rate (hereafter referred to as the labor-related share).
The labor-related share is determined by identifying the national average proportion of total costs that are related to, influenced by, or vary with the local labor market. We continue to classify a cost category as labor-related if the costs are labor-intensive and vary with the local labor market.
Based on our definition of the labor-related share and the cost categories in the 2012-based IPF market basket, we are continuing to include in the labor-related share the sum of the relative importance of Wages and Salaries; Employee Benefits; Professional Fees: Labor-Related; Administrative and
B. Updates to the IPF PPS Rates for FY Beginning
The IPF PPS is based on a standardized federal per diem base rate calculated from the IPF average per diem costs and adjusted for budget-neutrality in the implementation year. The federal per diem base rate is used as the standard payment per day under the IPF PPS and is adjusted by the patient-level and facility-level adjustments that are applicable to the IPF stay. A detailed explanation of how we calculated the average per diem cost appears in the
1. Determining the Standardized Budget-Neutral Federal Per Diem Base Rate
Section 124(a)(1) of the BBRA required that we implement the IPF PPS in a budget-neutral manner. In other words, the amount of total payments under the IPF PPS, including any payment adjustments, must be projected to be equal to the amount of total payments that would have been made if the IPF PPS were not implemented. Therefore, we calculated the budget-neutrality factor by setting the total estimated IPF PPS payments to be equal to the total estimated payments that would have been made under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248) methodology had the IPF PPS not been implemented. A step-by-step description of the methodology used to estimate payments under the TEFRA payment system appears in the
Under the IPF PPS methodology, we calculated the final federal per diem base rate to be budget-neutral during the IPF PPS implementation period (that is, the 18-month period from
Next, we standardized the IPF PPS federal per diem base rate to account for the overall positive effects of the IPF PPS payment adjustment factors by dividing total estimated payments under the TEFRA payment system by estimated payments under the IPF PPS. Additional information concerning this standardization can be found in the
The federal per diem base rate has been updated in accordance with applicable statutory requirements and
IPFs must include a valid procedure code for ECT services provided to IPF beneficiaries in order to bill for ECT services, as described in our Medicare Claims Processing Manual, Chapter 3, Section 190.7.3 (available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.) There were no changes to the ECT procedure codes used on IPF claims as a result of the update to the ICD-10-PCS code set for FY 2018.
2. Update of the Federal per Diem Base Rate and Electroconvulsive Therapy Payment per Treatment
The current (FY 2017) federal per diem base rate is
Section 1886(s)(4)(A)(i) of the Act requires that, for RY 2014 and each subsequent RY, in the case of an IPF that fails to report required quality data with respect to such rate year, the Secretary shall reduce any annual update to a standard federal rate for discharges during the RY by 2.0 percentage points. Therefore, we are applying a 2.0 percentage point reduction to the federal per diem base rate and the ECT payment per treatment as follows: For IPFs that failed to submit quality reporting data under the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program, we are applying a -0.75 percent payment rate update (that is, 1.25 percent reduced by 2 percentage points in accordance with section 1886(s)(4)(A)(ii) of the Act, which results in a negative update percentage) and the wage index budget-neutrality factor of 1.0006 to the FY 2017 federal per diem base rate of
C. Updates to the IPF PPS Patient-Level Adjustment Factors
1. Overview of the IPF PPS Adjustment Factors
The IPF PPS payment adjustments were derived from a regression analysis of 100 percent of the FY 2002 MedPAR data file, which contained 483,038 cases. For a more detailed description of the data file used for the regression analysis, see the
2. IPF-PPS Patient-Level Adjustments
The IPF PPS includes payment adjustments for the following patient-level characteristics: Medicare Severity Diagnosis Related Groups (MS-DRGs) assignment of the patient's principal diagnosis, selected comorbidities, patient age, and the variable per diem adjustments.
a. MS-DRG Assignment
We believe it is important to maintain the same diagnostic coding and DRG classification for IPFs that are used under the Inpatient Prospective Payment System (IPPS) for providing psychiatric care. For this reason, when the IPF PPS was implemented for cost reporting periods beginning on or after
The IPF PPS includes payment adjustments for designated psychiatric DRGs assigned to the claim based on the patient's principal diagnosis. The DRG adjustment factors were expressed relative to the most frequently reported psychiatric DRG in FY 2002, that is, DRG 430 (psychoses). The coefficient values and adjustment factors were derived from the regression analysis. Mapping the DRGs to the MS-DRGs resulted in the current 17 IPF MS-DRGs, instead of the original 15 DRGs, for which the IPF PPS provides an adjustment. For the FY 2018 update, we are not making any changes to the IPF MS-DRG adjustment factors.
In FY 2015 rulemaking (79 FR 45945 through 45947), we proposed and finalized conversions of the ICD-9-CM-based MS-DRGs to ICD-10-CM/PCS-based MS-DRGs, which were implemented on
For FY 2018, we will continue to make a payment adjustment for psychiatric diagnoses that group to one of the existing 17 IPF MS-DRGs listed in Addendum A of this notice with comment period. Psychiatric principal diagnoses that do not group to one of the 17 designated DRGs will still receive the federal per diem base rate and all other applicable adjustments, but the payment would not include a DRG adjustment.
The diagnoses for each IPF MS-DRG will be updated as of
Code First
As discussed in the ICD-10-CM Official Guidelines for Coding and Reporting, certain conditions have both an underlying etiology and multiple body system manifestations due to the underlying etiology. For such conditions, the ICD-10-CM has a coding convention that requires the underlying condition be sequenced first followed by the manifestation. Wherever such a combination exists, there is a "use additional code" note at the etiology code, and a "code first" note at the manifestation code. These instructional notes indicate the proper sequencing order of the codes (etiology followed by manifestation). In accordance with the ICD-10-CM Official Guidelines for Coding and Reporting, when a primary (psychiatric) diagnosis code has a "code first" note, the provider would follow the instructions in the ICD-10-CM text. The submitted claim goes through the CMS processing system, which will identify the primary diagnosis code as non-psychiatric and search the secondary codes for a psychiatric code to assign a DRG code for adjustment. The system will continue to search the secondary codes for those that are appropriate for comorbidity adjustment.
For more information on "code first" policy, please see the
b. Payment for Comorbid Conditions
The intent of the comorbidity adjustments is to recognize the increased costs associated with comorbid conditions by providing additional payments for certain existing medical or psychiatric conditions that are expensive to treat. In the
Comorbidities are specific patient conditions that are secondary to the patient's principal diagnosis and that require treatment during the stay. Diagnoses that relate to an earlier episode of care and have no bearing on the current hospital stay are excluded and must not be reported on IPF claims. Comorbid conditions must exist at the time of admission or develop subsequently, and affect the treatment received, length of stay (LOS), or both treatment and LOS.
For each claim, an IPF may receive only one comorbidity adjustment within a comorbidity category, but it may receive an adjustment for more than one comorbidity category. Current billing instructions for discharge claims, on or after
The comorbidity adjustments were determined based on the regression analysis using the diagnoses reported by IPFs in FY 2002. The principal diagnoses were used to establish the DRG adjustments and were not accounted for in establishing the comorbidity category adjustments, except where ICD-9-CM "code first" instructions apply. In a "code first" situation, the submitted claim goes through the CMS processing system, which will identify the primary diagnosis code as non-psychiatric and search the secondary codes for a psychiatric code to assign a DRG code for adjustment. The system will continue to search the secondary codes for those that are appropriate for comorbidity adjustment.
As noted previously, it is our policy to maintain the same diagnostic coding set for IPFs that is used under the IPPS for providing the same psychiatric care. The 17 comorbidity categories formerly defined using ICD-9-CM codes were converted to ICD-10-CM/PCS in the FY 2015 IPF PPS final rule (79 FR 45947 through 45955). The goal for converting the comorbidity categories is referred to as replication, meaning that the payment adjustment for a given patient encounter is the same after ICD-10-CM implementation as it would be if the same record had been coded in ICD-9-CM and submitted prior to ICD-10-CM/PCS implementation on
We have updated the ICD-10-CM/PCS codes which are associated with the existing IPF PPS comorbidity categories, based upon the FY 2018 update to the ICD-10-CM/PCS code set. The FY 2018 ICD-10-CM/PCS updates included additions or deletions which affected the comorbidity categories for Oncology (both the Treatment and Procedures lists). These updates are detailed in Addendum B of this notice.
In accordance with the policy established in the FY 2015 IPF PPS final rule (79 FR 45949 through 45952), we reviewed all new FY 2018 ICD-10-CM codes to remove site unspecified codes from the new FY 2018 ICD-10-CM/PCS codes in instances where more specific codes are available. There were no new FY 2018 ICD-10-CM/PCS codes that were site unspecified. Please see Addendum B of this notice with comment period for a table of changes to the ICD-10-CM/PCS codes which affect FY 2018 IPF PPS comorbidity categories.
3. Patient Age Adjustments
As explained in the
4. Variable per Diem Adjustments
We explained in the
For FY 2018, we will use the variable per diem adjustment factors currently in effect as shown in Addendum A of this notice with comment period. A complete discussion of the variable per diem adjustments appears in the
D. Updates to the IPF PPS Facility-Level Adjustments
The IPF PPS includes facility-level adjustments for the wage index, IPFs located in rural areas, teaching IPFs, cost of living adjustments for IPFs located in
1. Wage Index Adjustment
a. Background
As discussed in the
b. Updated Wage Index for FY 2018
Since the inception of the IPF PPS, we have used the pre-floor, pre-reclassified acute care hospital wage index in developing a wage index to be applied to IPFs, because there is not an IPF-specific wage index available. We believe that IPFs compete in the same labor markets as acute care hospitals, so the pre-floor, pre-reclassified hospital wage index should reflect IPF labor costs. As discussed in the
We apply the wage index adjustment to the labor-related portion of the federal rate, which changed from 75.1 percent in FY 2017 to 75.0 percent in FY 2018. This percentage reflects the labor-related share of the 2012-based IPF market basket for FY 2018 (see section III.A.3 of this notice with comment period).
c. OMB Bulletins
OMB publishes bulletins regarding Core-Based Statistical Area (CBSA) changes, including changes to CBSA numbers and titles. In the
In the
In accordance with our established methodology, we have historically adopted any CBSA changes that are published in the OMB bulletin that corresponds with the hospital wage index used to determine the IPF PPS wage index. For the FY 2015 IPF wage index, we used the FY 2014 pre-floor, pre-reclassified hospital wage index to adjust the IPF PPS payments. On
Because the FY 2014 pre-floor, pre-reclassified hospital wage index was finalized prior to the issuance of this Bulletin, the FY 2015 IPF PPS wage index, which was based on the FY 2014 pre-floor, pre-reclassified hospital wage index, did not reflect OMB's new area delineations based on the 2010 Census. According to OMB, "[t]his bulletin provides the delineations of all Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan Statistical Areas, Combined Statistical Areas, and New England City and Town Areas in
Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. On
The bulletin establishes revised delineations for the Nation's Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas. The bulletin also provides delineations of Metropolitan Divisions as well as delineations of New England City and Town Areas. OMB Bulletin No. 15-01 made the following changes that are relevant to the FY 2018 IPF wage index:
*
* The county of
* The name of
In accordance with our longstanding policy, the IPF PPS continues to use the latest labor market area delineations available as soon as is reasonably possible to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. As discussed in the FY 2017 IPPS and
In FY 2016, we applied a 1-year transition period when implementing the OMB delineations described in the
In summary, as the changes made in the
d. Adjustment for Rural Location
In the
As noted in section III.D.1.c of this notice with comment period, we adopted the
In the FY 2016 IPF PPS final rule, we implemented a budget-neutral 3-year phase-out of the rural adjustment for the existing FY 2015 rural IPFs that became urban in FY 2016 and that experienced a loss in payments due to changes from the new CBSA delineations (80 FR 46689 to 46690). This policy allowed rural IPFs that were classified as urban in FY 2016 to receive two-thirds of the IPF PPS rural adjustment for FY 2016. For FY 2017, these IPFs will receive one-third of the IPF PPS rural adjustment. For FY 2018 (and subsequent years), these IPFs will not receive any rural adjustment. FY 2018 is the third year of the 3-year rural adjustment phase-out. Therefore, these IPFs that were classified as rural in FY 2015, but were changed to urban in FY 2016 as a result of the
Additionally, as noted previously in section III.D.1.c. of this notice with comment period, the
e. Budget Neutrality Adjustment
Changes to the wage index are made in a budget-neutral manner so that updates do not increase expenditures. Therefore, for FY 2018, we will continue to apply a budget-neutrality adjustment in accordance with our existing budget-neutrality policy. This policy requires us to update the wage index in such a way that total estimated payments to IPFs for FY 2018 are the same with or without the changes (that is, in a budget-neutral manner) by applying a budget neutrality factor to the IPF PPS rates. We use the following steps to ensure that the rates reflect the update to the wage indexes (based on the FY 2013 hospital cost report data) and the labor-related share in a budget-neutral manner:
Step 1. Simulate estimated IPF PPS payments, using the FY 2017 IPF wage index values (available on the CMS Web site) and labor-related share (as published in the FY 2017 IPF PPS notice (81 FR 50506, and 50508 to 50509)).
Step 2. Simulate estimated IPF PPS payments using the FY 2018 IPF wage index values (available on the CMS Web site) and labor-related share (based on the latest available data as discussed previously).
Step 3. Divide the amount calculated in step 1 by the amount calculated in step 2. The resulting quotient is the FY 2018 budget-neutral wage adjustment factor of 1.0006.
Step 4. Apply the FY 2018 budget-neutral wage adjustment factor from step 3 to the FY 2017 IPF PPS per diem rate after the application of the market basket update described in section III.A.2 of this notice with comment period, to determine the FY 2018 IPF PPS per diem rate.
2. Teaching Adjustment
In the
Medicare makes direct GME payments (for direct costs such as resident and teaching physician salaries, and other direct teaching costs) to all teaching hospitals including those paid under a PPS, and those paid under the TEFRA rate-of-increase limits. These direct GME payments are made separately from payments for hospital operating costs and are not part of the IPF PPS. The direct GME payments do not address the estimated higher indirect operating costs teaching hospitals may face.
The results of the regression analysis of FY 2002 IPF data established the basis for the payment adjustments included in the
We established the teaching adjustment in a manner that limited the incentives for IPFs to add FTE residents for the purpose of increasing their teaching adjustment. We imposed a cap on the number of FTE residents that may be counted for purposes of calculating the teaching adjustment. The cap limits the number of FTE residents that teaching IPFs may count for the purpose of calculating the IPF PPS teaching adjustment, not the number of residents teaching institutions can hire or train. We calculated the number of FTE residents that trained in the IPF during a "base year" and used that FTE resident number as the cap. An IPF's FTE resident cap is ultimately determined based on the final settlement of the IPF's most recent cost report filed before
In the regression analysis, the logarithm of the teaching variable had a coefficient value of 0.5150. We converted this cost effect to a teaching payment adjustment by treating the regression coefficient as an exponent and raising the teaching variable to a power equal to the coefficient value. We note that the coefficient value of 0.5150 was based on the regression analysis holding all other components of the payment system constant. A complete discussion of how the teaching adjustment was calculated appears in the
3. Cost of Living Adjustment for IPFs Located in
The IPF PPS includes a payment adjustment for IPFs located in
We analyzed the effect of applying a COLA to payments for IPFs located in
A COLA for IPFs located in
The COLA factors through 2009 (before being reduced by locality payments) are published on the
We note that the COLA areas for
*
*
*
* Rest of the
As stated in the
When we published the proposed COLA factors in the
In the FY 2013 IPPS/LTCH final rule (77 FR 53700 through 53701), we established a new methodology to update the COLA factors for
Specifically, the FY 2018 IPPS/LTCH PPS final rule updates the 2009 OPM COLA factors (as these are the last COLA factors OPM published prior to transitioning from COLAs to locality pay) by a comparison of the growth in the Consumer Price Indices (CPIs) for
BLS publishes the CPI for All Items for
Reweighted indexes were created using BLS data for 2009 through 2016, which is the most recent data available at the time of the FY 2018 IPPS/LTCH final rule. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50985 through 50987), reweighted indexes were created based on the FY 2010-based IPPS market basket (which was adopted for the FY 2014 IPPS update) and BLS data for 2009 through 2012 (the most recent BLS data at the time of the FY 2014 IPPS/LTCH PPS rulemaking). We continue to believe this methodology is appropriate for IPFs because we continue to make a COLA for IPFs located in
Under the COLA factor update methodology established in the FY 2013 IPPS/LTCH final rule, CMS exercised its discretionary authority to adjust payments to hospitals located in
The COLA factors that we are establishing for FY 2018 to adjust the nonlabor-related portion of the per diem amount for IPFs located in
Table 1--Comparison of IPF PPS Cost-of-Living Adjustment Factors: IPFs Located inAlaska and Hawaii Area FY 2015 FY 2018 through 2017 Alaska: City of Anchorage and 80-kilometer (50-mile) radius by 1.23 1.25 road City of Fairbanks and 80-kilometer (50-mile) radius by 1.23 1.25 road City of Juneau and 80-kilometer (50-mile) radius by road 1.23 1.25 Rest of Alaska 1.25 1.25 Hawaii: City and County of Honolulu 1.25 1.25 County of Hawaii 1.19 1.21 County of Kauai 1.25 1.25 County of Maui and County of Kalawao 1.25 1.25
As noted in the FY 2018 IPPS/LTCH PPS final rule, the reweighted CPI for
Similarly, the reweighted CPI for
The IPF PPS COLA factors for FY 2018 are also shown in Addendum A of this notice with comment period.
4. Adjustment for IPFs With a
The IPF PPS includes a facility-level adjustment for IPFs with qualifying EDs. We provide an adjustment to the federal per diem base rate to account for the costs associated with maintaining a full-service ED. The adjustment is intended to account for ED costs incurred by a freestanding psychiatric hospital with a qualifying ED or a distinct part psychiatric unit of an acute care hospital or a CAH, for preadmission services otherwise payable under the Medicare Outpatient Prospective Payment System (OPPS), furnished to a beneficiary on the date of the beneficiary's admission to the hospital and during the day immediately preceding the date of admission to the IPF (see
The ED adjustment is incorporated into the variable per diem adjustment for the first day of each stay for IPFs with a qualifying ED. Those IPFs with a qualifying ED receive an adjustment factor of 1.31 as the variable per diem adjustment for day 1 of each patient stay. If an IPF does not have a qualifying ED, it receives an adjustment factor of 1.19 as the variable per diem adjustment for day 1 of each patient stay.
The ED adjustment is made on every qualifying claim except as described below. As specified in
Therefore, when patients are discharged from an acute care hospital or CAH and admitted to the same hospital or CAH's psychiatric unit, the IPF receives the 1.19 adjustment factor as the variable per diem adjustment for the first day of the patient's stay in the IPF. For FY 2018, we will continue to retain the 1.31 adjustment factor for IPFs with qualifying EDs. A complete discussion of the steps involved in the calculation of the ED adjustment factor appears in the
E. Other Payment Adjustments and Policies
1. Outlier Payment Overview
The IPF PPS includes an outlier adjustment to promote access to IPF care for those patients who require expensive care and to limit the financial risk of IPFs treating unusually costly patients. In the
We make outlier payments for discharges in which an IPF's estimated total cost for a case exceeds a fixed dollar loss threshold amount (multiplied by the IPF's facility-level adjustments) plus the federal per diem payment amount for the case.
In instances when the case qualifies for an outlier payment, we pay 80 percent of the difference between the estimated cost for the case and the adjusted threshold amount for days 1 through 9 of the stay (consistent with the median LOS for IPFs in FY 2002), and 60 percent of the difference for day 10 and thereafter. We established the 80 percent and 60 percent loss sharing ratios because we were concerned that a single ratio established at 80 percent (like other Medicare PPSs) might provide an incentive under the IPF per diem payment system to increase LOS in order to receive additional payments.
After establishing the loss sharing ratios, we determined the current fixed dollar loss threshold amount through payment simulations designed to compute a dollar loss beyond which payments are estimated to meet the 2 percent outlier spending target. Each year when we update the IPF PPS, we simulate payments using the latest available data to compute the fixed dollar loss threshold so that outlier payments represent 2 percent of total projected IPF PPS payments.
2. Update to the Outlier Fixed Dollar Loss Threshold Amount
In accordance with the update methodology described in
Based on an analysis of the latest available data (the
3. Update to IPF Cost-to-Charge Ratio Ceilings
Under the IPF PPS, an outlier payment is made if an IPF's cost for a stay exceeds a fixed dollar loss threshold amount plus the IPF PPS amount. In order to establish an IPF's cost for a particular case, we multiply the IPF's reported charges on the discharge bill by its overall cost-to-charge ratio (CCR). This approach to determining an IPF's cost is consistent with the approach used under the IPPS and other PPSs. In the
As we indicated in the
To determine the rural and urban ceilings, we multiplied each of the standard deviations by 3 and added the result to the appropriate national CCR average (either rural or urban). The upper threshold CCR for IPFs in FY 2018 is 1.9634 for rural IPFs, and 1.7071 for urban IPFs, based on CBSA-based geographic designations. If an IPF's CCR is above the applicable ceiling, the ratio is considered statistically inaccurate, and we assign the appropriate national (either rural or urban) median CCR to the IPF.
We apply the national CCRs to the following situations:
* New IPFs that have not yet submitted their first Medicare cost report. We continue to use these national CCRs until the facility's actual CCR can be computed using the first tentatively or final settled cost report.
* IPFs whose overall CCR is in excess of three standard deviations above the corresponding national geometric mean (that is, above the ceiling).
* Other IPFs for which the Medicare Administrative Contractor (MAC) obtains inaccurate or incomplete data with which to calculate a CCR.
We are updating the FY 2018 national median and ceiling CCRs for urban and rural IPFs based on the CCRs entered in the latest available IPF PPS Provider Specific File. Specifically, for FY 2018, to be used in each of the three situations listed previously, using the most recent CCRs entered in the CY 2017 Provider Specific File, we estimate a national median CCR of 0.5930 for rural IPFs and a national median CCR of 0.4420 for urban IPFs. These calculations are based on the IPF's location (either urban or rural) using the CBSA-based geographic designations.
A complete discussion regarding the national median CCRs appears in the
IV. Update on IPF PPS Refinements
For RY 2012, we identified several areas of concern for future refinement, and we invited comments on these issues in our RY 2012 proposed and final rules. For further discussion of these issues and to review the public comments, we refer readers to the RY 2012 IPF PPS proposed rule (76 FR 4998) and final rule (76 FR 26432).
We have delayed making refinements to the IPF PPS until we have completed a thorough analysis of IPF PPS data on which to base those refinements. Specifically, we will delay updating the adjustment factors derived from the regression analysis until we have IPF PPS data that include as much information as possible regarding the patient-level characteristics of the population that each IPF serves. We have begun and will continue the necessary analysis to better understand IPF industry practices so that we may refine the IPF PPS in the future, as appropriate.
As we noted in the FY 2016 IPF PPS final rule (80 FR 46693 to 46694), our preliminary analysis of 2012 to 2013 IPF data found that over 20 percent of IPF stays reported no ancillary costs, such as laboratory and drug costs, in their cost reports, or laboratory or drug charges on their claims. Because we expect that most patients requiring hospitalization for active psychiatric treatment will need drugs and laboratory services, we again remind providers that the IPF PPS per diem payment rate includes the cost of all ancillary services, including drugs and laboratory services. We pay only the IPF for services furnished to a Medicare beneficiary who is an inpatient of that IPF, except for certain professional services, and payments are considered to be payments in full for all inpatient hospital services provided directly or under arrangement (see 42 CFR 412.404(d)), as specified in 42 CFR 409.10.
We are continuing to analyze data from claims and cost reports that do not include ancillary charges or costs, and will be sharing our findings with the
V. Waiver of Notice and Comment
We ordinarily publish a notice of proposed rulemaking in the
We find it is unnecessary to undertake notice and comment rulemaking for this action because the updates in this notice with comment period do not reflect any substantive changes in policy, but merely reflect the application of previously established methodologies. Therefore, under 5 U.S.C 553(b)(3)(B), for good cause, we waive notice and comment procedures.
VI. Request for Information on CMS Flexibilities and Efficiencies
CMS is committed to transforming the health care delivery system--and the Medicare program--by putting an additional focus on patient-centered care and working with providers, physicians, and patients to improve outcomes. We seek to reduce burdens for hospitals, physicians, and patients, improve the quality of care, decrease costs, and ensure that patients and their providers and physicians are making the best health care choices possible. These are the reasons we are including this Request for Information in this notice with comment period.
As we work to maintain flexibility and efficiency throughout the Medicare program, we would like to start a national conversation about improvements that can be made to the health care delivery system that reduce unnecessary burdens for clinicians, other providers, and patients and their families. We aim to increase quality of care, lower costs improve program integrity, and make the health care system more effective, simple and accessible.
We would like to take this opportunity to invite the public to submit their ideas for regulatory, subregulatory, policy, practice, and procedural changes to better accomplish these goals. Ideas could include payment system redesign, elimination or streamlining of reporting, monitoring and documentation requirements, aligning Medicare requirements and processes with those from Medicaid and other payers, operational flexibility, feedback mechanisms and data sharing that would enhance patient care, support of the physician-patient relationship in care delivery, and facilitation of individual preferences. Responses to this Request for Information could also include recommendations regarding when and how CMS issues regulations and policies and how CMS can simplify rules and policies for beneficiaries, clinicians, physicians, providers, and suppliers. Where practicable, data and specific examples would be helpful. If the proposals involve novel legal questions, analysis regarding CMS' authority is welcome for CMS' consideration. We are particularly interested in ideas for incentivizing organizations and the full range of relevant professionals and paraprofessionals to provide screening, assessment and evidence-based treatment for individuals with opioid use disorder and other substance use disorders, including reimbursement methodologies, care coordination, systems and services integration, use of paraprofessionals including community paramedics and other strategies. We are requesting commenters to provide clear and concise proposals that include data and specific examples that could be implemented within the law.
We note that this is a Request for Information only. Respondents are encouraged to provide complete but concise responses. This Request for Information is issued solely for information and planning purposes; it does not constitute a Request for Proposal (RFP), applications, proposal abstracts, or quotations. This Request for Information does not commit the
VII. Collection of Information Requirements
This notice does not impose any new or revised information collection requirements or burden pertaining to collecting, reporting, recordkeeping, or disclosing information. Consequently, there is no need for review by the
VIII. Response to Comments
Because of the large number of public comments we normally receive on
IX. Regulatory Impact Analysis
A. Statement of Need
This notice with comment period updates the prospective payment rates for Medicare inpatient hospital services provided by IPFs for discharges occurring during FY 2018 (
B. Overall Impact
We have examined the impacts of this notice with comment period as required by Executive Order 12866 on Regulatory Planning and Review (
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a "significant regulatory action" as an action that is likely to result in a rule: (1) Having an annual effect on the economy of
We estimate that the total impact of these changes for FY 2018 payments compared to FY 2017 payments will be a net increase of approximately
The RFA requires agencies to analyze options for regulatory relief of small entities if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most IPFs and most other providers and suppliers are small entities, either by nonprofit status or having revenues of
Because we lack data on individual hospital receipts, we cannot determine the number of small proprietary IPFs or the proportion of IPFs' revenue derived from Medicare payments. Therefore, we assume that all IPFs are considered small entities.
As shown in Table 2, we estimate that the overall revenue impact of this notice with comment period on all IPFs is to increase Medicare payments by approximately 0.99 percent. As a result, since the estimated impact of this notice with comment period is a net increase in revenue across almost all categories of IPFs, the Secretary has determined that this notice with comment period will have a positive revenue impact on a substantial number of small entities. MACs are not considered to be small entities. Individuals and states are not included in the definition of a small entity.
In addition, section 1102(b) of the Social Security Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. As discussed in detail below, the rates and policies set forth in this notice with comment period will not have an adverse impact on the rural hospitals based on the data of the 277 rural units and 67 rural hospitals in our database of 1,621 IPFs for which data were available. Therefore, the Secretary has determined that this notice with comment period will not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. As stated previously, this notice with comment period will not have a substantial effect on state and local governments.
C. Anticipated Effects
In this section, we discuss the historical background of the IPF PPS and the impact of this notice with comment period on the Federal Medicare budget and on IPFs.
1. Budgetary Impact
As discussed in the
As discussed in section III.D.1 of this notice with comment period, we are using the wage index and labor-related share in a budget neutral manner by applying a wage index budget neutrality factor to the federal per diem base rate and ECT payment per treatment. Therefore, the budgetary impact to the Medicare program of this notice with comment period will be due to the market basket update for FY 2018 of 2.6 percent (see section III.A.2 of this notice with comment period) less the productivity adjustment of 0.6 percentage point required by section 1886(s)(2)(A)(i) of the Act; further reduced by the "other adjustment" of 0.75 percentage point under sections 1886(s)(2)(A)(ii) and 1886 (s)(3)(E) of the Act; and the update to the outlier fixed dollar loss threshold amount.
We estimate that the FY 2018 impact will be a net increase of
2. Impact on Providers
To show the impact on providers of the changes to the IPF PPS discussed in this notice with comment period, we compare estimated payments under the IPF PPS rates and factors for FY 2018 versus those under FY 2017. We determined the percent change of estimated FY 2018 IPF PPS payments compared to FY 2017 IPF PPS payments for each category of IPFs. In addition, for each category of IPFs, we have included the estimated percent change in payments resulting from the update to the outlier fixed dollar loss threshold amount; the updated wage index data including the updated labor-related share; and the market basket update for FY 2018, as adjusted by the productivity adjustment according to section 1886(s)(2)(A)(i) of the Act, and the "other adjustment" according to sections 1886(s)(2)(A)(ii) and 1886(s)(3)(E) of the Act.
To illustrate the impacts of the FY 2018 changes in this notice with comment period, our analysis begins with a FY 2017 baseline simulation model based on FY 2016 IPF payments inflated to the midpoint of FY 2017 using
Each of the following changes is added incrementally to this baseline model in order for us to isolate the effects of each change:
* The update to the outlier fixed dollar loss threshold amount.
* The FY 2017 pre-floor, pre-reclassified hospital wage index.
* The FY 2018 labor-related share.
* The market basket update for FY 2018 of 2.6 percent less the productivity adjustment of 0.6 percentage point in accordance with section 1886(s)(2)(A)(i) of the Act and further reduced by the "other adjustment" of 0.75 percentage point in accordance with sections 1886(s)(2)(A)(ii) and 1886(s)(3)(E) of the Act, for a payment rate update of 1.25 percent.
Our final column comparison illustrates the percent change in payments from FY 2017 (that is,
Table 2--IPF PPS Impacts for FY 2018 [Percent change in columns 3 through 6] Facility by Number of Outlier CBSA wage Payment Total type facilities index and update *1 percent labor share change *2 (1) (2) (3) (4) (5) (6) All 1,621 -0.26 0.00 1.25 0.99 Facilities Total Urban 1,277 -0.26 -0.06 1.25 0.93 Total Rural 344 -0.26 0.38 1.25 1.37 Urban unit 827 -0.38 -0.20 1.25 0.67 Urban 450 -0.09 0.13 1.25 1.29 hospital Rural unit 277 -0.31 0.39 1.25 1.33 Rural 67 -0.14 0.34 1.25 1.45 hospital By Type of Ownership: Freestanding IPFs: Urban Psychiatric Hospitals: Government 121 -0.32 -0.09 1.25 0.83 Non-Profit 97 -0.13 0.49 1.25 1.61 For-Profit 232 -0.03 0.04 1.25 1.26 Rural Psychiatric Hospitals: Government 33 -0.14 0.90 1.25 2.02 Non-Profit 13 -0.12 -0.26 1.25 0.87 For-Profit 21 -0.14 0.11 1.25 1.22 IPF Units: Urban: Government 118 -0.61 -0.36 1.25 0.27 Non-Profit 535 -0.38 -0.29 1.25 0.57 For-Profit 174 -0.19 0.17 1.25 1.22 Rural: Government 68 -0.31 0.35 1.25 1.29 Non-Profit 147 -0.31 0.50 1.25 1.44 For-Profit 62 -0.30 0.19 1.25 1.14 By Teaching Status: Non-teaching 1,436 -0.22 0.04 1.25 1.06 Less than 104 -0.37 -0.12 1.25 0.75 10% interns and residents to beds 10% to 30% 60 -0.54 -0.39 1.25 0.31 interns and residents to beds More than 21 -0.49 0.17 1.25 0.93 30% interns and residents to beds By Region: New England 106 -0.31 -0.46 1.25 0.47 Mid-Atlantic 233 -0.34 0.04 1.25 0.94 South 240 -0.15 -0.25 1.25 0.85 Atlantic East North 269 -0.23 -0.03 1.25 0.99 Central East South 165 -0.24 -0.08 1.25 0.93 Central West North 133 -0.34 -0.05 1.25 0.85 Central West South 244 -0.20 0.13 1.25 1.18 Central Mountain 105 -0.16 0.17 1.25 1.25 Pacific 126 -0.37 0.62 1.25 1.50 By Bed Size: Psychiatric Hospitals Beds: 0-24 86 -0.09 0.27 1.25 1.43 Beds: 25-49 74 -0.12 -0.04 1.25 1.09 Beds: 50-75 88 -0.14 0.24 1.25 1.35 Beds: 76+ 269 -0.08 0.15 1.25 1.32 Psychiatric Units Beds: 0-24 640 -0.40 -0.01 1.25 0.83 Beds: 25-49 288 -0.34 -0.12 1.25 0.78 Beds: 50-75 112 -0.35 -0.30 1.25 0.60 Beds: 76+ 64 -0.32 -0.08 1.25 0.84 *1 This column reflects the payment update impact of the IPF market basket update for FY 2018 of 2.6 percent, a 0.6 percentage point reduction for the productivity adjustment as required by section 1886(s)(2)(A)(i) of the Act, and a 0.75 percentage point reduction in accordance with sections 1886(s)(2)(A)(ii) and 1886(s)(3)(E) of the Act. *2 Percent changes in estimated payments from FY 2017 to FY 2018 include all of the changes presented in this notice. Note, the products of these impacts may be different from the percentage changes shown here due to rounding effects.
3. Results
Table 2 displays the results of our analysis. The table groups IPFs into the categories listed below based on characteristics provided in the Provider of Services (POS) file, the IPF provider specific file, and cost report data from the Healthcare Cost Report Information System:
* Facility Type
* Location
* Teaching Status Adjustment
*
* Size
The top row of the table shows the overall impact on the 1,621 IPFs included in this analysis. In column 3, we present the effects of the update to the outlier fixed dollar loss threshold amount. We estimate that IPF outlier payments as a percentage of total IPF payments are 2.26 percent in FY 2017. Thus, we are adjusting the outlier threshold amount in this notice with comment period to set total estimated outlier payments equal to 2 percent of total payments in FY 2018. The estimated change in total IPF payments for FY 2018, therefore, includes an approximate 0.26 percent decrease in payments because the outlier portion of total payments is expected to decrease from approximately 2.26 percent to 2.0 percent.
The overall impact of this outlier adjustment update (as shown in column 3 of Table 2), across all hospital groups, is to decrease total estimated payments to IPFs by 0.26 percent. The largest decrease in payments is estimated to be a 0.61 percent decrease in payments for urban government IPF units.
In column 4, we present the effects of the budget-neutral update to the IPF wage index and the Labor-Related Share (LRS). This represents the effect of using the most recent wage data available and taking into account the updated OMB delineations. That is, the impact represented in this column reflects the update from the FY 2017 IPF wage index to the FY 2018 IPF wage index, which includes the LRS update from 75.1 percent in FY 2017 to 75.0 percent in FY 2018. We note that there is no projected change in aggregate payments to IPFs, as indicated in the first row of column 4, however, there will be distributional effects among different categories of IPFs. For example, we estimate the largest increase in payments to be 0.90 percent for rural government psychiatric hospitals, and the largest decrease in payments to be 0.46 percent for New England IPFs.
In column 5, we present the estimated effects of the update to the IPF PPS payment rates of 1.25 percent, which are based on the 2012-based IPF market basket update of 2.6 percent, less the productivity adjustment of 0.6 percentage point in accordance with section 1886(s)(2)(A)(i) of the Act, and further reduced by 0.75 percentage point in accordance with sections 1886(s)(2)(A)(ii) and 1886(s)(3)(E) of the Act.
Finally, column 6 compares our estimates of the total changes reflected in this notice with comment period for FY 2018 to the estimates for FY 2017 (without these changes). The average estimated increase for all IPFs is approximately 0.99 percent. This estimated net increase includes the effects of the 2.6 percent market basket update reduced by the productivity adjustment of 0.6 percentage point, as required by section 1886(s)(2)(A)(i) of the Act and further reduced by the "other adjustment" of 0.75 percentage point, as required by sections 1886(s)(2)(A)(ii) and 1886(s)(3)(E) of the Act. It also includes the overall estimated 0.26 percent decrease in estimated IPF outlier payments as a percent of total payments from the update to the outlier fixed dollar loss threshold amount.
IPF payments are estimated to increase by 0.93 percent in urban areas and 1.37 percent in rural areas. Overall, IPFs are estimated to experience a net increase in payments as a result of the updates in this notice with comment period. The largest payment increase is estimated at 2.02 percent for rural government psychiatric hospitals.
4. Effect on Beneficiaries
Under the IPF PPS, IPFs will receive payment based on the average resources consumed by patients for each day. We do not expect changes in the quality of care or access to services for Medicare beneficiaries under the FY 2018 IPF PPS, but we continue to expect that paying prospectively for IPF services will enhance the efficiency of the Medicare program.
5. Regulatory Review Costs
If regulations impose administrative costs on private entities, such as the time needed to read and interpret this notice with comment period, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the notice with comment period, we assume that the total number of unique commenters on the most recent IPF proposed rule from FY 2016 will be the number of reviewers of this notice with comment period. We acknowledge that this assumption may understate or overstate the costs of reviewing this notice with comment period. It is possible that not all commenters reviewed the FY 2016 IPF proposed rule in detail, and it is also possible that some reviewers chose not to comment on that proposed rule. For these reasons we thought that the number of past commenters would be a fair estimate of the number of reviewers of this notice with comment period. We welcome any comments on the approach in estimating the number of entities which will review this notice with comment period.
We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this notice with comment period, and therefore for the purposes of our estimate we assume that each reviewer reads approximately 50 percent of the notice with comment period. We seek comments on this assumption.
Using the wage information from the BLS for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this notice with comment period is
6. Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771, titled "Reducing Regulation and Controlling Regulatory Costs," was issued on
D. Alternatives Considered
The statute does not specify an update strategy for the IPF PPS and is broadly written to give the Secretary discretion in establishing an update methodology. Therefore, we are updating the IPF PPS using the methodology published in the
E. Accounting Statement
As required by OMB Circular A-4 (available at www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 3, we have prepared an accounting statement showing the classification of the expenditures associated with the updates to the IPF PPS wage index and payment rates in this notice with comment period. This table provides our best estimate of the increase in Medicare payments under the IPF PPS as a result of the changes presented in this notice with comment period and based on the data for 1,621 IPFs in our database.
Table 3--Accounting Statement: Classification of Estimated Expenditures Category Transfers Change in Estimated Transfers from FY 2017 IPF PPS to FY 2018 IPF PPS Annualized Monetized Transfers$45 million . From Whom to Whom? Federal Government to IPF Medicare Providers.
In accordance with the provisions of Executive Order 12866, this notice with comment period was reviewed by the
Dated:
Administrator,
Dated:
Secretary,
[FR Doc. 2017-16430 Filed 8-2-17;
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