Centers for Medicare & Medicaid Services (CMS) recently published the FY 2021 Hospital Inpatient Prospective Payment System (PPS) Proposed Rule. It contains various updates hospitals and health system should keep in mind as they consider their S-10 worksheets data to calculate uncompensated care payments. The proposed changes are scheduled to go into effect on Oct. 1, 2020.
Below are some key highlights to consider from this proposed rule:
Disproportionate share payments.1 CMS will be distributing $7.8 billion — a decrease of more than $500 million from FY 2020 — in uncompensated care payments in FY 2021. This rule proposes using FFY 2017 Worksheet S-10 data (S-10, Line 30 from the March HCRIS extract) to calculate Factor 3 for FY 2021. CMS’s recommendation for future years is to use the most recently audited single year of data for distribution.
Also of note, per the IPPS 2020 Final Rule, as FY 2015 Hospital S-10 Line 30 was used to distribute the FFY 2020 uncompensated care pool — and the 35% Medicare Bad Debt reduction is included as part of Line 30 — hospitals were able to recoup some of their Medicare Bad Debt via this uncompensated care distribution. This same benefit applies in FFY 2021, except FY 2017 data will be used. In 2015, hospitals received back approximately 27–28% of this reduction. Based on this proposed rule, we’d expect this reimbursement to be around
Medicare bad debts. The proposed rule looks to clarify, update and codify certain long-standing Medicare bad debt regulations. These clarifications include:
Reasonable Collection Effort, Non-Indigent Beneficiaries
Reasonable Collection Effort, Beneficiaries Determined Indigent by Provider Using Required Criteria
Reasonable Collection Effort, Dual Eligible Beneficiaries and the Medicaid Remittance Advice
Accounting Standard Update Topic 606 and Accounting for Medicare Bad Debt
Price transparency. Building on the executive order last year, along with previous CMS rules on price transparency, this proposal would require hospitals to post median payer-negotiated rates by Medicare Severity-Diagnosis Related Group (MS-DRG) on their Medicare cost reports. There’s already been pushback on this requirement, and it’s likely to garner industry commentary.2
Comment period. The comment period on the proposed rule is open through July 10, 2020. Prior to this date, it’s important to verify the correct amounts from S-10, Line 30 for your hospital are being used. For corrections, email Section3133DSH@cms.hhs.gov. Comments on the proposed rules should be addressed at www.regulations.gov, and refer to file code CMS-1735-P.
Implementation date. Due to the COVID-19 pandemic and the strain it has put on hospitals and health systems, there will be a 30-day delay in the date this final rule will be effective, replacing the previous 60-day delay.
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The materials available on this page are for general informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.