August 2017

August 2017

FORHP’s Policy Team is ready to answer any questions you may have about these updates at

Quality Payment Program (QPP) Hardship Exception for Meaningful Use

The Centers for Medicare & Medicaid Services (CMS) is now accepting applications from clinicians eligible for the Merit-based Incentive Payment System (MIPS) to obtain hardship exceptions from the Advancing Care Information (ACI) requirements of the program. Under MIPS scoring, MIPS-eligible clinicians and groups may qualify for a reweighting of their ACI (i.e., Meaningful Use) performance category score to 0 percent of the final score, and can submit a hardship exception application, for one of the following reasons:

  • Insufficient internet connectivity
  • Extreme and uncontrollable circumstances
  • Lack of control over the availability of certified electronic health record technology

Some MIPS-eligible clinicians will be automatically reweighted (or exempted in the case of clinicians participating in a MIPS Alternative Payment Model) and do not need to submit an application for exception. Clinicians with this special status include those in practices deemed rural by CMS.

Fiscal year (FY) 2018 Final Rule Medicare Hospital Inpatient Prospective Payment System (IPPS)

On August 14, 2017, CMS published its final rule for the FY 2018 Medicare Hospital Inpatient Prospective Payment System (IPPS). The final rule aims to relieve regulatory burdens for providers; supports the patient-doctor relationship in health care; and promotes transparency, flexibility and innovation in the delivery of care.

Overall payment changes in the rule increase IPPS payment to Medicare-participating hospitals by roughly $2.4 billion for FY 2018, including 1.3% for operating payments and 0.7% for uncompensated care payment. CMS analysis finds that urban hospitals will experience far greater increases (1.4%) than rural hospitals (0.2%). Rural-specific payment reductions account for most of this disparity, including expiration of the Medicare-dependent hospital (MDH) program (-0.9%) and implementation of the rural floor and imputed rural floor (-0.2%).

Significant proposals for rural providers include:

  • Terminates MDH program as of October 1, 2017, per the Medicare Access and CHIP Reauthorization Act (MACRA), leaving all previous MDHs to be paid under IPPS and reducing overall payment to rural hospitals by 0.9%
    • CMS estimate: 96 of 158 current MDHs lose $119 million
  • Terminates temporary expansion of low-volume hospital (LVH) adjustment
    • Reinstates pre-Affordable Care Act (ACA) 25% LVH adjustment for hospitals more than 25 miles from like hospital and less than 200 total discharges (i.e., both Medicare and non-Medicare discharges)
    • Decreases LVH payments by $312 million from FY 2017 to 2018
    • Considers only distance between like subsection (d) hospitals (i.e., Indian Health Services (IHS) to IHS, non-IHS to non-IHS), thereby increasing LVH payments by $3 million to hospitals qualifying under this parallel LVH adjustment
  • Establishes approx. $7 billion disproportionate share hospital (DSH) uncompensated care pool to be allotted according to Worksheet S-10 data
    • Phases in Worksheet S-10 data, using FY 2014 Worksheet S-10 data and low-income proxy data from FYs 2013 and 2012
    • In effect, redistribution of DSH uncompensated care dollars from more urban, Medicaid-expansion states to more rural, non-expansion states
  • Deemphasizes review of critical access hospital (CAH) 96-hour certification requirement
    • Quality Improvement Organziations (QIO), Medicare Administrative Contractors (MAC) and Recovery Audit Contractors (RAC) will not conduct medical record review for 96-hour rule unless CMS finds evidence of gaming or noncompliance
  • Extends Rural Community Hospital demonstration for 5 years (per 21st Century Cures Act)
    • April 2017 solicitations for non-CAH rural hospitals in any state, priority to those in 20 states with lowest population density
    • Applicants may note impact of state rural hospital closures 
  • Withdraws the requirement for CMS-approved accrediting organizations to post final accreditation survey reports (including deficiency findings) for the last three years on their website
  • Extends the imputed rural floor policy for one year (i.e., until September 30, 2018), thereby reducing overall payments to rural hospitals by 0.2%
  • Updates the Hospital Readmissions Reduction Program (HRRP), including stratifying hospitals into five peer groups based on the proportion of dual-eligible beneficiaries to assess penalties in the HRRP
    • CMS estimates that rural hospitals will experience smaller penalty reductions under the updated HRRP compared to urban hospitals: 0.53% vs. 0.63%, respectively
  • Requires hospitals and CAHs in the EHR Incentive Program and Hospital Inpatient Quality Reporting (IQR) Program to select four of the Electronic Clinical Quality Measures (eCQM) available in the IQR measure set and submit one self-selected quarter of data for calendar years (CY) 2017 and 2018
    • CMS modified eCQM certification requirements such that, for CY 2018, hospitals and CAHs may use 2014-edition certified EHR technology (CEHRT), 2015-edition CEHRT, or a combination of both
  • Refines two IQR measures, including:
    • Replacing 3 pain management questions in the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey with three questions regarding communication about pain during the hospital stay and
    • Updates risk adjustment for the 30-day stroke mortality measure using stroke severity codes based on the National Institutes of Health (NIH) Stroke Scale
  • Adopts two measures for the Hospital Value-Based Purchasing (VBP) program including:
  • Hospital-level payment for 30-day episodes for pneumonia care (beginning FY 2022)
  • Ten indicator patient safety and adverse events composite (NQF #0531; beginning FY 2023), and modifies domain scoring policies for FY 2019

This rule is effective October 1, 2017. For more information, see the CMS fact sheet

FY 2018 Final Rule for Long-Term Care Hospitals (LTCH) payment

Also on August 14, 2017, CMS published the final rule for the FY 2018 Long-Term Acute Care Hospital (LTCH) PPS and the related LTCH Quality Reporting Program (LTCH QRP) along with the IPPS update. Nationwide, most inpatients are treated in acute care hospitals, but some are admitted to LTCHs. In this final rule, CMS updated the LTCH PPS standard Federal payment rate by 1%, resulting in an overall projected decrease in payments of approximately 2.4 %, or $110 million in FY 2018 compared to FY 2017. LTCHs in rural areas will experience this as a 0.1% payment decrease. The rule also finalizes a number of changes to the FY 2020 LTCH QRP. Specifically, the agency would add measures assessing pressure ulcer changes, compliance with a spontaneous breathing trial and ventilator liberation rates.

The rule is effective October 1, 2017.  For more information, see the CMS fact sheet. 

FY 2018 Final Rule for SKilled Nursing Facilities (SNF)

On August 4, CMS published a final rule to update 2018 Medicare payment rates and polices for skilled nursing facilities (SNF). The rule is effective October 1, 2017. The rule applies to freestanding SNFs, SNFs affiliated with acute care facilities, and all non-CAH swing-bed rural hospitals. Changes include a payment rate increase of 1.0% or $370 million compared to FY 2017. On average, rural areas will experience this as a 0.4% increase. 

Also of note for rural providers, the SNF VBP begins 2019 and, as CMS clarified in the FY17 SNF PPS rule, it will apply to “all non-CAH swing-bed rural hospitals.” CMS will reduce payments to all SNFs by 2% to fund the SNF VBP incentive pool. SNFs in the lowest 40% of performance must be paid less than they would have received in the absence of SNF VBP.

This rule is effective October 1, 2017.  A fact sheet is available on the CMS website.

FY 2018 Final Rule for Inpatient Rehabilitation Facilities (IRF)

On August 3, CMS published a final rule to update FY 2018 Medicare payment and policies for IRFs. Changes include an overall update of .9% (or $75 million), removal of the voluntary swallowing status item from the IRF-patient assessment instrument (IRF-PAI), removal of the 25 percent payment penalty for late transmissions of the IRF-PAI, changes to the IRF Quality Reporting Program (QRP) and changes to the 60 percent rule presumptive methodology. 

This rule also finalizes and clarifies that FY 2018 is the third and final year of the phase-out of the 14.9 percent rural adjustment for the 20 IRF providers that were designated as rural in FY 2015 but changed to urban under the new Office of Management and Budget (OMB) delineations in FY 2016. Additionally, CMS has indicated that one provider located in Garfield County, Oklahoma and designated as rural in FY 2017 will be designated as urban in FY 2018. Because this provider will also experience an increase of 13% in their wage index value, CMS did not propose a transition period to adopt this update. 

This rule is effective October 1, 2017.  A fact sheet is available on the CMS website.

FY 2018 Final Rule for Hospice

On August 4, 2017, CMS published a final rule to update 2018 Medicare payment and polices for hospice facilities.  Major provisions within the rule include:

  • An overall payment increase to hospices of 1.0% ($180 million): rural areas will experience this as a 1.1% increase on average
  • Updates to the hospice wage index and the hospice cap amount
  • Updates the hospice quality reporting program (HQRP) including changes to some survey measures and announces CMS plans to enhance the current hospice item set and continued development of a more comprehensive patient assessment instrument preliminarily called Hospice Evaluation & Assessment Reporting Tool (HEART)
  • An announcement that CMS will also begin sharing HQRP data publicly later in this calendar year and has plans to provide public reporting via a Compare site this year and in future years

This rule is effective October 1, 2017.  A fact sheet is available on the CMS website.

This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,100,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government.