September 2017

September 2017

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

The Centers for Medicare and Medicaid Services (CMS) Proposes Cancellation of Cardiac Bundled Payment Program

On August 17, 2017, CMS published a proposed rule to:

  • Cancel the Episode Payment Models (EPMs) for care related to acute myocardial infarction (AMI) and coronary artery bypass graft (CABG) surgeries, including an incentive payment for cardiac rehabilitation, which had been previously delayed until January 1, 2018
  • Allow for more flexibility in the Comprehensive Care for Joint Replacement (CJR) model, beginning January 1, 2018:
    • Only hospitals in 34 of the 67 selected metropolitan statistical areas (MSAs) are required to participate, and
    • Hospitals in the other 33 MSAs may elect to participate, as well as low-volume or rural hospitals in any of the 67 MSAs

If finalized, the CMS proposal would allow low-volume and rural hospitals to elect to participate between January 1-31, 2018. Otherwise, these and other hospitals not required to participate will be automatically withdrawn from CJR on February 1, 2018.

As a reminder, rural hospitals choosing not to participate in CJR can act as post-acute care CJR collaborators to arrange payment from participating CJR hospitals for shared responsibility for quality and clinical outcomes.

Comments are due by October 16, 2017. See the CMS fact sheet for more information.

Medicare-Dependent Hospital (MDH) Expiration: September 30, 2017

The CMS final rule for the fiscal year (FY) 2018 Hospital Inpatient Prospective Payment System (IPPS) implements the expiration of the MDH program, which the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) extended only through FY 2017. As of October 1, 2017, existing MDHs will be treated as prospective payment system (PPS) hospitals.

Without Congressional action to extend the program, CMS estimates the MDH expiration will reduce payments to rural providers by 0.9% in FY 2018. Specifically, CMS projects that 96 of the 157 current MDHs to lose $119 million in the change from their hospital-specific MDH rate to IPPS payment. Existing MDHs may apply for Sole Community Hospital (SCH) status. MDHs that meet SCH requirements (p. 10) will receive the higher of IPPS payment or a hospital-specific rate based on cost per discharge.

In April 2017, the Rural Hospital Access Act (S. 872/H.R. 1955) was introduced in Congress that would make permanent both the MDH program and the enhanced low-volume Medicare adjustment for small rural PPS hospitals. However, no further action has been taken on this bill.

CMS Clarifies Statutory Definition of “Hospital”

CMS issued a survey and certification letter on September 6, 2017, that provides new guidance on applying the Medicare definition of “hospital” and whether hospitals are “primarily engaged” in inpatient services.

  1. A hospital must meet all Medicare and Medicaid conditions of participation
  2. A hospital must have at least two inpatients at the time of survey for surveyors to directly observe the provision of care and services to patients, as well as the effects of that care
  3. For hospitals without at least two inpatients, surveyors will conduct an initial on-site review of the hospital’s admission data to determine whether over the last 12 months (a) average daily census (ADC) is at least two and (b) average length of stay (ALOS) is at least two midnights
  4. Finally, the CMS Regional Office will consider other factors to determine whether (a) to survey the hospital a second time or (b) recommend denial of an applicant or termination of a current provider agreement for not being “primarily engaged” in serving inpatients

Note: This guidance is not applicable to critical access hospitals (CAHs) or psychiatric hospitals.

CMS Reveals New Medicare Cards

CMS has shared with the public newly designed Medicare cards that now include a unique, randomly assigned number in place of the beneficiary’s Social Security number (SSN). CMS will begin mailing new cards to beneficiaries in April 2018. MACRA requires that all cards be replaced by April 2019.

CMS will provide a 21-month transition period to introduce the new cards during which providers and beneficiaries will be able to use either their current SSN-based Medicare number or their new, unique Medicare number.

More information about this new card (previously known as the Social Security Number Removal Initiative) was also provided on an April 25, 2017 rural health clinic technical assistance webinar available at

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.