On April 23, 2019, the Centers for Medicare and Medicaid Services released the fiscal year (FY) 2020 proposed rule for payments to hospital inpatient departments and long-term care hospitals (LTCHs). The rule outlines proposed payment policy for hospitals and LTCHs beginning with October 1, 2019. Proposals related to new technology add-on payments, graduate medical education, and quality reporting and payment programs among others are also included in the proposed rule.

Overall, CMS is predicting that spending on hospital inpatient services will increase $4.7 billion in 2020, leading to an average increase in overall payments by 3.2%.

Comments on the proposed rule are due June 24, 2019.

Changes to Wage Index Calculation Expected to Increase Payments to Rural Hospitals at Expense of Urban Hospitals

In an effort to increase payments to rural hospitals, CMS is proposing to increase the wage index for certain low-wage hospitals. If implemented, the payment increase would come at the expense to payments made to hospitals with the highest wage index. The increase would affect the hospitals in the bottom 25^th percentile of the wage index; under the new policy, those hospital’s wage index would be increased by 50% of the difference between current policy and the wage index for the 25^th percentile for all hospitals. Hospitals with a wage index in the 75^th percentile or higher would see their wage index decreased to offset the higher spending, but rank order will be preserved. If finalized, the payment changes will be phased in over four years; CMS also proposes to place a 5% cap on the reduction of any hospital’s wage index in a given year.

Additionally, CMS is proposing to calculate the rural floor without hospitals that have been newly reclassified as “rural” (vs. “urban”) in order to discourage state reclassification in order to take advantage of Medicare payment policies.

CMS Estimates Increase to DSH Payments, Seeks Comment on Inclusion of FY 2017 Data

In addition to proposing updates to methodologies for the calculation of DSH payments in 2019, CMS estimates that eligible Disproportionate Share Hospitals (DSH) will receive an overall increase of approximately $8.489 billion in 2020, which reflects an average increase of 2.61%. DSH payments in 2019 were approximately $8.273 billion.

These changes are due to methodological changes in Factors 1 and 2, which are used to calculate payment rates. CMS is specifically seeking comment on whether to use a single year of the S-10 worksheet from FY 2017 instead of the current FY 2015.

Patients with Infections Caused by Antibiotic-Resistant Bacteria May be Classified as More Severe for Payment Purposes

CMS is proposing to increase the severity rating for patients suffering from infections resistant to antibiotics. Currently, those patients are grouped into the least severe of the three severity ratings used to determine payment levels (i.e. “no CC”). Under the proposal, those patients would be grouped into the second severity level (i.e. “w CC”), which should result in higher payments to hospitals.

Agency Declines to Propose New MS-DRG for CAR-T, But Seeks Public Input on Payment for These Therapies

The proposed rule states that CMS has received a request to create a new MS-DRG for procedures involving CAR T-cell therapies. The agency notes its belief that it may be premature to consider this since these therapies are new. For FY 2020, CAR-T therapies will continue to use the current MS-DRG assignment.

The agency is looking for public comments, however, on payment alternatives for CAR-T therapies and how these alternatives would affect access to care and incentives to lower drug prices. The rule also reiterates the agency’s encouragement of value-based care.

CMS Proposes Significant Increase to New Technology Add-On Payments

CMS’ New Technology Add-On Program (NTAP) allows for an additional payment for medical services or technologies found to be 1) new; 2) disproportionately costly to the existing MS-DRG; and 3) a substantial clinical improvement. This additional payment is equal to the lesser of:

• 50 percent of the cost of the new technology or service, or
• 50 percent of the amount by which the costs of the case exceed the DRG payment.

Multiple stakeholders have complained that this 50 percent add-on does not adequately reflect the cost of some extremely-high-cost therapies (e.g. CAR-T therapy). Therefore, for FY 2020, CMS proposes to increase this percentage increase threshold to 65 percent in both of the above cases.

CMS estimates that this increase in payments will total $110 million in FY 2020.

Request for Comments on Substantial Clinical Improvement

CMS notes that, over the years, there have been multiple requests for clarification as to what constitutes substantial clinical improvement for both NTAP and outpatient pass-through payments, and is seeking comments on the type of additional information and guidance that would be helpful. These comments will serve as the basis for future rulemaking.

Three NTAP Payments Discontinued but Nine Proposed for Continuation

CMS considers medical services or technologies “new” for 2-3 years after the point at which inpatient data begins to become available. CMS begins and ends NTAP payments on a fiscal year basis.

CMS proposes ending NTAP payment for the following technologies for FY 2020:

• Defitelio® treatment for hepatic veno-occlusive disease (VOD) with evidence of multi-organ dysfunction. (Jazz Pharmaceuticals’ NTAP application approved for fiscal year 2017)
• Ustekinumab (Stelara®) intravenous (IV) infusion treatment for moderately to severely active Crohn’s disease. (Janssen Biotech FY 2018)
• Bezlotoxumab (ZINPLAVA™) to reduce recurrence of Clostridium difficile infection. (Merck & Co. FY 2018)

CMS proposes to extend the following technologies NTAP status through FY 2020 and solicits comments on how proposed NTAP payment changes should affect existing technologies approved for NTAP payments:

• KYMRIAH® (Tisagenlecleucel) and YESCARTA® (Axicabtagene Ciloleucel) CD-19-directed T-cell immunotherapies for aggressive variants of non-Hodgkin lymphoma. (Novartis Pharmaceuticals & Kite Pharma FY 2019)
• VYXEOS™ (Cytarabine and Daunorubicin Liposome for Injection) for newly diagnosed therapy-related acute myeloid leukemia. (Jazz Pharmaceuticals FY 2019)
• VABOMERE™ (meropenem-vaborbactam) for complicated urinary tract infections (cUTIs). (Melinta Therapeutics FY 2019)
• remedē® System transvenous phrenic nerve stimulator for moderate to severe central sleep apnea. (Respicardia FY 2019)
• ZEMDRI™ (Plazomicin) a next-generation aminoglycoside antibiotic. (Achaogen FY 2019)
• GIAPREZA™ synthetic human angiotensin II to raise blood pressure in septic or other distributive shock. (La Jolla Pharmaceutical Company FY 2019)
• Sentinel® Cerebral Protection System. (Claret Medical FY 2019)
• AQUABEAM System (Aquablation) for lower urinary tract symptoms caused by benign prostatic hyperplasia (BPH). (PROCEPT BioRobotics Corporation FY 2019)

AndexXa™ (Andexanet alfa) for use in the treatment of patients who are receiving treatment with rivaroxaban and apixaban, when reversal of anticoagulation is needed due to life-threatening or uncontrolled bleeding. (Portola Pharmaceuticals FY 2019).

CMS Receives Seventeen New Applications for FY 2020 NTAP Payments

CMS solicits comments on the newness, cost, and clinical improvement of 17 additional NTAP applications for FY 2020:

• AZEDRA® (Ultratrace® iobenguane Iodine-131) Solution for obenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma (Progenics Pharmaceuticals)
• CABLIVI® (caplacizumab-yhdp) humanized bivalent nanobody to inhibit microclot formation with acquired thrombotic thrombocytopenic purpura (aTTP) (Sanofi)
• CivaSheet® brachytherapy source for the treatment of selected localized tumors (CivaTech Oncology)
• CONTEPO™ (Fosfomycin for Injection) to treat complicated urinary tract infections (cUTIs) caused by multi-drug resistant (MDR) pathogens in hospitalized patients (Nabriva Therapeutics)
• DuraGraft® Vascular Conduit Solution to protect the endothelium of the vein graft by mitigating ischemic reperfusion injury (Somahlution)
• Eluvia™ Drug-Eluting Vascular Stent System for the treatment of lesions in the femoropopliteal arteries (Boston Scientific)
• ELZONRIS™ (tagraxofusp, SL-401) targeted therapy for the treatment of blastic plasmacytoid dendritic cell neoplasm (Stemline Therapeutics)
• Erdafitinib second-line treatment for locally advanced or metastatic urothelial carcinoma (Johnson & Johnson/Janssen Oncology)
• ERLEADA™ (Apalutamide) androgen receptor inhibitor for non-metastatic castration-resistant prostate cancer (Johnson & Johnson/Janssen Products)
• SPRAVATO (Esketamine) nasal spray for treatment-resistant depression (Johnson & Johnson/Janssen Pharmaceuticals)
• XOSPATA for relapsed or refractory acute myeloid leukemia (AML) with a FMS-like tyrosine kinase 3 (FLT3) mutation (Astellas Pharma)
• GammaTile™ brachytherapy technology for brain tumors (GT Medical Technologies, previously submitted for FY 2018 and 2019)
• Imipenem, Cilastatin, and Relebactam (IMI/REL) Injection for complicated intra-abdominal infections and complicated urinary tract infections (Merck & Co.)
• JAKAFI™ (Ruxolitinib) oral kinase inhibitor (Incyte Corporation)
• Supersaturated Oxygen (SSO2) Therapy (DownStream® System) for myocardial infarction (TherOx, Inc.)
• T2Bacteria® Panel (T2 Bacteria Test Panel) to aid in the diagnosis of bacteremia (T2 Biosystems)
• VENCLEXTA® oral anti-cancer drug for chronic lymphocytic leukemia or small lymphocytic lymphoma or acute myeloid leukemia (AbbVie Pharmaceuticals)

Breakthrough Devices to Receive Significantly Lower Scrutiny

CMS proposes that, for new medical devices receiving marketing authorization by the FDA as part of their Breakthrough Device Program, it would automatically be considered new and not substantially similar to another device for purposes of inpatient NTAP review. CMS would also waive the substantial clinical improvement criterion for these devices but would still require applicants to meet the cost criterion for the NTAP program.

Two New Opioid Measures and Hybrid Hospital-Wide Readmission Measures Proposed for Inclusion in Hospital IQR Program

Two opioid-related electronic clinical quality measures (eCQMs) are being proposed for inclusion in the Hospital Inpatient Quality Reporting (IQR) Program eCQM set, beginning with the CY 2021 reporting period/FY 2023 payment determination:

• Safe Use of Opioids- Concurrent Prescribing
• Hospital Harm- Opioid-Related Adverse Events

In addition, the rule proposes adopting the Hybrid Hospital-Wide Readmission Measures with Claims and Electronic Health Record Data (Hybrid HWR Measure) into the IQR Program in what CMS is referring to as a “stepwise fashion.” The agency would accept data submissions for two voluntary reporting periods following by mandatory reporting to impact the FY 2026 payment determination. There had been a voluntary reporting period for this measure during calendar year 2018 that did not impact hospital payment determinations. In conjunction, CMS is proposing to remove the Claims-Based Hospital-Wide All-Cause Unplanned Readmission Measure (HWR claims-only measure) beginning with the FY 2026 payment determination.

CMS Proposes Minor Changes to Various Quality Reporting Programs

CMS is proposing a measure removal policy for both the Hospital Readmissions Reduction Program (HRRP) and the Hospital-Acquired Condition (HAC) Reduction Program. This removal policy would align with removal factor policies adopted in other quality reporting programs, including the IQR, VBP, and LTCH QRP programs. CMS is not proposing to remove any measures from either program at this time.

In addition, beginning with the FY 2021 program year, CMS is proposing to update the definition of “dual-eligible” in the HRRP. This will allow for a one-month looking period to determine dual-eligible status for beneficiaries who die in the month of discharge.

In the FY 2019 final IPPS payment rule, CMS finalized a policy to select 200 additional hospitals for targeted validation and five targeting criteria. CMS is now proposing to change that to “up to 200 hospitals” to provide flexibility in the selection process for the HAC Reduction Program.

Also in the FY 2019 final IPPS payment rule, CMS finalized removal of domains from the HAC Reduction Program and the assignment of equal weight to each program measure for which a hospital has a score. This FY 2020 proposed rule notes that this is the first year for implementation of that scoring methodology.

CMS Proposes Flexibility in Resident Count for Critical Access Hospitals

CMS is proposing to allow teaching hospitals to count residents training at a critical access hospital (CAH) in the same way current policy allows those same residents to be counted in a “non-provider” setting. This provides a second means for direct and indirect Medicare GME funding to support physician residency training at a CAH.

CAHs have always been able to receive 101% of the reasonable costs associated with a resident’s training in their facilities, but for some CAHs, the administrative and financial burden was too great for them to participate. By allowing a teaching hospital to count residents in their FTE counts, a CAH can employ the residents without having to maintain the administrative capacity to support that program. This proposal will not change a CAH’s ability to still choose to directly receive 101% of the reasonable costs of resident training if they choose to

CMS Asks for Public Comment on SPADE for Pain Interference

In this proposed rule, CMS continues to seek input on the inclusion of Standardized Patient Assessment Data Elements (SPADE); this is consistent with previously released post-acute care (PAC) payment rules for FY 2020. CMS seeks to standardize pain assessment within the category of pain interference; CMS additionally recognizes alternative methods, such as physical therapy, in the management of pain.

FY 2020 Payment Policies for LTCHs Proposed

For FY 2020, the Long-Term Care Hospital (LTCH) proposed annual payment update is 2.7 percent. The payment update is estimated to increase payment per discharge by 2.6 percent from FY 2019 to FY 2020.  For LTCHs that fail to submit quality reporting data, the proposed payment update is 0.7 percent. CMS estimates that the LTCH PPS payments will increase by $37 million in FY 2020.

In the FY 2019 rule, CMS eliminated the 25- percent threshold policy and established temporary factors to be applied to the payment rates to keep the change budge neutral. For FY 2020, CMS is proposing to reduce the one-time budget neutrality factor of 0.99088 to 0.99074 for estimated cost of elimination of 25-percent threshold policy.

LTCHs with Under 50% Discharge Payment Percentage to Face Payment Adjustment

For LTCHs with discharge payment percentage that do not equal at least 50 percent in FY 2020 cost reporting period, CMS proposes that an LTCH would become subject to payment adjustment for Medicare discharges in all its cost reporting periods, beginning on or after October 1, 2019. However, CMS also proposes a special probationary reinstatement process to allow an LTCH to have a delayed payment adjustment under some circumstances. CMS is specifically seeking comments on the probationary reinstatement process and whether it should mirror existing process for the greater than 25-day average length-of-stay requirements.

Two New Measures Proposed for LTCHs

To align with the Agency’s “Meaningful Measures Initiative,” CMS proposes to add two new measures to LTCH Quality Reporting Program (QRP) on transfer of health information to provider and patient post-acute care. Additionally, CMS is looking to remove baseline nursing facility (NF) residents, patients who had a long-term NF stay within 180 days prior to LTCH stay, from the Discharge to Community-Post Acute Care (PAC) measure.