On August 2, 2019, the Centers for Medicare and Medicaid Services (CMS) released the final FY 2020 payment rule for hospital inpatient departments and long-term care hospitals. The rule includes the payment update for both types of facilities as well as policies for new technology add-on payments, graduate medical education, and the hospital wage index.

This final rule becomes effective on October 1, 2019.

Approximately 3 Percent Update Finalized for Payment Rates in FY 2020

Acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful EHR users will see an increase in operating payment rates of approximately 3.1 percent for FY 2020. Overall, CMS is projecting that inpatient prospective payment system (IPPS) payments will increase by approximately 3.8 billion in FY 2020; this is an approximately 3.0 percent increase from previous levels. This amount includes increased payments for new technologies and changes to uncompensated care payments.

Rural Hospitals Across the U.S. Get Wage Index Boost

CMS increases the wage index for hospital payments to address the disparity between urban and rural hospitals. Hospitals in the bottom 25^th percentile of the wage index will receive a boost of 50 percent of the difference between current applicable age index value for the hospital and the 25^th percentile wage index value for all hospitals. The Agency originally proposed to offset this higher spending by decreasing the wage index for hospitals in the 75^th percentile or higher. However, responding to concerns of commenters’, CMS instead finalized a budget neutrality adjustment by decreasing payment across the board. Cuts will be capped at maximum of 5 percent decrease from a hospital’s FY 2019 wage index. The changes to wage index will be effective for four years beginning with October 1, 2019.

In addition, CMS finalizes the removal of urban to rural hospital reclassifications from the calculation of the rural floor wage index.

Increase in DSH Payments, But CMS Decides Against Use of 2017 Worksheet S-10 Cost Report Data

CMS finalizes their estimate that eligible Disproportionate Share Hospitals (DSH) will receive an overall increase of approximately $8.48 billion in FY 2020. This reflects an approximate $78 million increase from FY 2019.

In this year’s proposed rule, CMS asked for public input on use of data from single-year 2017 Worksheet S-10 instead of data from 2015. CMS finalized the use of 2015 data, citing that 2015 was properly audited, resulting in more accurate cost estimates.

CAR-T DRG Assignment to Remain Same in FY 2020

For FY 2020, CAR-T cell therapies will continue to use the current MS-DRG. CMS had received a request to create a new MS-DRG for procedures involving CAR-T therapies, but the agency has declined to do so, saying they will not modify the DRG assignment for FY 2020.

CMS notes that they solicited comments in the proposed rule on possible ways to update or change reimbursement for CAR-T; multiple comments were received in response. The Agency says that after reviewing the comments in response to the rule, CMS continues to believe that given the newness of CAR-T and their continued consideration of new approaches to encourage value-based care and lower drug prices, it would be “premature to adopt structural changes to our existing payment mechanisms.”

However, CMS is finalizing a new technology add-on payment (NTAP) threshold of 65 percent of the costs of the new technology for FY 2020. The two current CAR-T therapies that are NTAP eligible, Kymriah and Yescarta, will receive this increased payment.

Severity Changes to Most CC/MCCs not Finalized for FY 2020

In the FY 2020 proposed rule, CMS had proposed approximately 1,400 severity classification changes to the complication or comorbidity (CC) group or major complication or comorbidity (MCC) designation of International Classification of Diseases, tenth edition (ICD-10) codes.

CMS chose to not finalize the CC/MCC changes initially proposed, with the exception of those under the category of resistance to antimicrobial drugs. The Agency cited that most commenters asked for a delay of severity reclassification implementation due to the magnitude of the proposed revisions. The final rule did not specify when these CC/MCC severity changes may be implemented in future years.

Increased Severity Rating for Patients with Antibiotic-Resistant Infections Finalized

CMS is increasing the MS-DRG severity level designation for diagnosis codes that specific antimicrobial drug resistance. Eighteen ICD-10-CM codes will be designated as a complication or comorbidity (CC); this higher severity level notes the higher level of resources associated with these designations. This designation often results in assignment to a higher severity MS-DRG, which will result in increased payments for hospitals treating these patients.

The codes in the table below have will have the associated severity level designation changed.

ICD-10-CM Diagnosis Code	Code Description
Z16.10	Resistance to unspecified beta lactam antibiotics
Z16.11	Resistance to penicillins
Z16.12	Extended spectrum beta lactamase (ESBL) resistance
Z16.19	Resistance to other specified beta lactam antibiotics
Z16.20	Resistance to unspecified antibiotic
Z16.21	Resistance to vancomycin
Z16.22	Resistance to vancomycin related antibiotics
Z16.23	Resistance to quinolones and fluoroquinolones
Z16.24	Resistance to multiple antibiotics
Z16.29	Resistance to other single specified antibiotic
Z16.30	Resistance to unspecified antimicrobial drugs
Z16.31	Resistance to antiparasitic drug(s)
Z16.32	Resistance to antifungal drug(s)
Z16.33	Resistance to antiviral drug(s)
Z16.341	Resistance to single antimycobacterial drug
Z16.342	Resistance to multiple antimycobacterial drugs
Z16.35	Resistance to multiple antimicrobial drugs
Z16.39	Resistance to other specified antimicrobial drug

 

CMS Finalizes 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 had 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 proposed to increase this percentage increase threshold to 65 percent in both of the above cases. In response to stakeholder comments on antimicrobial resistance, CMS is finalizing its proposal and additionally raising the threshold for qualified infectious disease products (QIDPs, as defined by the Food and Drug Administration (FDA)) to 75 percent.

CMS estimates that this increase in payments will total $94 million for the new and continuing NTAP recipients in FY 2020.

Breakthrough Devices to Receive Lower Scrutiny

CMS is finalizing its proposal that, for a new medical device 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 will also waive the substantial clinical improvement criterion for these devices but would still require applicants to meet the cost criterion for the NTAP program.

Qualified Infectious Disease Products Get New NTAP Pathway

Acknowledging the impact of antimicrobial resistance, CMS is finalizing a new pathway for qualified infectious disease products (QIDPs) to receive NTAP status. Under this pathway, QIDPs will be considered new and will not need to demonstrate meeting the substantial clinical improvement criterion. These products will only need to demonstrate that they meet the third NTAP criterion, the cost criterion. In addition, the QIDPs will have an increased NTAP percentage of 75 percent. This is higher than the 65 percent threshold finalized for non-QIDP NTAP products.

Request for Comments on Substantial Clinical Improvement Acknowledged

CMS noted 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 in its proposed rule sought comments on the type of additional information and guidance that would be helpful. CMS thanked the commenters and stated that their comments will serve as the basis for future rulemaking.

CMS Issues Final Decisions on Thirteen of 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. Of these, three were withdrawn prior to the final rule:

• 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)
• VENCLEXTA® oral anti-cancer drug for chronic lymphocytic leukemia or small lymphocytic lymphoma or acute myeloid leukemia (AbbVie Pharmaceuticals)

In addition, Imipenem, Cilastatin, and Relebactam (IMI/REL) Injection for complicated intra-abdominal infections and complicated urinary tract infections (Merck & Co.) did not meet the July 1 FDA approval deadline and was therefore not eligible.

CMS has approved NTAP status for the following applications in FY 2020:

• AZEDRA® (Ultratrace® iobenguane Iodine-131) Solution for obenguane avid malignant and/or recurrent and/or unresectable pheochromocytoma and paraganglioma (Progenics Pharmaceuticals): $98,150 or 65 percent
• CABLIVI® (caplacizumab-yhdp) humanized bivalent nanobody to inhibit microclot formation with acquired thrombotic thrombocytopenic purpura (aTTP) (Sanofi): $33,215 or 65 percent
• ELZONRIS™ (tagraxofusp, SL-401) targeted therapy for the treatment of blastic plasmacytoid dendritic cell neoplasm (Stemline Therapeutics): $125,448.05 or 65 percent
• Erdafitinib second-line treatment for locally advanced or metastatic urothelial carcinoma (Johnson & Johnson/Janssen Oncology): $3,563 or 65 percent
• ERLEADA™ (Apalutamide) androgen receptor inhibitor for non-metastatic castration-resistant prostate cancer (Johnson & Johnson/Janssen Products): $1,858.25 or 65 percent
• SPRAVATO (Esketamine) nasal spray for treatment-resistant depression (Johnson & Johnson/Janssen Pharmaceuticals): $1,014.79 or 65 percent
• XOSPATA for relapsed or refractory acute myeloid leukemia (AML) with a FMS-like tyrosine kinase 3 (FLT3) mutation (Astellas Pharma): $7,312.50 or 65 percent
• JAKAFI™ (Ruxolitinib) oral kinase inhibitor (Incyte Corporation): $3,977.06 or 65 percent
• T2Bacteria® Panel (T2 Bacteria Test Panel) to aid in the diagnosis of bacteremia (T2 Biosystems): $97.50 or 65 percent

Four NTAP applications were denied for FY 2020:

• CivaSheet® brachytherapy source for the treatment of selected localized tumors (CivaTech Oncology)
• Eluvia™ Drug-Eluting Vascular Stent System for the treatment of lesions in the femoropopliteal arteries (Boston Scientific)
• GammaTile™ brachytherapy technology for brain tumors (GT Medical Technologies, previously submitted for FY 2018 and 2019)
• Supersaturated Oxygen (SSO2) Therapy (DownStream® System) for myocardial infarction (TherOx, Inc.)

Three NTAP Payments Discontinued but Nine Finalized 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 will end 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 will extend the following technologies NTAP status through FY 2020 and increase payments consistent with the increased NTAP threshold as noted.

• 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): $242,450 or 65 percent
• VYXEOS™ (Cytarabine and Daunorubicin Liposome for Injection) for newly diagnosed therapy-related acute myeloid leukemia. (Jazz Pharmaceuticals FY 2019): $47,352.50 or 65 percent
• VABOMERE™ (meropenem-vaborbactam) for complicated urinary tract infections (cUTIs). (Melinta Therapeutics FY 2019): $8,316 or 75 percent
• remedē® System transvenous phrenic nerve stimulator for moderate to severe central sleep apnea. (Respicardia FY 2019): $22,425 or 65 percent
• ZEMDRI™ (Plazomicin) a next-generation aminoglycoside antibiotic. (Achaogen FY 2019): $4,083.75 or 75 percent
• GIAPREZA™ synthetic human angiotensin II to raise blood pressure in septic or other distributive shock. (La Jolla Pharmaceutical Company FY 2019): $4,083.75 or 65 percent (this amount to be a typographical error and will likely be corrected to $1,950)
• Sentinel® Cerebral Protection System. (Claret Medical FY 2019): $1,820 or 65 percent
• AQUABEAM System (Aquablation) for lower urinary tract symptoms caused by benign prostatic hyperplasia (BPH). (PROCEPT BioRobotics Corporation FY 2019): $1,625 or 65 percent
• 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): $18,281.25 or 65 percent

CMS Adds Flexibility in Resident Count for Critical Access Hospitals

CMS is finalizing its proposal 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 percent 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 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 policy will not change a CAH’s ability to instead choose to directly receive 101 percent of the reasonable costs of resident training if they so choose.

IME Formula Remains the Same, But CMS Estimates 5.5 Percent Increase in Payments

The Indirect Medical Education (IME) Payment Adjustment Factor remains 1.35 for 2020; however, CMS estimates that the use of this factor in FY 2020 under IPPS will increase payments to teaching hospitals by 5.5 percent for every 10 percent increase in resident-to-bed ratio.

Minor Changes to Various Quality Reporting Programs Finalized

CMS is finalizing its proposal to remove the Hospital-Wide All-Cause Readmission measure (NQF #1789) beginning with July 1, 2023- June 30, 2024 reporting period and the FY 2026 payment determination. The measure will be replaced by the newly adopted Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data measure (NQF #2879). Reporting of this newly adopted measure will be required beginning with the FY 2026 payment determination after two years of voluntary reporting starting July 1, 2021.

In addition, CMS finalizes its proposal to adopt the Safe Use of Opioids- Concurrent Prescribing electronic clinical quality measure (eCQM) beginning with the CY 2021 reporting period and FY 2023 payment determination. The agency is not finalizing the proposal to adopt the Hospital Harm- Opioid-Related Adverse Events eCQM for the Hospital IQF Program.

For the Hospital Readmissions Reduction Program (HRRP) and the Hospital Acquired Conditions (HAC) Reduction Program, CMS is finalizing their proposal to adopt an eight-favor measure removal policy.  This removal policy aligns with those adopted in other quality reporting programs, including the Hospital IQR and Hospital Value-Based Purchasing (VBP) Programs. No measures are being removed from the programs at this time.

Long Term Care Hospitals Get Payment Increase; Transitional Blended Payment Period for Site Neutral LTCHs Ends

For FY 2020, the Long-Term Care Hospital (LTCH) annual payments are to increase by 2.7 percent due to annual update of 2.5 percent for discharges paid under the standard LTCH payment rate and a 0.2 percent increase in outlier payments.  CMS estimates that overall LTCH PPS payments will increase by $43 million, or 1.0 percent.

The blended payment period for discharges occurring in LTCHs transitioning to the site neutral payment rate ends in FY 2020. As such, LTCH PPS payments those discharges will decrease by 5.9 percent.

CMS finalizes a special probationary reinstatement process for LTCHs with a discharge payment percentage that does not equal at least 50 percent in the FY 2020 cost reporting period. This probationary “cure period” will allow an LTCH to have a delayed payment adjustment for a cost reporting period under certain circumstances.

As part of CMS’ “Meanings Measure Initiative,” two new measures are added to the LTCH Quality Reporting Program (QRP):

• Transfer of Health Information to Provider to the Post-Acute Care(PAC)
• Transfer of Health Information to Patient to the PAC

These measured were also finalized for other PAC providers for FY 2020.

CMS also modifies the specifications of the Discharge to Community- Post Acute Care (PAC) measure to exclude baseline nursing facility residents from the measure and adds social determinants of health elements to the standardized patient assessment data (SPADE). Additionally, the Agency will no longer publish a list of compliant LTCHs on the LTCH QRP website.