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Fiscal Year (FY) 2018 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule, and Request for Information CMS-1677-P

Date
2017-04-14
Title
Fiscal Year (FY) 2018 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule, and Request for Information CMS-1677-P
Contact
press@cms.hhs.gov

Fiscal Year (FY) 2018 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule, and Request for Information CMS-1677-P

On April 14, 2017, the Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would update 2018 Medicare payment and polices when patients are admitted into hospitals. The proposed 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.

CMS is committed to transforming the health care delivery system – and the Medicare program – by putting a strong focus on patient-centered care, so providers can direct their time and resources to patients and improve outcomes. In addition to the payment and policy proposals, CMS is releasing a Request for Information to solicit ideas for regulatory, policy, practice and procedural changes to better achieve transparency, flexibility, program simplification and innovation. This will inform the discussion on future regulatory action related to inpatient and long-term hospitals.

This fact sheet discusses major provisions of the proposed rule, including the Request for Information (RFI), the proposed revisions to the application and re-application procedures for National Accrediting Organizations, the proposed changes to termination notices, and the extension of the Rural Community Hospital Demonstration. CMS will accept comments on the proposed rule and the RFI until June 13, 2017. The proposed rule and the RFI (CMS-1677-P) can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection.

Request for Information

In addition to the payment and policy proposals, CMS is releasing a Request for Information to welcome feedback on positive solutions to better achieve transparency, flexibility, program simplification and innovation. This will inform the discussion on future regulatory action related to inpatient and long-term hospitals.

We would like to start a national conversation about improving the health care delivery system, how Medicare can contribute to making the delivery system less bureaucratic and complex, and how we can reduce burden for clinicians, providers and patients in a way that increases quality of care and decreases costs –thereby making the health care system more effective, simple, and accessible while maintaining program integrity and preventing fraud.

CMS is soliciting ideas for regulatory, sub-regulatory, policy, practice and procedural changes to better accomplish these goals. Ideas could include recommendations regarding payment system re-design; elimination or streamlining of reporting; monitoring and documentation requirements; operational flexibility; and feedback mechanisms and data sharing that would enhance patient care, support the doctor-patient relationship in care delivery, and facilitate patient-centered care within inpatient stays at general acute care and long-term care hospitals. Ideas could also include recommendations regarding when and how CMS issues regulations and policies and how CMS can simplify rules and policies for beneficiaries, clinicians, providers and suppliers.

In responding to the RFI, CMS should be provided with clear and concise proposals that include data and specific examples. If the proposals involve novel legal questions, analysis regarding CMS’ authority is welcome. CMS will not respond to RFI comment submissions in the final rule, but rather will actively consider all input in developing future regulatory proposals or future sub-regulatory guidance. 

Proposed Changes and Updates in the FY 2018 Medicare Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Propestive Payment System (PPS) Policies

Background on the IPPS and LTCH PPS
CMS pays acute care hospitals (with a few exceptions specified in the law) for inpatient stays under the IPPS and long-term care hospitals under the LTCH PPS. Under these two payment systems, CMS sets base payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness. A hospital receives a single payment for the case based on the payment classification – Medicare Severity Diagnosis-Related Groups (MS-DRGs) under the IPPS and Medicare Severity Long-Term Care Diagnosis-Related Groups (MS-LTC-DRGs) under the LTCH PPS – assigned at discharge. 

By law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in the costs of goods and services used by these hospitals in treating Medicare patients, as well as for other factors. This is known as the hospital “market basket.” The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospitals’ costs, including the patient’s condition and the cost of hospital labor in the hospital’s geographic area. Payment rates to LTCHs are currently typically annually according to a separate market basket based on LTCH-specific goods and services.

The proposed changes, which would apply to approximately 3,330 acute care hospitals and approximately 420 LTCHs, would affect discharges occurring on or after October 1, 2017.

Proposed Changes to Payment Rates under IPPS
The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 1.6 percent. This reflects the projected hospital market basket update of 2.9 percent adjusted by a -0.4 percentage point required for productivity. This also reflects a -0.6 percent adjustment to remove the one-time adjustment of 0.6 percent made in FY 2017 for the FYs 2014–2016 effect of the adjustment to offset the estimated costs of the two midnight policy, a proposed +0.4588 percentage point adjustment required by the statute, as recently amended by the 21st Century Cures Act, and the    -0.75 percentage point adjustment to the update required by the Affordable Care Act. 

CMS projects that the rate increase, together with other proposed changes to IPPS payment policies, will increase IPPS operating payments by approximately 1.7 percent, and that proposed changes in uncompensated care payments will increase IPPS operating payments by an additional 1.2 percent for a total increase in IPPS operating payments of 2.9 percent. Other additional payment adjustments will include continued penalties for excess readmissions, a continued 1 percent penalty for hospitals in the worst performing quartile under the Hospital Acquired Condition Reduction Program, and continued upward and downward adjustments under the Hospital Value-Based Purchasing Program. In sum, CMS projects that total Medicare spending on inpatient hospital services, including capital, will increase by about $3.1 billion in FY 2018. 

Medicare Uncompensated Care Payments
CMS distributes a prospectively determined amount to Medicare disproportionate share hospitals based on their relative share of uncompensated care nationally. As required under law, this amount is equal to an estimate of 75 percent of what otherwise would have been paid as Medicare disproportionate share hospital payments, adjusted for the change in the rate of uninsured individuals and other factors. In this rule, CMS is proposing to distribute roughly $7.0 billion in uncompensated care payments in FY 2018, an increase of approximately $1.0 billion from the FY 2017 amount. This change reflects CMS’ proposal to incorporate data from its National Health Expenditure Accounts into estimate the percent change in the rate of uninsurance, which is used in calculating the total amount of uncompensated care payments available to be distributed.

For FY 2018, CMS proposes to begin incorporating uncompensated care cost data from Worksheet S-10 of the Medicare cost report in the methodology for distributing these funds. Specifically, for FY 2018, CMS proposes to use Worksheet S-10 data from FY 2014 cost reports in combination with insured low income days data from the two preceding cost reporting periods to determine the distribution of uncompensated care payments. 

Hospital-Acquired Conditions (HAC) Reduction Program
The HAC Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make payment adjustments to applicable hospitals that rank in the worst-performing quartile. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to make five changes to existing HAC Reduction Program policies:

Specify the dates of the time period used to calculate hospital performance for the FY 2020 HAC Reduction Program;

1. Request comments on additional measures for potential future adoption;
2. Request comments on accounting for social risk factors;
3. Request comments on accounting for disability and medical complexity in the CDC NHSN measures in Domain 2; and
4. Update the Extraordinary Circumstance Exception policy.

Hospital Readmissions Reduction Program (HRRP)
The HRRP requires a reduction to a hospital’s base operating DRG payment to account for excess readmissions associated with selected applicable conditions. For the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to implement changes to the payment adjustment factor in accordance with the 21st Century Cures Act. CMS will propose to assess penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid. Specifically, CMS is proposing the following:

1. A methodology for calculating the proportion of dual-eligible patients;
2. A methodology for assigning hospitals to peer groups; and
3. A payment adjustment formula calculation methodology.

In addition, CMS is proposing to specify the applicable time period and the methodology for the calculation of aggregate payments for excess readmissions for FY 2018 and to update the program’s Extraordinary Circumstance Exception policy.

Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs for Eligible Hospitals, Critical Access Hospitals (CAHs), and Eligible Professionals (EPs)
In 2011, the Medicare and Medicaid EHR Incentive Programs were established to encourage eligible professionals, eligible hospitals, and critical access hospitals (CAHs) to adopt, implement, upgrade (AIU), and demonstrate meaningful use of certified EHR technology (CEHRT).

Proposed Changes to Clinical Quality Measures (CQMs)

In the FY 2018 IPPS/LTCH PPS proposed rule, for eligible hospitals and CAHs participating in the EHR Incentive Program, CMS is proposing the following changes

For Calendar Year (CY) 2017:

a. Reporting period: For eligible hospitals and CAHs demonstrating meaningful use for the first time in 2017 or that have demonstrated meaningful use in any year prior to 2017, the reporting period would be two self‑selected quarters of CQM data in CY 2017;

b. CQMs: If an eligible hospital or CAH is only participating in the EHR Incentive Program, or is participating in both the EHR Incentive Program and the Hospital IQR Program, the eligible hospital or CAH would report on at least six (self-selected) of the available CQMs;

For CY 2018:

a. Reporting period: For eligible hospitals and CAHs reporting CQMs electronically that demonstrate meaningful use for the first time in 2018 or that have demonstrated meaningful use in any year prior to 2018, the reporting period would be the first 3 quarters of CY 2018. For the Medicare EHR Incentive Program only, the submission period for reporting CQMs electronically would be the 2 months following the close of the calendar year, ending February 28, 2019.

b. CQMs: For eligible hospitals and CAHs participating only in the EHR Incentive Program, or is participating in both the EHR Incentive Program and the Hospital IQR Program, the eligible hospital or CAH would report on at least 6 (self-selected) of the available CQMs.

Additionally, in the proposed rule, for the Eligible Professionals (EPs) in the EHR Incentive Program, CMS is proposing the following changes:

1. Reporting Periods:

  • For 2017, CMS is proposing to modify the CQM reporting period for EPs electronically reporting CQMs under the Medicaid EHR Incentive Program to a minimum of a continuous 90-day period during the calendar year.

2. CQMs: Align the specific CQMs available to EPs participating in the Medicaid EHR Incentive Program with those available to professionals participating in the Merit-based Incentive Payment System.

Proposed Changes for the Medicare and Medicaid EHR Incentive Programs   

For 2018, CMS is proposing to modify the EHR reporting periods for new and returning participants attesting to CMS or their state Medicaid agency from the full year to a minimum of any continuous 90-day period during the calendar year.

As mandated by the 21st Century Cures Act, CMS is proposing to add a new exception from the Medicare payment adjustments for EPs, eligible hospitals, and CAHs that demonstrate through an application process that compliance with the requirement for being a meaningful EHR user is not possible because their certified EHR technology has been decertified under ONC’s Health IT Certification Program,

CMS is also proposing, as mandated by the 21st Century Cures Act, to implement a policy to provide that no payment adjustments will be made for eligible professionals who furnish “substantially all” of their services in an ambulatory surgical center (ASC). In addition, CMS is proposing to exempt ambulatory surgical center (ASC)-based EPs from the 2017 and 2018 Medicare payment adjustments if they furnish substantially all of their covered professional services in an ASC CMS is requesting public comment on two proposed alternative definitions to determine the final definition:

  • An EP who furnishes 75 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is two years before the payment adjustment year; and

  • An EP who furnishes 90 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is two years before the payment adjustment year.

Additionally, we propose to use Place of Service (POS) code 24 to identify services furnished in an ASC and requesting public comment on whether other POS codes or mechanisms should be used to identify sites of service in addition to or in lieu of POS code 24.

Hospital Inpatient Quality Reporting (IQR) Program
The Hospital IQR Program is a quality reporting program established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to refine two previously adopted measures as follows:

1. Re-wording the current pain management questions in the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey to focus on the hospital’s communications with patients about the patients’ pain during the hospital stay beginning with surveys in January 2018; and

2. Changing the risk adjustment methodology used in the Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate following Acute Ischemic Stroke Hospitalization (Stroke 30-Day Mortality Rate) measure to include stroke severity codes (based on the NIH Stroke Scale), beginning with the FY 2023 payment determination.

CMS is also proposing voluntary reporting of one new measure, the Hybrid Hospital-Wide Readmission Measure with Claims and Electronic Health Record Data, for the CY 2018 reporting period. Furthermore, CMS is inviting public comment on potential new quality measures for future inclusion in the Hospital IQR Program, accounting for social risk factors in the Hospital IQR Program, and providing confidential feedback reports to hospitals with measure rates for certain measures stratified by patients’ dual eligibility status.

In addition, CMS is proposing a number of changes in relation to the reporting of electronic clinical quality measures (eCQMs):

1. Modifying the previously finalized eCQM reporting requirements for the CY 2017 reporting period/FY 2019 payment determination, such that hospitals would be required to select and submit six of the available eCQMs included in the Hospital IQR Program measure set and provide two, self-selected, calendar year quarters of data, in alignment with the electronic reporting requirements for CQMs in the Medicare EHR Incentive Program for hospitals;

2. Modify the previously finalized eCQM reporting requirements for the CY 2018 reporting period/FY 2020 payment determination, such that hospitals would be required to select and submit six of the available eCQMs, and provide data for the first three calendar quarters (Q1-Q3) of CY 2018, in alignment with the electronic reporting requirements for CQMs in the Medicare EHR Incentive Program for hospitals;

3. Making changes to several related technical eCQM submission requirements beginning with the FY 2019 payment determination, including which Edition of certified EHR technology hospitals should use for eCQM reporting, in alignment with the Medicare EHR Incentive Program for hospitals;

4. Modifying the previously finalized validation process for eCQM data to reduce the number of cases required to be submitted and to include additional exclusion criteria beginning with the FY 2020 payment determination and subsequent years; and

5. Continuing the medical record submission requirements for validation of eCQM data that were finalized in the FY 2017 IPPS/LTCH PPS final rule for the FY 2021 payment determination and subsequent years.

Hospital Value-Based Purchasing (VBP) Program
The Hospital VBP Program adjusts payments to hospitals for inpatient services based on their performance on an announced set of measures. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to implement updates to the Hospital VBP Program, including the removal of one measure and adoption of two measures. Specifically, the rule proposes to:

1. Remove the current 8-indicator Patient Safety for Selected Indicators (PSI 90) measure from the Safety domain beginning with the FY 2019 program year;

2. Adopt the 10-indicator modified Patient Safety and Adverse Events Composite PSI 90 measure beginning in the FY 2023 program year;

3. Adopt the Hospital-Level, Risk-Standardized Payment Associated with a 30-day Episode of Care for Pneumonia measure for the Efficiency and Cost Reduction domain beginning with the FY 2022 program year; and

4. Revise the Efficiency and Cost Reduction domain weighting beginning with the FY 2021 program year to reflect the implementation of condition-specific payment measures in the Hospital VBP Program.

Furthermore, CMS is inviting public comment on accounting for social risk factors in the Hospital VBP Program.

PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The PCHQR Program collects and publishes data on an announced set of quality measures. In the FY 2018 IPPS/LTCH PPS proposed rule, CMS is proposing to collect four new measures, remove three previously-adopted measures, and implement revisions to the PCHQR Extraordinary Circumstances Exceptions (ECE) Policy. Specifically, CMS is proposing to add four measures that assess end-of-life care:

1. Proportion of Patients Who Died from Cancer Receiving Chemotherapy in the Last 14 Days of Life (NQF #0210);
2. Proportion of Patients Who Died from Cancer Admitted to the ICU in the Last 30 Days of Life (NQF #0213);
3. Proportion of Patients Who Died from Cancer Not Admitted to Hospice (NQF #0215); and
4. Proportion of Patients Who Died from Cancer Admitted to Hospice for Less than Three Days (NQF #0216).

CMS is also proposing to remove three cancer-specific, chart-abstracted process measures:

1. Adjuvant Chemotherapy is Considered or Administered Within four Months (120 Days) of Diagnosis to Patients Under the Age of 80 with AJCC III (Lymph Node Positive) Colon Cancer (NQF #0223);
2. Combination Chemotherapy is Considered or Administered Within four Months (120 Days) of Diagnosis for Women Under 70 with AJCC T1c, or Stage II or III Hormone Receptor Negative Breast Cancer (NQF #0559); and
3. Adjuvant Hormonal Therapy (NQF #0220).

Inpatient Psychiatric Facility Quality Reporting Quality Reporting (IPFQR) Program
The IPFQR Program is a quality reporting program established by the Affordable Care Act. In the proposed rule, CMS is proposing one additional measure for the program. Specifically, beginning with FY 2020 payment determination, and continuing for subsequent years, CMS is proposing to add one measure, Medication Continuation following Inpatient Psychiatric Discharge, which is calculated from claims data. Second, CMS is proposing to update the IPFQR Program’s extraordinary circumstances exception (ECE) policy to align with other programs’ ECE provisions. Third, CMS is proposing to change how the annual data submission period is specified in order to align the end of this period with the deadline for submitting a Notice of Participation (NOP) or withdrawing from the program. Finally, CMS is proposing factors by which it would evaluate measures to be removed from or retained in the IPFQR Program.

Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Changes
Nationwide, most inpatients are treated in acute care hospitals, but some are admitted to LTCHs. In this proposed rule, CMS is proposing to update the LTCH PPS standard Federal payment rate by 1 percent, consistent with the provisions of the Medicare Access and CHIP Reauthorization Act of 2015. This is the payment rate applicable to LTCH patients that meet certain clinical criteria under the dual rate LTCH PPS payment system required by the Pathway for SGR Reform Act of 2013. Overall, based on the changes included in this proposed rule, CMS projects that LTCH PPS payments would decrease by approximately 3.75 percent, or $173 million in FY 2018, which is due in large part to the continued phase in of the dual payment rate system.

In addition, CMS is evaluating if the 25-percent threshold policy is still needed. For FY 2018, CMS is proposing a regulatory moratorium on the implementation of the 25-percent threshold policy for FY 2018 while it conducts the evaluation. CMS is also proposing to revise its short-stay outlier payment adjustment and implementing various provisions of the 21st Century Cures Act that affect LTCHs.

Long Term Care Hospital Quality Reporting Program (LTCH QRP)

Under the LTCH QRP, the applicable annual update for any LTCH that does not submit the required data to CMS is reduced by two percentage points with respect to that fiscal year.

In this FY 2018 proposed rule, CMS is proposing to replace the current pressure ulcer measure with an updated version of that measure, as well as adopt two new companion measures (one process and one outcome) related to ventilator weaning, beginning with the FY 2020 LTCH QRP. These proposed measures are:

1. Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury
2. Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay
3. Ventilator Liberation Rate

Further, CMS is proposing to remove two currently adopted measures, Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678) and All-Cause Unplanned Readmission Measure for 30 Days Post-Discharge from LTCHs. CMS is also proposing to begin publicly reporting six new measures to display on the LTCH Compare website by fall 2018 and one new measure to display on the LTCH Compare website by fall 2020.

Beginning with the FY 2019 LTCH QRP, standardized patient assessment data must be reported by LTCHs. We propose to satisfy this requirement using the data submitted on the existing pressure ulcer measure. For the FY 2020 program year, CMS is proposing that LTCHs begin reporting standardized patient assessment data with respect to five specified patient assessment categories required by law that include:

1. functional status;
2. cognitive function;
3. special services, treatments and interventions;
4. medical conditions and co-morbidities; and
5. impairments.

Lastly, CMS is making proposals with respect to the applicability of current procedural requirements.

Notice Regarding Changes to Instructions for the Review of the Critical Access Hospital (CAH) 96-Hour Certification Requirement

For inpatient CAH services to be payable under Medicare Part A, the statute requires that a physician certify that the individual may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the CAH. Based on feedback from stakeholders CMS has reviewed the CAH 96-hour certification requirement to determine if there are ways to reduce its burden on providers. In this proposed rule, CMS is providing notice that it will direct Quality Improvement Organizations (QIOs), Medicare Administrative Contractors (MACs), the Supplemental Medical Review Contractor (SMRC), and Recovery Audit Contractors (RACs) to make the CAH 96-hour certification requirement a low priority for medical record reviews conducted on or after October 1, 2017. This means that absent concerns of probable fraud, waste or abuse of the coverage requirement, these contractors will not conduct medical record reviews.

Proposed Changes for Indian Health Service (IHS) or Tribal Facilities and Hospital-within-Hospitals (HwHs)

As part of its effort to reduce regulatory burden, CMS is proposing changes to the provider-based regulations as they relate to IHS or Tribal facilities, and separately is also proposing to revise certain HwH requirements, which are regulations governing payment where hospitals are co-located.

Proposed Revisions to the Application and Re-Application Procedures for National Accrediting Organizations (AOs)

In addition to the above proposals, CMS also proposes to revise the application and re-application process for AOs, specifically related to transparency by requiring AOs to post provider/supplier survey reports and plans of corrections from CMS-approved accreditation programs on their website. AOs currently do not make their survey reports and acceptable PoCs from their CMS-approved accreditation programs publicly available. This regulation would propose that these AOs be required to post all survey reports and acceptable PoCs from their CMS-approved accreditation programs on their websites. CMS continues to make the Regional Offices (ROs) and State Agencies (SAs) survey reports (2567’s) as well as their acceptable plans of correction (PoCs) publicly available through a variety of methods, in order to advance the Department’s and Agency’s commitment to transparency in terms of patient access to quality and safety information. Access to survey reports and PoCs will enable health care consumers, in addition to Medicare beneficiaries, to make a more informed decision regarding where to receive health care thus encouraging health care providers to improve the quality of care and services they provide.

Proposed Changes to Termination Notices

CMS also proposes to eliminate newspaper notices for the Medicare termination of Ambulatory Surgical Centers (ASCs), Federally Qualified Health Centers (FQHCs), Rural Health Clinics (RHCs) and Organ Procurement Organizations (OPOs). Newspapers have become an outdated means of communication for these notices. The existing regulations for the majority of providers and suppliers require CMS to notify the public of Medicare terminations. Currently, the public notice of termination for ASCs, FQHCs, RHCs and OPOs, must be published in one or more local newspapers. We are proposing to change the requirement for ASCs, FQHCs, RHCs and OPOs, in order to be consistent with other provider and suppliers’ public notification regulatory language by proposing to eliminate the posting of the termination notice in a local newspaper.

Rural Community Hospital Demonstration

Section 15003 of the 21st Century Cures Act requires an extension of the Rural Community Hospital Demonstration for an additional 5-year period. The demonstration was authorized originally for a 5-year period by section 410A of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), and it was extended for another 5-year period by sections 3123 and 10313 of the Affordable Care Act.

The 21st Century Cures Act allows for hospitals that were participating in the demonstration as of the last day of the initial 5-year period, or as of December 30, 2014, to participate in this second extension period unless the hospital makes an election to discontinue participation. The statute also requires that no later than 120 days after enactment of the law, a request for applications be issued for additional hospitals to participate in the demonstration program for the second 5 year extension period, so long as the maximum number of 30 hospitals stipulated by the Affordable Care Act is not exceeded. CMS expects the request for applications to be released in April 2017.

The MMA requires the demonstration to be budget neutral. In prior years, CMS has adjusted the national IPPS rates by an amount sufficient to account for the added costs of this demonstration program, thus applying budget neutrality across the payment system as a whole rather than merely across the participants in the demonstration program.

In the FY 2018 IPPS/LTCH PPS proposed rule, we provide a summary of the previous legislative provisions and their implementation, as well as a description of the provisions of section 15003 of the 21st Century Cures Act and our proposals for implementation, including proposals regarding the start date of the second five year extension for previously participating hospitals and the budget neutrality methodology for this second extension period. 

CMS is proposing to align the periods of performance for both previously participating hospitals and newly selected hospitals during the second 5-year extension period such that the performance periods for any of the hospitals would start with a hospital’s first cost reporting period beginning on or after October 1, 2017 following upon the announcement of the selection of the additional hospitals. In addition, CMS is proposing to apply a budget neutrality methodology similar to that of previous years by proposing to adjust the national IPPS rates to account for the added costs of the demonstration program. 

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