2019 IPPS Final Rule: Payment Changes, Burden Reduction and Price Transparency

on Monday, 13 August 2018. All News Items | Documentation | Coding

Creating a Patient-Centered Healthcare System

This week MMP continues our series of articles focusing on the 2019 IPPS/LTCH Final Rule. In a related CMS Fact Sheet, they note that this Final Rule further advances “the agency’s priority of creating a patient-centered healthcare system by achieving greater price transparency, interoperability, and significant burden reduction so that hospitals can operate with better flexibility and patients have what they need to be active healthcare consumers.”

Last week’s article focused on the change to the admission order requirement. CMS put the admission order change into the “variety of changes” that will result in “Burden Reduction” for hospitals. This week’s article focuses on the finalized payment rate changes for acute care hospitals, “transparency” through online posting of standard charges, and “Burden Reduction” through revisions to the Physician Certification requirement.

Payment Rate Changes for IPPS Participating Acute Care Hospitals

“By law, CMS is required to update payment rates for IPPS hospitals annually, and to account for changes in the prices 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.”

“The 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 1.85 percent.” This first table details Payments Rates Finalized for FY 2016 through FY 2018 compared to the Finalized Rate 1.85 percent change for FY 2019.

Table 1: Operating Payment Rate Compare: Hospital Inpatient Quality Reporting & Meaningful EHR Users

IPPS Payment Rates Compare: Final Changes for FY 2016 – 2018 vs. Final Changes for FY 2019
 FY 2016FY 2017FY 2018FY 2019
Hospitals successful participation in Hospital Inpatient Quality Reporting (IQR) & are Meaningful Electronic Health Record (EHR) users 0.9% increase 0.9% increase 1.6% increase 1.85% increase
Hospitals not successfully participating in the Hospital IQR Program & Do Not submit required Quality Data ¼ Reduction Market Basket Update ¼ Reduction Market Basket Update ¼ Reduction Market Basket Update ¼ Reduction Market Basket Update
Hospitals that are not Meaningful EHR Users ½ Reduction Market Basket Update ¾ Reduction in Market Basket Update ¾ Reduction in Market Basket Update ¾ Reduction in Market Basket Update

This next table details the Market Basket and “other factors” accounted for in the payment rate updates. Keep in mind that this percentage is for Hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) and are Meaningful EHR users.

Table 2: Elements Used to Compute Operating Payment Rates

How CMS computes Acute Care Hospital Operating Payment Rates
 FY 2016FY 2017FY 2018FY 2019
Hospital Market Basket Update 2.4% 2.8% 2.9% 2.9%
Adjustment for multi-factor productivity -0.5% -0.5% -0.4% -0.8%
Adjustment in accordance with the Affordable Care Act -0.2% -0.75% -0.75 -0.75%
Documentation & Coding Recoupment Adjustment required by American Taxpayer Relief Act of 2012 -0.8% -1.5% (+)0.46% (+)0.5%
Proposed Increase to remove adjustment to offset estimated costs of the Two Midnight policy and address its effects in FYs 2014, 2015 & 2016 N/A (+)0.8% -0.6% N/A
Operating Payment Rates: 0.9% 0.85% (*) 1.6 % 1.85%

“CMS projects that the rate increase, together with other changes to IPPS payment policies, will increase Medicare spending on inpatient hospital services in FY 2019 by approximately $4.8 billion, including an increase in new technology add-on payments of $0.2 billion.” The projected increase in Medicare spending doubles the expected increase of $2.4 billion in FY 2018.


Transparency: Requirements for Hospitals to Make Public a List of Their Standard Charges via the Internet

Public Health Services Act

Section 2718 of the Public Health Services Act focuses on bringing down the cost of health care coverage. More specifically, Section 2718(e) is sub-titled Standard Hospital Charges and provides the following requirement:

“(e) Standard Hospital Charges – Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups established under section 1886(d)(4) of the Social Security Act.”

2015 IPPS/LTCH Final Rule

In the FY 2015 IPPS/LTCH Final Rule (79 FR 50146), CMS reminded hospitals of their obligation to comply with provision 2718(e) of the Public Health Service Act and provided guidelines for its implementation.  


  • Hospitals either make public a list of their standard charges (whether that be the chargemaster itself or in another form of their choice), OR
  • Have a policy for allowing the public to view a list of those charges in response to an inquiry.

MedPAC suggested that hospitals be required to post the list on the internet. While CMS agreed posting a list on the internet would be one approach to satisfy the guidelines, they believed hospitals were in the best position to determine the manner and method to make the list public and did not make this a requirement.

CMS did encourage hospitals to undertake efforts to do the following:

  • Engage in consumer friendly communication of their charges to help patients understand what their potential financial liability might be for services they obtain at the hospital, and
  • Enable patients to compare charges for similar services across hospitals.

The expectation was that hospitals would update the information at least annually, or more often as appropriate, to reflect current charges. CMS ended this section of the 2015 Final Rule by stating “We are confident that hospital compliance with this statutory transparency requirement will improve the public accessibility of charge information. As hospitals continue to make data publicly available in compliance with section 2718(e) of the Public Health Service Act, we also will continue to review and post relevant charge data in a consumer friendly way, as we previously have done by posting on the CMS Web site the following hospital and physician charge information: May and June 2013 hospital charge data releases; 2013 physician data requests for information; and the April 2014 physician data releases and data provided on geographic variation in payments and payments per beneficiary.”

CMS maintains a Medicare Provider Utilization and Payment Data webpage on the CMS.gov website. Here you will find data across several settings (i.e., Hospital Inpatient and Outpatient, Home Health, Skilled Nursing Facilities and Physician Data).

2019 IPPS/LTCH Proposed Rule

In the 2019 IPPS/LTCH Proposed Rule CMS shared their concern “that challenges continue to exist for patients due to insufficient price transparency.” Specific challenges cited include:

  • Patients being surprised by out-of-network bills for physicians, such as anesthesiologists and radiologist, who provide services at in-network hospitals.
  • Patient being surprised by facility fees and physician fees for emergency department visits.

Another concern was “that chargemaster data are not helpful to patients for determining what they are likely to pay for a particular service or hospital stay. In order to promote greater price transparency for patients…we are considering ways to improve the accessibility and usability of the charge information that hospitals are required to disclose under section 2718(e) of the Public Health Service Act.”

As a first step, CMS acted upon MedPAC’s prior suggestion and effective January 1, 2019, hospitals will be required “to make available a list of their current standard charges via the Internet in a machine readable format and to update this information at least annually, or more often as appropriate. This could be in the form of the chargemaster itself or another form of the hospital’s choice, as long as the information is in machine readable format.”

2019 IPPS/LTCH Final Rule: Comments and CMS Responses

Comment: Some supported the update to the guidelines and indicated many hospitals already make their standard charges available voluntarily or under applicable State law.

CMS Response: CMS agreed many hospitals already make information available, “for example, the 2014 American Hospital Association State Transparency Survey data indicated that 35 States required hospitals to release information on some charges and 7 States relied on voluntary disclosure of charge data.”

Side note, in July 2014, the American Hospital Association released a Toolkit for Hospitals regarding Achieving Price Transparency for Consumers.

Comment: Commenters suggested that payers are a better source of information about the cost of care and should be the primary source of information for out of pocket costs and that CMS should require that insurance companies provide cost calculators or other tools to patients to calculate costs specific to their situation. This comment ended by noting that many uninsured patients receive free or discounted care through the hospital’s charity care policies.

CMS Response: With respect to the commenters who indicated that, for insured patients, payers are a better source of information about the cost of care and should be the primary source of information for out-of-pocket costs for patients, we note that nothing in our guidelines precludes hospitals and payers from working together to provide information on out-of-pocket costs for patients and to improve price transparency for patients. We also recognize that sometimes uninsured patients receive free or discounted care through a hospital’s charity care policies and again commend hospitals for those policies. Nothing in our guidelines precludes a hospital from providing charity care to uninsured patients.

CMS finalized their proposed update to the guidelines that effective January 1, 2019 hospitals will be required “to make available a list of their current standard charges via the Internet in a machine readable format and to update this information at least annually, or more often as appropriate.”


Burden Reduction: Physician Certification Changes

In a related article about the 2019 IPPS Final Rule, MMP reported that the proposed and finalized revision to the hospital inpatient admission orders documentation requirements did not include changes to the Physician Certification requirements. Specifically, CMS notes in the Final Rule that Physician certification of inpatient services continues to be a requirement for cases that are 20 inpatient days or more (long-stay cases), for outlier cases of hospitals other than inpatient psychiatric facilities, and for cases of Critical Access Hospitals as per the CY 2015 OPPS/AC final rule (79 FR 66997), and 42 CFR part 312, subpart F, 42 CFR 424.13, and 42 CFR 424.15.

Towards the end of the display copy of the Final Rule, page 2142, CMS discusses the revisions made to the Physician Certification and Recertification of Claims. Medicare regulations at 42 CFR 424.11 implements §1814(a) and 1835(a)(2) of the Act, specifying “the requirements for physician statements that certify and periodically recertify as to the medical necessity of certain types of covered services provided to Medicare beneficiaries.”

  • §424.11 (c) “specifies that when supporting information for the required physician statement is available elsewhere in the records (for example, in the physician’s progress notes), the information need not be repeated in the statement itself. The last sentence of §424.11(c) further provides that it will suffice for the statement to indicate where the information is to be found.”

CMS notes as part of their initiative “to identify Medicare regulations that are unnecessary, obsolete, or excessively burdensome on health care providers and suppliers…we have been made aware that the provisions of §424.11(c)” which state that it will suffice for the statement to indicate where the information is to be found may be resulting in unnecessary denials of Medicare claims.”  

At the end of the day, “the medical record must contain adequate documentation of the relevant criteria for which the physician is providing certification and recertification” even when the exact location of this information is not noted on the Physician Certification. CMS notes “the precise location is becoming increasingly obsolete with the growing utilization of electronic health records (EHRs)—which, by their nature are readily searchable.”

CMS finalized their proposal to delete the last sentence of §421.11(c) and relocate the second sentence of §421.11(c) to the end of the immediately preceding paragraph (b).


CMS 2019 IPPS/LTCH Final Rule Home Page: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Final-Rule-Home-Page.html

CMS Fact Sheet Announcing Release of 2019 IPPS/LTCH Final Rule: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2018-Fact-sheets-items/2018-08-02.html


Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc.  Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. 

In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Risk Assessment (CRA) Tool. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.

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