Starting Oct. 1, rural hospitals across the U.S. will get the wage index boost they have long begged for, the CMS' said in its final rule on inpatient prospective hospital payments for fiscal 2020.
The agency's original proposal would have made this change by redistributing money from the top 25% of hospitals—such as politically heavyweight states like California and New York. In the final rule, the CMS will instead decrease payments across the board and cap any cut at 5%.
"The Trump administration is providing relief to rural communities and addressing payment policies that have disadvantaged rural hospitals, making it harder for them to stay open and provide care to the one in five Americans living in rural areas," CMS Administrator Seema Verma said in a statement. "The changes we're finalizing in today's rule are long overdue and improve the way Medicare pays hospitals, which will help many rural hospitals maintain their healthcare labor force, to ensure that patients have access to high-quality, affordable healthcare."
The CMS has also decided to boost pay with "new technology add-on payments" for 18 technologies including chimeric antigen receptor (CAR) T-cell therapies for cancer — a costly and sophisticated treatment.
The American Hospital Association welcomed the initial proposal to boost this payment. The agency said, however, that it's not ready to make any major change to the way Medicare approaches the therapy.
"After a review of the comments received, we continue to believe, similar to last year, that given the relative newness of CAR T-cell therapy, and our continued consideration of approaches and authorities to encourage value-based care and lower drug prices, it would be premature to adopt structural changes to our existing payment mechanisms, either under the IPPS or for IPPS-excluded cancer hospitals, specifically for CAR T-cell therapy," the agency said.
The most controversial part of the proposed rule was the wage index change.
After the CMS first outlined its proposal, AHA walked a careful line between the conflicting interests of its member hospitals by supporting an increase for rural states but urging the CMS not to cut elsewhere.
"Improving wage index values for some hospitals — while much needed — by cutting payments to other hospitals, particularly when Medicare already pays far less than the cost of care, is problematic," the AHA wrote in its comment letter. "CMS has the ability to provide needed relief to low-wage areas without penalizing high-wage areas."
The Greater New York Hospital Association had estimated that in total $242 million would get redistributed, and the group hinted at potential legal action in its comment letter to the agency.
The CMS "simply cannot use its authority ... to circumvent Congress's intent in enacting the wage index provisions," the GNYHA wrote. "Nor can it appropriately interpret this section to permit adjustments to the wage index calculation."
HHS' Office of Inspector General last November called for a complete overhaul of the wage index in a report that found the payment system is based on inaccurate wage data. The OIG estimated that 272 hospitals got at least $140.5 million in overpayments from 2014 to 2017.