AFFORDABLE CARE ACT IMPLEMENTATION:

PPS HOSPITAL OPPORTUNITY FOR SUBSTANTIAL BONUS PAYMENTS - 2011 IPPS FINAL RULE DETAILS LOW VOLUME HOSPITAL BONUS PAYMENT CHANGES

FILING DEADLINE:  SEPTEMBER 1, 2010

CMS recently issued a public inspection version of the 2011 Inpatient Prospective Payment System Final Rule ("Final Rule").  In addition to addressing other provisions of the Patient Protection and Affordable Care Act of 2010 ("ACA") the Final Rule updates the regulations to reflect the new ACA standards that PPS hospitals must meet in order to obtain a "low volume adjustment" of up to 25% added to their DRG rate.   

While this opportunity existed prior to the ACA, it was only for hospitals with fewer than 200 total discharges (Medicare and non-Medicare).  The ACA raises the eligibility threshold to hospitals with fewer than 1,600 Medicare discharges for Federal fiscal years 2011 and 2012.  After that, the standard will revert back to 200 total discharges.  Prior to the ACA, hospitals had to be at least "25 road miles" from the nearest PPS hospital to qualify.  The ACA temporarily reduces this mileage threshold to 15 miles for these two years.  The amount of the payment adjustment available is based on a sliding scale add on percentage that increases by 1.6667% for each 100 discharges below 1,600, until a full 25% add on payment amount is reached for hospitals with fewer than 201 discharges.   

Prior to FY 2011 and for 2013 and later, the discharge test is applied based on a hospital's most recently submitted cost report.  For FYs 2011 and 2012, the discharge test is applied based on Medicare discharges.  These Medicare discharges include those attributable to Medicare inpatients whose stay was covered under Part A, whose inpatient benefits are exhausted, whose stay was not covered and those covered by Advantage plans.  This discharge count is to be determined based on the most recently available MedPAR data as determined by CMS.   

The Final Rule includes a chart of over 1,300 PPS hospitals, listed by provider number, that are below the 1,600 threshold based on the March 2010 update of the FY 2009 MedPAR files.  To determine whether your hospital might qualify, please review the chart that can be found here.  The chart also includes the low volume adjustment percentage to be added on to each potentially eligible provider's DRG rate. 

Please note: hospitals listed in the chart are NOT automatically eligible, because CMS has made no attempt to determine whether or not the hospital meets the 15 mile distance requirement.  The 15 mile test is based on the same definitions that are used for determining whether a hospital would qualify for Medicare sole community hospital status - "road miles" for the "shortest distance over improved roads."  The distance must be determined to the nearest "subsection (d) hospital" - which means that excluded hospitals such as CAHs, rehab, psych, LTCH and children's hospitals are disregarded.  Only the distance to other PPS-DRG paid hospitals is considered. 

If your hospital is on the list and meets the 15 mile test, the next step would be to submit documentation confirming compliance with the mileage requirement to the appropriate fiscal intermediary or Medicare administrative contractor.  For discharges occurring in FY 2011, hospitals must make their requests in writing to the FI/MAC by September 1, 2010, so that the applicable add on payments may be applied for discharges beginning on or after October 1, 2010.