2021 IPPS Proposed Rule: CMS Proposes Increased Payment Rates


According to the proposed rule, CMS projects total Medicare spending on inpatient hospital services, including capital, will increase by about $2.07 billion in FY 2021.

CMS’ fiscal year (FY) 2021 Inpatient Prospective Payment System (IPPS) proposed rule, released May 11, includes a proposed increase to hospital payment rates, the creation of a new Medicare-Severity Diagnosis-Related Group (MS-DRG) for chimeric antigen receptor T-cell (CAR-T) therapy, and ICD-10-CM/PCS code update proposals.

According to the proposed rule, CMS will increase operating payment rates by approximately 3.1 percent for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting Program and are meaningful electronic health record users. In comparison, in the FY 2020 IPPS proposed rule, CMS proposed an approximate increase of 3.2 percent in operating payment rates

For FY 2021 CMS projects the rate increase, together with other proposed changes to IPPS payment policies, will increase IPPS operating payments by approximately 2.5 percent. Proposed changes in uncompensated care payments, new technology add-on payments, and capital payments will decrease IPPS payments by approximately 0.4 percent, according to the proposed rule. Therefore, CMS estimates a total increase in overall IPPS payments of approximately 1.6 percent.

Hospitals may be subject to other payment adjustments under the IPPS, including:

  • A 1 percent penalty for the worst-performing quartile under the Hospital-Acquired Condition Reduction Program
  • Penalties for excess readmissions, which reflect an adjustment to a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid
  • Upward and downward adjustments under the Hospital Value-Based Purchasing Program

According to the proposed rule, CMS projects total Medicare spending on inpatient hospital services, including capital, will increase by about $2.07 billion in FY 2021.

CMS is also proposing the creation of a new MS-DRG specifically for cases involving CAR-T therapies. The new payment group would help to predictably compensate hospitals for their costs in delivering necessary care to Medicare beneficiaries and provide payment flexibility for the future as new CAR-T therapies become available, the rule says.

As for ICD-10-CM code updates, if all the proposed changes are finalized, coders will see 490 new, 47 revised, and 58 invalidated ICD-10-CM codes. Newly proposed ICD-10-CM codes include options for sickle cell anemia, arthritis, and a series of new options for reporting headaches. The entire list of proposed changes to the ICD-10-CM/PCS codes are available in tables 6A-6K and 6P.1a-6P.4a of the rule.

CMS invites the public to comment on all proposals. For more information on the rule, see the Federal Register. Comments are due to CMS no later than 5 p.m. EST on July 10 as CMS is waiving the 60-day delay in the effective date of the final rule and replacing it with a 30-day delay.

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