Ways and Means Propose Site Neutral Hospital Prospective Payment System

The House Ways and Means Committee released a bipartisan draft bill, the Hospitals Improvement for Payment (HIP) Act, on November 19 in response to the committee's concerns regarding Medicare's two-midnights policy for determining inpatient stays, short inpatient stays, outpatient observation stays, as well as concerns related to auditing and appeals.

The bipartisan draft bill seeks to merge the Medicare inpatient and outpatient payment systems. The bill would establish a hospital prospective payment system (HPPS) by fiscal year (FY) 2020. ASPS will review the draft legislation to determine which provisions may be of interest to ASPS members.

Key provisions include merging inpatient and outpatient payment systems; requiring overnight outpatient observation stays be reimbursed out of the Part A trust fund; defining overnight outpatient hospital services as an observation stay of more than 24 hours; extending the previously regulated and legislated Recovery Audit Contractor (RAC) audit moratorium regarding the enforcement of the Centers for Medicare and Medicaid Services' (CMS) two-midnights standard; establishing a comprehensive, voluntary bundled payment program; and requiring hospitals to notify beneficiaries who are in observation that they may not qualify for coverage of skilled nursing facility (SNF) services.

The House Ways and Means Committee is seeking public comment on the discussion draft. ASPS will submit comments on behalf of its members, and will continue to monitor the legislation's progress.