CMS finalizes plan to boost wage index for rural hospitals

Classic rural farm scene with a weathered red barn, silos, golden crops and a blue sky
CMS released a final rule that increases payments to rural hospitals under Medicare. (Getty/James Pintar)

The Trump administration released a final rule on Friday that boosts Medicare payments to rural hospitals in a bid to address major inequalities.

The Centers for Medicare & Medicaid Services released final rules on Friday for the Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment system for fiscal year 2020. The rules included an increase to the wage index for certain low-wage hospitals such as those in rural areas.

"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," CMS Administrator Seema Verma said in a statement on Friday.

The changes will improve the accuracy of Medicare payments to low-wage hospitals that earn below the 25th percentile of the index.

The policy will be effective for at least four years starting in federal fiscal 2020 on Oct. 1.

Verma told reporters that the boost to the wage index will be budget neutral by "adjusting payments across all hospitals for at least four years."

"With all of those changes together, even high-wage states will see an overall increase in their payments compared to last year," she said on Friday.

CMS also increased the add-on payment to hospitals for treating patients with new technology from 50% to 65% starting on Oct. 1. 

The increase would affect new treatments that include chimeric antigen-receptor T-cell therapy, an expensive immunotherapy that CMS is considering covering.