Medicare Proposed FY18 Inpatient Rule Very Problematic for Autologous Transplant; Comments Needed

Policy Perspectives, May 2017



Medicare Proposed FY18 Inpatient Rule Very Problematic for Autologous Transplant; Comments Needed

By Stephanie Farnia, ASBMT Director of Health Policy and Strategic Relations


 “April showers bring May flowers” is a favorite saying here in the Upper Midwest, along with “Don’t put the snow blower away until Memorial Day!” – something that many of us have learned the hard way.   More relevant to this column, however is the role April plays in kicking off the beginning of the Medicare (CMS) rule-making season.  As a Federal Agency charged with the role of implementing health care legislation, CMS enters a lengthy process each year of creating the new Inpatient Prospective Payment System (IPPS) Final Rule – a set of very detailed instructions, payment procedures and calculations for the upcoming Fiscal (FY) or Calendar Year (CY).   The Inpatient portion of IPPS is self-explanatory – this rule specifically governs the payments made to facilities for inpatient care provided to Medicare beneficiaries (Part A of Medicare).  Prospective Payment is a method of payment established by the Social Security Amendments Act of 1983, in which CMS switched from reimbursing providers for the specific amount spent per patient claim to a pre-set amount for specific episodes of care, based on historical data.   Translation: for a hospital treating a patient with a cardiac-related stay in 1982, they were reimbursed a percentage of the charges on the specific patient’s bill; in 1983, under the new system, they were paid a set amount which was determined in advance (Prospective Payment), based on cardiac-related claims across the country for the previous data year.  This system has been in place ever since, with on-going modifications made each year during the CMS rule-making process.  

Rule-Making Process

The Federal rule-making process mandates several steps, including the release of a proposed rule with a 60-day comment period during which the general public can comment on any of the changes being proposed.   After the due date for comments has passed, CMS staffers are required to review each submitted comment and address relevant concerns in revisions to the Final Rule before it is released.  The Final Rule is released 60 days prior to when it needs to be implemented by the affected parties.  There are many rules that cycle through this process each year, but the key ones for our field are listed in the table below.


Proposed Rule Released

Comments Due

Final Rule Released

Effective Date





October 1 (FY)





January 1  (CY)

Physician Fee




January 1  (CY)



Key HCT Items in the FY18 IPPS Proposed Rule

There are two areas of substantial concern for HCT in this year’s IPPS Proposed Rule.

  1. Due to a general project evaluating all of the care episodes for which it pays, CMS has categorized Autologous HCT as a Non-Operating Room procedure.  While this is clinically correct, CMS interprets Non-OR care episodes as being less resource intensive and has accordingly changed the grouper logic for all Non-OR procedures in a way that is detrimental to rate-setting.  Based on CMS’s own data, there were 1,957 Auto HCTs categorized as MS-DRG 016 and 157 Auto HCTs categorized as MS-DRG 017 in the FY2016 data year.  However, because of the newly proposed grouper changes, only 4 and 2 of those cases, respectively, are being recognized by CMS as claims that should be used for future rate-setting purposes. 


For detailed information on this issue, see the NMDP website.


  1. Despite ongoing requests from the HCT community, CMS did not propose to pay for bone marrow/stem cell transplant acquisition costs separate from the MS-DRG payment for Allogeneic HCT.  Providers will continue to have to absorb these costs into the already inadequate DRG payment rate.  See table below for more details.


FY2018 Proposed Payment Rate for HCT

Each year, CMS calculates a weight for each MS-DRG (episode payment number) by reviewing the resources used in the data year being analyzed.  To calculate the base payment rate, one takes the weight and multiplies it by the National Adjusted Operating Standard Amount, which is what CMS calculates as the labor and operating costs per unit of inpatient care.  The FY2018 standard calculated cost is $5,436.51 per weight for base-level hospitals.   [Note: these amounts vary by type of hospital.  I use the lowest amount in order to assess worst-case scenario for payment.]


Proposed Weight


Standard Cost

FY18 Base Payment

014 – Allogeneic HCT


23.8 days



016 – Autologous w/ CC/MCC





017 – Auto w/o CC/MCC







By contrast, MS-DRG 001, Heart Transplantation with Major Comorbidities and/or Complications has a Medicare weight of 25.2117, which results in a payment of over $130,000 for a hospital stay with an average of 28 days.  Additionally, solid organ programs receive separate payment for the costs of locating and purchasing the organ used for transplantation.

The link to rule can be found here.  

This year’s IPPS rule is 1,832 pages and includes over 20 data tables and files.  Below the general description is a box with several links:

  • “CMS-1677-P” takes you to the text of the rule.
  • “Data Files” takes you to the listing of tables with the information used to calculate the rule
  • “Data Tables” gives information on various aspects of the proposed rule

Data Reminder: the data being shown in the tables and used for purposes of calculating FY18 payment rates is from two years ago.  Example: the IPPS FY2018 payment rates use FY2016 data – specifically, the claims data you submitted between October 1, 2015 and September 30, 2016. 

Importance of Commenting on the Proposed Rule

Each year, the ASBMT and NMDP partner to attempt to get health professionals and transplant programs to comment on the proposed rule.  This is not a fruitless endeavor – the positive changes you have seen in your reimbursement, including the splits to the Autologous and Allogeneic DRGs and the dramatic increase in the outpatient payment rate for 2017, are due to the efforts of yourselves and your colleagues in sending comments to CMS.  Due to the potential impact of the proposed changes for FY18, we will need all of you to comment on the issues of concern this year.

Links to submit a comment:

CMS also provides information on how to submit a comment directly, through several methods, on pages 3-4 of the proposed rule file.

Things to Remember When Submitting a Comment

  After You Submit Your Comments - Tell the World!
After you take action on this important issue, be sure to tweet about it - share this page on Facebook - send out emails - encourage your peers to take action too!
  • You do not have to understand the technicalities of Medicare payment to comment.  Very few people understand how to fluently interpret the language and data in the proposed rule.  But all of you understand the issues in your program when the transplant payment rate is far below what it costs you to provide.  When you click on the links provided, the tool will take you to a page for submitting your comments and will prompt you with some of the important items you may wish to highlight.
  • Telling your story is important.  Share your role in your transplant program, your experience with treating Medicare beneficiaries and whatever impact the low reimbursement rate for HCT has had or will have on your program or patient population. 
  • Ask Medicare to fix the problem.  Request that Medicare reverse the proposed method of sorting autologous transplant claims and ask that CMS pay separately for the cost of finding and acquiring donor cells for allogeneic transplantation.   Encourage Medicare to examine additional ways to bring the payment closer to the cost of care. 
  • Communicate with your Government Affairs team or Oncology Leader.  Share that these proposed changes are an issue for your entire hospital and/or cancer center and ask for their involvement.
  • The comment period ends on Tuesday, June 13.   ASBMT and NMDP/Be The Match will be separately submitting detailed comment letters and will be partnering on a series of media activities intended to remind all of you that commenting is crucially important for our field.

Questions and Concerns:

Keep up with these kinds of issues by following me @HCT_policy on Twitter. 


  Want to know more about this topic?

  Watch the WEBINAR Recording :
"What you need to know about the Medicare Inpatient Reimbursement rule
with Susan Leppke, Alicia Silver (NMDP) and Stephanie Farnia (ASBMT) 



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