Provider Notice Issued 12/22/2017

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Date:   December 22, 2017

To:       Participating Hospitals:  Chief Executive Officers, Chief Financial Officers, and Patient Accounts Managers

Re:      Updates to Hospital Reimbursement Components Effective January 1, 2018

The Department will not be updating grouper versions January 1, 2018 and will continue to utilize Grouper Version 33 of the 3M All Patient Refined Diagnosis Related Group (APR-DRG) payment system for inpatient claims and Grouper Version 3.11 of the Enhanced Ambulatory Patient Groups (EAPG) for outpatient claims. 

In accordance with 89 Ill. Adm. Code Section 149.100, the Department is updating components of the inpatient reimbursement system including the Medicare Inpatient Prospective Payment System (IPPS) labor share percentage and the Medicare IPPS wage index. These updates will affect the base rates assigned to individual hospitals reimbursed under the APR-DRG grouper.

Effective with discharges on and after January 1, 2018: 

·       For Medicare IPPS hospitals that are in-state or are out-of-state Medicaid cost-reporting hospitals, the wage index is based on the Medicare inpatient prospective payment system post-reclass wage index effective at the beginning of the federal fiscal year starting three months prior to the calendar year during which the discharge occurred; except, for the calendar year beginning January 1, 2014, the wage index is based on the Medicare IPPS hospital post-reclass wage index effective October 1, 2012.

·       For in-state non-Medicare IPPS hospitals and out-of-state non-Medicaid cost-reporting hospitals, the wage index is based on the Medicare inpatient prospective payment system wage index for the hospital's Medicare CBSA effective at the beginning of the federal fiscal year starting three months prior to the calendar year during which the discharge occurred; except, for the calendar year beginning January 1, 2014, the wage index is based on the Medicare IPPS wage index for the hospital's Medicare CBSA effective October 1, 2012. 

·       "Medicare IPPS labor share percentage" means the Medicare inpatient prospective payment system operating standardized amount labor share percentage for the federal fiscal year ending three months prior to the calendar year during which the discharge occurred; except, for the calendar year beginning January 1, 2014, the labor share percentage in the Medicare inpatient prospective payment system for the federal fiscal year beginning October 1, 2012, which is 0.6880 for a hospital with a Medicare IPPS wage index greater than 1.0 or 0.6200 for all other hospitals.

In accordance with 89 Ill. Adm. Code Section 149.105(b), the Department is updating the Medicare IPPS outlier cost to charge ratios for those hospitals reimbursed under the APR-DRG payment system. Effective with discharges on or after January 1, 2018:

·       For Medicare IPPS hospitals, the outlier cost-to-charge ratio is based on the sum of the Medicare inpatient prospective payment system hospital-specific operating and capital outlier cost-to-charge ratios effective at the beginning of the federal fiscal year starting three months prior to the calendar year during which the discharge occurred.

·       For non-Medicare IPPS hospitals, the outlier cost-to-charge ratio is based on the sum of the Medicare inpatient prospective payment system statewide average operating and capital outlier cost-to-charge ratios for urban hospitals for the state in which the hospital is located, effective at the beginning of the federal fiscal year starting three months prior to the calendar year during which the discharge occurred.

Effective with dates of service on or after January 1, 2018, in accordance with 89 Ill. Adm. Code Section 148.140, the Department is updating the Medicare IPPS wage index used in calculating the outpatient EAPG base rates. 

For in-state providers and out-of-state Illinois Medicaid cost reporting providers, the wage index used for inpatient reimbursement is as described in 89 Ill. Adm. Code Section 149.100. For out-of-state non‑cost reporting providers, the wage index used to adjust the EAPG standardized amount shall be a factor of 1.0.

The Department is in the process of finalizing new hospital rate sheets as well as new inpatient and outpatient calculators. A communication will be sent notifying hospitals when these resources have been posted and a link to where they can be accessed on the Department’s website.  

Any further questions may be directed to the Bureau of Rate Development and Analysis at

217-785-0710.

Sincerely,

Dan Jenkins, Chief

Bureau of Rate Development and Analysis