CMS cuts hospital payments by 2.9%

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The Centers for Medicare & Medicaid Services (CMS) has issued a prospective payment system final rule for fiscal year 2011 for acute-care and long-term care hospitals that would decrease average inpatient payments by 0.4 percent.

The final rule includes an initial market basket update of 2.35 percent (which includes the 0.25 percentage point cut mandated by the Patient Protection and Affordable Care Act) for those hospitals that submit data on quality measures; hospitals not submitting data would receive a 0.35 percent update.

Also, the final rule makes a 2.9 percent cut to eliminate the effect of coding or classification changes the agency says do not reflect real changes in case-mix. When coupled with other policy changes, payments will decrease by 0.4 percent on average in the fiscal year of 2011 compared with the fiscal year of 2010.

Under current law, hospitals that successfully report quality measures included in the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program will receive the full update for 2011. Based on the reporting in 2009, 96 percent of participating hospitals are receiving the full update this year, CMS said.

The final rule adds 12 measures to the RHQDAPU set, and retires one current measure—mortality for selected surgical procedures (composite). However, only 10 of the new measures—including rates of occurrence for eight of 10 categories of conditions that are subject to the hospital-acquired conditions policy—will be considered in determining a hospital’s fiscal year 2012 update. The remaining two measures to be reported in 2011 would be considered in determining the hospital’s fiscal year 2013 update.

The final rule applies to approximately 3,500 acute-care hospitals paid under the inpatient prospective payment system (IPPS), and approximately 420 long-term care hospitals paid under the long-term care  hospital prospective payment system, for discharges occurring on or after Oct. 1, according to CMS. It also updates the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. The updated rate-of-increase limits are effective for cost reporting periods beginning on or after Oct. 1.

"America's hospitals strongly disagree with the CMS' final inpatient rule," said the American Hospital Association President and CEO Rich Umbdenstock. "The rule cuts billions of dollars from the healthcare system at a time when patients are sicker, more people are losing coverage due to the economic downturn and hospitals are dealing with significant changes contained in the health reform bill."