The Centers for Medicare & Medicaid Services (CMS) has issued a final Inpatient Prospective Payment System (IPPS) rule to slightly increase the current Medicare payments to acute care hospitals and long-term inpatient hospitals.
CMS estimated that total Medicare operating payments for acute care hospitals will increase by $1.13 billion (1.1. percent) in fiscal year 2012. These changes will be due to a 1 percent increase in payment rates, the agency said. Likewise, Medicare payments to hospitals paid under Long Term Care Hospital Prospective Payment System (LTCH PPS) will increase by $126 million, or 2.5 percent, in FY2012 due to the 1.8 percent increase in payment rates coupled with additional policies adopted under the final rule.
Under the Affordable Care Act, CMS is required to implement a Hospital Readmission Reduction Program to decentivize hospitals for excess readmissions for certain conditions beginning FY2013. The rule finalizes readmission measures for three conditions—acute heart attack, heart failure and pneumonia—and these reduced payments will pertain to discharges on or after Oct. 1, 2012.
“CMS has developed its update policy in response to many comments expressing concerns about our original proposal,” said Jonathan Blum, deputy administrator and director for CMS. “We believe that our final policy strikes the appropriate balance between providing a fair update to hospitals and ensuring careful stewardship of the Medicare Trust Fund.”
The current Medicare payment rules will apply to 3,400 acute care hospitals and 420 LTCHs. The rule’s aim is to update payment policies and rates for acute care hospitals that are paid under the IPPS and the LTCH PPS. Additionally, CMS said that the final rule will strengthen the Hospital Inpatient Quality Reporting (IQR) program by attempting to prevent healthcare-associated infections in acute care hospitals.
“With respect to the annual update, [this] rule is welcome news for patients who depend on hospital care,” the American Hospital Association (AHA) said in a statement. “We are pleased CMS heeded hospitals’ recommendation and recognized the important work that hospitals are doing in their communities to care for patients.”
While the AHA commended CMS’ efforts, the association said that it is “disappointed CMS continues to implement coding cuts.” However, AHA did say it was “pleased” that CMS acknowledged its earlier plan would have hurt hospitals.
Medicare law requires CMS to pay acute care hospitals for inpatient stays under the IPPS and long-term hospitals under LTCH PPS. Payment systems set rates based on a patient’s diagnosis and severity of a condition. These payment rates must be updated by CMS annually to account for changes in costs of goods and services by hospitals treating Medicare patients.
The final rule will be published in the Federal Register Aug. 18.