Life Science Compliance Update

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October 23, 2012

CMS Final Rule Inpatient Prospective Payment System, Raises Hospital Payments

Hospital Payments
General acute care hospitals will see Medicare payment rates rise 2.3 percent in fiscal year 2013, after allowing for other payment and regulatory changes, according to a final rule (almost 200 pages) recently issued by the Centers for Medicare & Medicaid Services (CMS).  This represents a significant increase from the 0.9 percent the agency proposed in April.

Under the final rule for the 2013 Inpatient Prospective Payment System and the Long-Term Care Hospital Prospective Payment System, CMS expects total Medicare spending on inpatient hospital services will increase by about $2 billion in 2013.  Long-term acute care hospitals (LTHCs) will see a 1.7 percent bump in Medicare payments with the new rule.

The American Hospital Association commended CMS for its actions.  “Although we remain concerned that CMS continues to implement unnecessary coding cuts for changes in 2008 and 2009, we are pleased that CMS changed course on the new 2010 proposal that would have challenged hospitals' mission of caring,” AHA President and CEO Rich Umbdenstock said.  AHA was pleased that CMS delayed the full implementation of the 25% rule for LTCHs for an additional year.

With the final rule, CMS added a new outcome measure to the value-based purchasing program set to begin in October, now rewarding hospitals for avoiding central line-associated bloodstream infections.

The rule also determined the methodology of the Hospital Readmissions Reduction Program, which will penalize hospitals for high readmissions for heart attack, heart failure and pneumonia starting in October. Hospitals should expect a 0.3 percent drop (about $280 million) in Medicare payments due to the readmissions program, according to CMS.

In a string of rate increases, CMS also gave skilled nursing facilities a 1.8 percent Medicare payment bump for fiscal 2013.

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