WASHINGTON – Hospital groups across the country are assessing the potential impact of the final rule issued by the Centers for Medicare & Medicaid Services on IPPS last month.

The rule will increase the emphasis on collecting quality data and use payment policies to push providers to give beneficiaries safer care.

A variety of other payment nuances will tweak hospitals’ reimbursements for Medicare services. CMS estimates that overall payments to all hospitals will increase by an estimated average of 3.5 percent for fiscal year 2008, which starts October 1. Much of that increase is a result of the 3.3 percent hike related to the marketbasket, which measures the change in the cost of a sample goods and services typically purchased by hospitals.

The new rule uses the marketbasket update for fiscal 2009 to leverage hospitals to provide more quality data in fiscal 2008. CMS will measure 30-day mortality for Medicare patients with pneumonia and plans to adopt two measures relating to surgical care improvements. The agency also expects to finalize two additional surgical care improvement measures.

The Premier Healthcare Alliance lauded the inclusion of quality improvement initiatives in the final rule, saying the additions bring to 27 the number of quality measures on which hospitals will need to provide data in fiscal 2008.

CMS is turning up pressure to eliminate medical miscues and the ability of providers to charge the Medicare program for fixing them. The rule implements a provision from the deficit reduction act of 2005 preventing Medicare from paying hospitals higher costs when beneficiaries acquire an infection during a hospital stay.

Beginning October 1, hospitals will be required to report secondary diagnoses that are present when Medicare beneficiaries are admitted. They’ll have two years to fine-tune present-on-admission reporting because in fiscal 2009, Medicare will not pay for any additional treatment of conditions that were not reported at admission.

The final rule also identifies eight conditions, including three serious preventable events – sometimes called “never” events – that Medicare won’t reimburse if they occur during hospital treatment. Those include leaving objects in patients during surgery and giving them incompatible blood, said Blair Childs, senior vice president at Premier.

The high-cost threshold for qualifying for outlier payments has been lowered to $22,650, down from $24,485 in fiscal 2007. The threshold is reached when Medicare’s payment is less than the cost of treating beneficiaries with complicated, expensive care.

Capital-related payments to urban hospitals, which had provided a 3 percent add-on to large metropolitan facilities, have been eliminated, and there is a three-year phase-out period for indirect medical education payments, said Rich Umbdenstock, president and CEO of the American Hospital Association. He predicted the IME cut, which CMS had not proposed in the first draft of the rule, will hurt the nation’s teaching hospitals.

The rule also creates new disclosure requirements for physician-owned specialty hospitals, aimed at requiring physicians to disclose their ownership interest in the facilities to patients. It also requires written notification to patients if a facility is not staffed by physicians on a round-the-clock basis and, in such cases, how it plans to handle medical emergencies.