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CMS issues proposed 2014 IPPS

New Medicare rates cut hospital DSH payments

The Centers for Medicare & Medicaid Services proposed late Friday its fiscal 2014 Medicare payment schedule. Included in the proposal are payment cuts to hospitals that treat uninsured individuals and slightly higher rates for acute care and long-term care hospitals. The proposal also prepares the groundwork for a program that imposes a penalty on facilities that lag on reducing the frequency of hospital-acquired conditions.

[See also: DSH cuts rattle urban hospital execs ]

The 1,424-page proposed IPPS rule would increase operating rates by 0.8 percent. The proposed rate increase also reflects a proposed temporary reduction of 0.8 percent required in the implementation of the American Taxpayer Relief Act to avert the fiscal cliff. The temporary reduction serves to recoup overpayments to providers from prior years as a result of a new patient classification system that better recognizes patient severity of illness. A proposed additional 0.2 percent reduction would offset projected spending increases associated with proposals regarding admission and medical review criteria for inpatient services, CMS said in a press release.

The proposed rule also modifies the method for calculating disproportionate share hospital payments (DSH) to hospitals that serve a large proportion of uninsured and low-income individuals.

CMS said it will reduce DSH payments to 25 percent of the amount Medicare would pay under the current policy. The remaining 75 percent will be adjusted depending on hospitals’ rate of uninsured individuals and uncompensated care. The agency seeks comments on how these additional payments will be distributed.

The proposed rule also lifts the moratorium on applying the 25-percent threshold for patients admitted to long-term care hospitals (LTCH) from a single acute care hospital. In 2014, Medicare will pay for those patients above the 25 percent threshold at a lower rate.

The proposed IPPS is anticipated to increase acute care hospital payments by $27 million and LTCH hospital payments by $62 million or 1.1 percent in 2014, the announcement said.

Under the patient safety program to be launched in 2015, and called for by the Affordable Care Act (ACA), hospitals that rank among the lowest-performing 25 percent on hospital-acquired conditions will be paid 1 percent less than they would otherwise be paid under the Inpatient Prospective Payment System (IPPS), CMS said in the press release.

Other provisions in the proposed rule related to supporting paying for value and quality to improve patient care, include:

Value-Based Purchasing Program. CMS is increasing the portion of Medicare payments available to fund the value-based incentive payments to 1.25 percent, with the total amount available for performance-based incentive payments for 2014 approximately $1.1 billion. The rule would also add new measures to the program.

• Hospital Readmissions Reduction Program. The maximum reduction in payments will rise from 1 percent to 2 percent. CMS also proposes to add two new readmission measures, which could be used to calculate readmission penalties for 2015.

•  Quality Reporting Programs. The proposed rule would update the measures in the Hospital Inpatient Quality Reporting program, Inpatient Psychiatric Facility Quality Reporting program, Long-Term Care Hospital (LTCH) Quality Reporting program and the PPS-Exempt Cancer Hospital Quality Reporting program. It proposes to ease providers’ reporting burden by aligning the quality measure reporting. requirement with Medicare Electronic Health Record (EHR) Incentive Program policies with certain measures in the Hospital IQR Program.

CMS will accept comments on the proposed rule until June 25 and finalize the rule by Aug. 1. The agency will officially publish the proposed rule in the May 10 Federal Register.

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