On August 1, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates fiscal year (FY) 2013 Medicare payment policies and rates for their inpatient prospective payment system (IPPS) and long-term care hospitals (LTCH) prospective payment system (PPS). The final rule implements key elements of the Affordable Care Act’s hospital value-based purchasing and hospital readmissions reduction programs. The rule also advances efforts to tie Medicare payments to quality health care across the delivery system, with new quality reporting measures for general acute care hospitals in FY 2015 and FY 2016. In addition, the rule established new reporting and other requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program.
Under the final rule, payment rates to general acute care hospitals will increase by 2.8% in FY 2013. The 2.8% is the net result after the market basket update, improvements in productivity, a statutory adjustment factor and adjustments for hospital documentation and coding changes. The rate increase, together with other policies in the final rule, would increase Medicare’s operating payments to acute care hospitals by approximately 2.3% in FY 2013. CMS projects that total Medicare spending on inpatient hospital services will increase by about $2 billion in FY 2013 relative to FY 2012. Long-term care hospitals (LTCHs) will receive a net payment increase of 1.7% in fiscal year 2013
The rule also outlines parameters around the Hospital Readmissions Reduction Program, set to begin October 1, under which hospitals with higher-than-expected readmission rates will see reductions in their Medicare payments. For the first year of the program, CMS will use three existing 30-day readmission measures for heart attack, heart failure and pneumonia patients.
In addition, the rule strengthens the Hospital Value-Based Purchasing Program. This includes adding a new outcome measure, central line-associated bloodstream infection, to the program.
The long-term care hospital (LTCH) increase includes a 2.6% market-basket update, which is offset by two payment reductions under the Affordable Care Act (ACA) and, for patients discharged on or after December 29, a payment cut for very short-stay outlier cases. The final rule also delays full implementation of the “25% Rule” for one year for cost reports beginning between October 1, 2012 and October 1, 2013. The rule also implements a proposed one-time, permanent reduction of 3.75%. The payment cut will be phased in over three years, beginning with a 1.266% cut for discharges occurring on and after December 29, 2012.
The final rule will appear in the August 31, 2012 Federal Register, and will take effect on October 1, 2012.
The final rule is available at http://www.ofr.gov/OFRUpload/OFRData/2012-19079_PI.pdf