On August 4, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a final rule updating the fiscal year (FY 2015) Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCH). CMS announced that the payment rate update to general acute care hospitals will be 1.4% in FY 2015. The rate update for long-term care hospitals will be 0.9%. The difference in the updating is accounted for by different statutory and regulatory provisions that apply to each system.
Some key provisions included in the 2015 Inpatient Prospective Payment System (IPPS) final rule are:
- For FY 2015, CMS is increasing the applicable percentage reduction to the Hospital Value-Based Purchasing (VBP) Program adjusting to 1.5% of the base operating MS-DRG payment amounts to all participating hospitals. CMS estimates that the total amount available for the value-based incentive payment will be approximately $1.4 billion.
- Hospital Readmissions Reduction Program will see a maximum reduction increase from 2 to 3 percent. For FY 2015, CMS will assess hospitals’ readmissions measures endorsed by the National Quality Forum. CMS estimates that hospital readmissions for Medicare declined by a total of 150,000 from January 2012 through December 2013.
- CMS is implementing the Affordable Care Act’s (ACA) Hospital Acquired Condition (HAC) Reduction Program. Beginning in FY 2015, hospitals scoring in the top quartile for the rate of HACs will have their Medicare inpatient payments reduced by one percent. This new program builds on the progress in this area achieved through the existing HAC program, which is currently saving $30 million annually.
- CMS is revising the labor market areas used for the wage index based on the most recent Office of Management and Budget (OMB) Core-Based Statistical Area delineations that are based on 2010 Census data. In order to mitigate potential negative payment impacts, CMS is adopting a one-year transitional during FY 2015 that would be based on a 50/50 blend of the former wage index and the new wage index. The new wage index will take effect in full in FY 2016.
The display copy can be found by going to https://s3.amazonaws.com/public-inspection.federalregister.gov/2014-18545.pdf