CMS Issues Proposed Hospital Inpatient Payment Regulation

Today, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update fiscal year (FY) 2015 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (LTCHs). This rule builds on the Obama administration’s efforts through the Affordable Care Act to promote improvements in hospital care that will lead to better patient outcomes while slowing the long-term health care cost growth.

CMS projects that the payment rate update to general acute care hospitals will be 1.3 percent in FY 2015. The rate update for long term care hospitals will be 0.8 percent.  The difference in the update is accounted for by different statutory and regulatory provisions that apply to each system.

The rule’s most significant changes are payment provisions intended to improve the quality of hospital care that reduce payment for readmissions, and hospital acquired conditions (HACs). The rule also includes proposed changes to the Hospital Inpatient Quality Reporting (IQR) Program. The rule also describes how hospitals can comply with the Affordable Care Act’s requirements to disclose charges for their services online or in response to a request, supporting price transparency for patients and the public.

“The policies announced today will assist the highly committed professionals working around the clock to deliver the best possible care to Medicare beneficiaries,” said CMS administrator Marilyn Tavenner. “This proposed rule is geared toward improving hospital performance while creating an environment for improved Medicare beneficiary care and satisfaction.”

The proposed rule asks for public input on an alternative payment methodology for short stay inpatient cases that also may be treated on an outpatient basis, including how to define short stays. In addition, the proposed rule reminds stakeholders of the existing process for requesting additional exceptions to the two-midnight benchmark.

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