In fiscal year 2013, inpatient hospital payments will be increasing by 2.3 percent ($2.5 billion) under the final rule for the hospital inpatient and long-term care hospital prospective payment systems (IPPS/LTCH). The final rule was issued Wednesday night by the Centers for Medicare & Medicaid Services (CMS).
After concerns were raised by the American Hospital Association (AHA), as well as other hospital leaders around the country, CMS withdrew its proposed new cut of 0.8 percent (about $850 million) to inpatient PPS payments to permanently eliminate what it claimed was the effect of documentation and coding changes from fiscal year 2010 that do not reflect real changes in case mix.
"We were really concerned about the 0.8 percent cut for a couple of reasons, but the biggest factor is that CMS had compared our coding practices in 2010 to 2007 and we felt like there had been a lot of change in those last years and that comparison was no longer appropriate," said Joanna Kim, senior associate director for the AHA.
In addition, the rule outlines parameters around the Hospital Readmissions Reduction Program, set to begin Oct. 1, 2012, 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.
"Although we remain concerned that CMS continues to implement unnecessary coding cuts for changes in 2008 and 2009, we are pleased that CMS changed course on the new 2010 proposal that would have challenged hospitals' mission of caring," said AHA President and CEO Rich Umbdenstock, in a written statement. "AHA commends CMS for delaying the full implementation of the 25 percent rule for long-term care hospitals (LTCHs) for an additional year. Additionally, CMS addressed a gap in their proposal and we are pleased that all LTCHs will now benefit from the delayed implementation in the first year."
The final rule does not adjust the measures for patient socioeconomic factors, as AHA had urged, which may unfairly penalize certain hospitals, according to Umbdenstock's statement.
"Overall, the final rule will increase hospital payments by 2.3 percent, which is a better increase than we've seen. But we do have concerns that the 2.3 percent doesn't put into account the automatic mandatory sequestration cuts that take place on Jan. 3, 2013," said Kim. "On October 1, we'll see this 2.3 percent increase, but it doesn't include this sequester."