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IPPS Proposed Rule Pinches Hospitals

Christopher Cheney, for HealthLeaders Media, May 7, 2014

Federal officials expect the net IPPS payment figure to be in the red because of several variable factors—mostly negative adjustments and penalties under Medicare payment programs. Those payment adjustments and penalties include ongoing cuts to the Disproportionate Share Hospital program that reimburses hospitals for uncompensated care as well as penalties for high rates of readmissions and hospital-acquired conditions.

The proposed IPPS reduction in HACs, which federal officials estimate at 0.3 percent, could be the most prominent pain point for hospitals, according to Kim and several other observers. She says large hospitals and teaching hospitals appear to be hardest hit. "If it's because they treat sicker patients, we don't think that's fair."

Peter Angood MD, CEO of the American College of Physician Executives, says reducing hospital acquired conditions is going to be a challenge for everybody.

"The complexities of reducing those HACs are tough," he said, noting reductions in readmission rates are easier to attain through relatively modest changes in programs and procedures. "It gets to the core of trying to improve the healthcare delivery system… Reduction in HACs is a longer term project. We've been on this journey for about a decade."

While Angood praised CMS for driving the effort to promote value in US healthcare, he said hospitals and other key stakeholders face short- and medium-term risk from the "dichotomous" payment system they face in the transition period. "CMS is using its platform effectively to shift us from volume to value… It's complicated for health systems to navigate both sides of that."

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2 comments on "IPPS Proposed Rule Pinches Hospitals"


BJ Reed, RN, BA (7/7/2014 at 3:18 PM)
I just retired from working in Hospitals and Long Term Care for over 50 years (Yes, before CMS even existed). I have also been on the receiving end of care. It's sad that these struggles about cost-shifting often result in the patient getting the short end of the stick financially and from the perspective of quality of care received.

Ronald Hirsch (5/7/2014 at 12:11 PM)
It is amazing how many so-called experts misunderstand the two midnight rule. The rule makes sense; it is the payment for services that used to be inpatient and are now outpatient that has everyone's panties in a bunch. Ask CMS to address the payment disparities but do not rescind the rule or ask for more exceptions.