CMS Proposes 2.9% Bump in Inpatient Hospital Payments

Next year's proposed rule for Medicare hospital-inpatient payments is expected to increase the federal government's spending on services and capital by $3.1 billion.

For the 2018 fiscal year, the Centers for Medicare & Medicaid Services is projecting a 2.9% increase in spending on hospital-inpatient services and capital.

The spending forecast is a highlight of the 2018 Inpatient Prospective Payment System proposed rule filed by CMS last week. The anticipated 2.9% spending increase has two elements:

• A 1.7% increase linked to proposed payment rate and policy changes
• A 1.2% increase linked to proposed changes to uncompensated care payments

The 2.9% hike would increase Medicare spending $3.1 billion, according to a CMS fact sheet For the 2017 fiscal year, which began with hospital discharges on Oct. 1, 2016, the IPPS final rule  projected $746 million in increased Medicare spending on hospital inpatient services and capital.

The IPPS sets Medicare's payment framework for 3,330 acute care hospitals and 420 long-term care hospitals across the country.

For the 2018 fiscal year, the proposed 1.7% spending increase linked to payment rate and policy changes is based mainly on several adjustments to next year's projected increase in the IPPS hospital "market basket," which is coincidentally, also calculated to be 2.9%.

The market basket figure, which is calculated annually, reflects changes in the costs of inpatient goods and services provided at acute care hospitals.

Three of the four primary adjustments to the 2018 IPPS proposed rule's market basket figure have a negative impact on the payment rate:

• -0.75% adjustment under the Patient Protection and Affordable Care Act
   
• -0.6% adjustment to offset costs tied to the "two midnights" admissions policy
   
• -0.4 adjustment for productivity
   
• +0.46% adjustment under the 21^st Century Cures Act

Under the 2018 IPPS proposed rule, CMS is set to spend $7 billion on uncompensated care for inpatient services, which would be a $1 billion increase over this year's projected spending.

Other highlights of the 2018 IPPS proposed rule:

• For long-term care hospitals (LTCHs), the proposed rule projects a 3.75% decrease in Medicare payments in the 2018 fiscal year, with the $173 million payment reduction linked mainly to the introduction of a new dual payment rate system.
   
• Changes to the "meaningful use" electronic health records policy such as shortening the 2018 reporting year to 90 days and creating exemptions for healthcare providers who offer "substantially all" of their services at ambulatory surgery centers.
   
• Four changes to the Inpatient Psychiatric Facility Quality Reporting program, including the addition of a measure based on claims data for "medication continuation following inpatient psychiatric discharge."
   
• Easing enforcement of the Critical Access Hospital (CAH) 96-hour certification requirement, which mandates physicians to certify that patients will be discharged or transferred to a larger hospital within 96 hours of admission to a CAH. CMS is proposing that the 96-hour certification requirement should become a low priority in medical-record reviews conducted on or after Oct. 1.
   
• Extension of the Rural Community Hospital Demonstration (RCHD) program for an additional five-year period. The RCHD program is designed to develop a cost-based Medicare payment methodology for inpatient services provided at rural hospitals with less than 51 acute-care beds that do not have the CAH designation.

The deadline to file public comments on the 2018 IPPS proposed rule is June 13.