For the upcoming federal fiscal year, Medicare payment rules and methodologies for hospital inpatient care feature a payment-rate hike and $800 million increase in uncompensated-care reimbursement.
Medicare reimbursement to about 3,330 acute-care hospitals nationwide is expected rise $2.4 billion in the federal fiscal year beginning Oct. 1.
In the FY2018 Inpatient Prospective Payment System (IPPS) final rule released yesterday, federal officials estimate Medicare reimbursement to acute-care hospitals will rise about 1.3%. This figure represents the adjusted base payment rate and the hospital-to-hospital financial impact of incentive payment programs such as the Hospital Readmissions Reduction Program (HRRP).
A factsheet produced at the Centers for Medicare and Medicaid Services (CMS) details features of the IPPS final rule, which is slated for publication in the National Register on Aug. 14.
The adjusted base payment rate, which is pegged at 1.2% has five elements:
- Market basket update +2.7
- Productivity update -0.6
- Removal of a one-time adjustment made in FY2017 to compensate hospitals for implementation of the Two-Midnight Rule for hospital-admission status -0.6
- 21st Century Cures Act adjustment +0.4588
- Patient Protection and Affordable Care Act -0.75
The American Hospital Association (AHA) posted an advisory report on the Chicago-based organization's website that offered a tepid take on the new IPPS final rule, including describing the Two-Midnight Rule payment adjustment as designed "to restore unlawfully instituted two-midnight policy cuts."
In the advisory report, AHA Executive Vice President Tom Nickels criticizes two provisions of the new final rule: a data-collection worksheet for uninsured patients and the refusal of CMS to offset a hospital-reimbursement cut in FY2017.
"We continue to have concerns over the accuracy and consistency of the 'Worksheet S-10' data that CMS will use to determine the cost of treating uninsured patients. … We are also disappointed that CMS has decided not to restore last year's excess cut to reimbursement rates for hospital services. While a reduction to the hospital update factor was mandated by law in 2012, CMS ignored Congress' intent by imposing a cut that was nearly two times what Congress specified."
There are several other elements of the new IPPS final rule that will impact acute-care hospitals:
- CMS is easing provisions of the Medicare and Medicaid electronic health record (EHR) incentive programs. The alleviation provisions include a change to "EHR reporting periods for new and returning participants attesting to CMS or their state Medicaid agency from the full year to a minimum of any continuous 90-day period during the calendar year," the CMS factsheet says.
- Readmission penalties assessed to hospitals under HRRP are being changed to reflect a hospital's performance relative to other hospitals with similar numbers of Medicare and Medicaid dual-eligible patients.
- Medicare payments to hospitals for uncompensated care under the Disproportionate Share Hospital program are slated to increase about $800 million over the FY2017 funding level.
Christopher Cheney is the CMO editor at HealthLeaders.