CMS Proposes IPPS Rule for 2015

The Centers for Medicare & Medicaid Services (CMS) proposed a rule this week that would reduce payments for hospital readmissions and hospital-acquired conditions in 2015. The agency called for an increase in payment rates for inpatient stays at acute care hospitals by 1.3% and 0.8% at long-term care facilities. The changes would decrease total Inpatient Prospective Payment System (IPPS) payments (capital and operating payments) by $214 million. This reduction in Medicare payments would equate to one of the most dramatic reimbursement cuts for hospitals in years. Still, CMS suggested that the rule would encourage hospitals to make accountable decisions.

“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 IPPS rule includes a variety of other initiatives that aim to improve patient care.

One change includes the rolling out of the hospital-acquired condition (HAC) reduction program, which would penalize low-performing hospitals by reducing their Medicare payments by 1%. As well, the rule would increase the maximum penalty that is part of the hospital readmissions reduction (HRR) program from 2% to 3%, meaning that about 2600 hospitals would see their Medicare reimbursement cut. CMS estimates that the HRR program alone could total $422 in decreased payments.

CMS stressed that the rule would encourage cost transparency, change how hospitals file cost reports, and change how certain teaching hospitals are reimbursed for new programs.

The 2-midnight rule, a contentious issue which is tied to the rule, remains open for public comment. The 2-midnight rule says that inpatient stays lasting fewer than 2 midnights must be treated and billed as outpatient services. CMS officials hope that providers can define and agree on a suitable payment model for short inpatient stays. However, some are concerned about the lack of a definite decision on the rule.

“CMS makes no concrete proposals and provides no indication that it will imminently abandon its flawed policy in favor of a new, more equitable approach,” said Blair Childs, senior vice president of Premier public affairs. “This leaves hospitals trying to implement an unclear, unfair policy where they will soon be subject to audits.”

CMS will issue a final decision on the rule in August.

Around the Web

CMS Proposal Would Decrease FY 2015 Hospital Payments $241 Million [Bloomberg BNA]

CMS Issues 2015 Proposed IPPS Rule [Fierce Healthcare]

CMS Issues Proposed Hospital Inpatient Payment Regulation [CMS]

Industry Leader Disappointed IPPS Proposed Rule Doesn't Address Two-Midnight Rule [Fierce Healthcare]