CMS issues final Medicare payment rule

Includes changes to payments for value-based purchasing, readmission reductions and hospital-acquired conditions
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The Centers for Medicare & Medicaid Services Monday issued a final rule updating Medicare payment policies and rates for general acute care and long-term care hospitals (LTCHs) for fiscal year 2015.

The rule establishes the payment rate update for general acute care hospitals as 1.4 percent in FY 2015, with an 0.9 percent update for LTCHs.

The rates take effect Oct. 1.

"Today's policies further support our efforts to continue improving the care our Medicare beneficiaries receive while also cutting the growth of Medicare costs," said CMS Administrator Marilyn Tavenner in a statement.  "This final rule builds on our recent efforts to improve hospital performance while giving hospitals the clarity and resources they need to deliver the best possible patient care."

In addition:

  • CMS is upping the applicable percent reduction, or the amount of Medicare payments available to fund incentive payments under the Hospital Value-Based Purchasing Program, to 1.5 percent of base operating diagnosis related group (DRG) payment amounts to all participating hospitals.

  • The payment-reduction ceiling for hospitals under the Hospital Readmissions Reduction Program will increase from 2 to 3 percent. CMS will assess readmission penalties using five measures endorsed by the National Quality Forum, and estimates that readmissions fell by 150,000 between January 2012 and December 2013.

  • Starting in FY 2015, hospitals scoring in the top 25 percent for rates of hospital-acquired conditions (HACs)--that is, the lowest performers--will lose 1 percent of Medicare inpatient payments. This program is an offshoot of the existing HAC program, which saves about $30 million a year "by not providing additional Medicare payment for treatment of certain conditions that are reasonably preventable when those conditions are acquired after the beneficiary has been admitted to the hospital for a different condition," according to the announcement. A June analysis found that Medicare does not track several expensive, common HACs, FierceHealthcare previously reported.

The rule also reduces overall Medicare disproportionate share hospital payments by 1.3 percent--an action that drew strong reaction from the American Hospital Association because the cuts are much higher than originally proposed.

"While we understand some of the reductions are due to increased coverage, it is unclear how CMS arrived at the remaining reductions, says Linda Fishman, senior vice president of public policy analysis and development. "These payments provide vital support to hospitals that serve the most vulnerable patients. That's why we continue to urge Congress to help hospitals and patients by delaying the Medicare DSH cuts for two years."

To learn more:
- read the rule (.pdf)
- here's the announcement
- here's the AHA statement (.pdf)

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