CMS to cut reimbursements 5.1%

CMS announced that it will cut Medicare and Medicaid reimbursement rates by 5.1 percent in 2007. Hospitals, meanwhile, will get a 3 percent raise for outpatient care on the condition that they submit data proving that they're following guidelines for improving patient care. CMS head Mark McClellan says the cuts are due to more treatments being given to each patient, which doesn't necessarily improve outcomes. That is why hospitals won't receive higher reimbursements unless they submit data on improving care. This move toward outcomes-based payment isn't surprising -- after all, CMS' actions are in line with the larger industry trend toward pay for performance.  But industry insiders say that with CMS taking these steps, P4P plans are likely to make another leap forward.

CMS is also cracking down on specialty hospitals, stating that "we are entering a new era in terms of disclosure, transparency, and oversight of specialty hospitals." The hospitals will be fined $10,000 a day if they don't report on their financial structures. They also must disclose physicians' financial ties to patients and will be required to treat all emergency patients regardless of their ability to pay for services.

- read this Washington Post article
- see the report from Modern Healthcare

PLUS: Believe it or not, a group of businesses is actually lobbying against a Bush administration plan that would lower "provider taxes." The rising cost of Medicare is behind their unusual effort. Article