CMS proposes modest increase to 2016 hospital inpatient payments

Hospitals would get a modest payment increase from the Medicare program in 2016 under the proposed payment formula put forth last week by the Centers for Medicare & Medicaid Services (CMS). Long-term care hospitals would initially see a larger hike, but would actually experience a net reduction in reimbursement.

The hospital inpatient prospective payment system proposal for next year would include an initial market basket update of 2.7 percent. That would be reduced 0.6 percent for a market productivity cut, and an additional market basket cut of 0.2 percent. There would also be an additional decrease of 0.8 percent cut tied to the American Taxpayer Relief Act of 2012 and documentation and coding changes from from fiscal years 2010-2012, according to AHA News Now. Altogether, that means the overall payment would increase a modest 1.1 percent.

The payment increase is significantly lower than the 3.2 percent payment increase that the American Hospital Association (AHA) had sought earlier this year.

For long-term care hospital payments, the market basket update would total 2.7 percent, offset by a 0.6 percent productivity cut and another 0.2 percent reduction as part of the Affordable Care Act (ACA). CMS also proposes that it go ahead with a site-neutral payment system starting this October. That would affect about half of all long-term care facilities, which would be paid a lower site neutral amount. As a result, long-term care payments would be about 4.6 percent lower overall next year than compared to 2015.

The AHA had been vehemently opposed to the site-neutrality proposal, which was intended to address payment disparities for non-critically ill long-term care patients. Long-term care hospital patients would have to be immediately discharged from an inpatient hospital to a long-term care facility for the latter to qualify for the higher rate, according to an article from AHA News Now. The patient also must not have a principal diagnosis related to a psychiatric or rehabilitation condition; receive at least three days of care in an intensive or critical care unit during their hospital stay; or require at least 96 hours of ventilator care in the long-term care facility.

CMS appears to have backed off another proposal that would have imposed site neutrality for treatment rendered at acute care versus outpatient settings, which also drew criticism from the provider community.

To learn more:
- here's the proposal (.pdf)
- check out the AHA News Now long-term care payment article

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