New Medicare rule updates payments to hospitals but also changes formula for how it reimburses uncompensated care

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Despite hospital opposition, CMS will now use data produced by its Office of the Actuary to estimate the percent change in the rate of uninsurance and will incorporate data from worksheet S-10 from 2014 cost reports to calculate the distribution of uncompensated care payments.

Medicare spending on inpatient hospitals will go up by $2.4 billion next year, according to a new final rule released late Wednesday.

The Centers for Medicare & Medicaid Services updated payment rates by 1.2% for hospitals that report quality data and were meaningful users of electronic health records.

But the final rule (PDF) also changes the way the agency reimburses hospitals for uncompensated care.

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The Centers for Medicare & Medicaid Services said in an announcement about the inpatient prospective payment system final rule that its new formula for calculating uncompensated care to disproportionate share hospitals (DSH) will result in additional payments of $800 million to approximately $6.8 billion for 2018.

CMS will now use data produced by its Office of the Actuary to estimate the percent change in the rate of uninsurance and will incorporate data from worksheet S-10 from 2014 cost reports to calculate the distribution of uncompensated care payments.

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Hospitals had urged the agency to delay the way it calculated DSH payments by one year so hospitals had time to learn how to properly complete the S-10 form. The final rule could impact hospitals’ ability to provide services for patients, said Tom Nickels, executive vice president of the American Hospital Association, in a statement. “We are disappointed CMS chose to implement its use for FY 2018 and without these additional protections for hospitals. We will continue to communicate with the agency on the steps that should be taken to improve the quality of these data, which would ensure fair payment for hospitals treating vulnerable communities,” he said.

But in a CMS fact sheet, the agency said it will work with hospitals to address their concerns through provider education and refinement of instructions for the worksheet. And to make sure that worksheet data is accurate for potential use in calculating FY 2019 uncompensated care payment amounts, CMS said it will allow hospitals to resubmit data to Medicare Administrative Contractors by Sept. 30 of this year.

The final rule also pushes back the looming deadline for EHR certification, allowing hospitals to delay system upgrades and reducing meaningful use attestation reporting periods.

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