Medicare proposes 0.8% pay bump for hospitals


Medicare issued a proposed rule Friday providing a 0.8 percent increase for acute care hospitals meeting quality guidelines, and cutting payments by 2 percentage points for those not passing quality muster.

The payment changes update fiscal 2014 Medicare rates for inpatient stays at about 3,400 acute care hospitals and about 440 long-term care hospitals, the Centers for Medicare & Medicaid Services announced. Total payments to acute care hospitals are projected to increase by $27 million, with payments to long-term care hospitals increasing by $62 million.

CMS also clarified that inpatient admissions of more than 24 hours--technically, encompassing two midnight hours--will qualify for payment under Medicare Part A. The clarification is intended to end the practice of holding patients for extended outpatient stays by hospitals uncertain about payment if the patient is admitted, CMS noted.

Hospitals have been sharply criticized for holding Medicare patients for observation, sometimes for days, without formally admitting them. A study released last year found that half of observation stays exceeded 24 hours, and 15 percent exceeded 48 hours.

But the president of the Pennsylvania Medical Society, among other defenders, said hospitals feared potential penalties if Medicare recovery auditors (RACs) and Medicare officials determined patients who should have been treated as outpatients were admitted instead.

The proposed rule also increases incentives under the Hospital Value-Based Purchasing program, CMS said in a second announcement. The reduction to base operating diagnosis-related group (DRG) payment amounts would increase 1.25 percent for fiscal 2014, for total funding of $1.1 billion. It also would grant waivers to hospitals struck by natural disaster or other extraordinary circumstance.

Also changing under the proposed rule is the program designed to reduce 30-day readmissions. Under the new policy, planned readmissions for heart attack, heart failure and pneumonia patients within 30 days wouldn't count against a hospital.

The rule is to be published May 10 in the Federal Register.

To learn more:
- read the first CMS announcement
- read the second announcement