CMS Releases IPPS Proposed Rule for FY 2014
On April 26, CMS issued its Fiscal Year (“FY”) 2014 proposed rule for hospitals paid under the inpatient prospective payment system (“IPPS”). The rule would update FY 2014 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals (“LTCHs”).
In particular, CMS proposed a net 0.8% increase to standard operating payments over FY 2013 levels. While the 0.8% proposed rate increase was positive, other areas of the rule were not as favorable for hospitals and are detailed below. Over the past 14 years, the final IPPS rule was, on average, +0.6% better versus the proposed rule.
June 25 is the deadline for hospitals interested in submitting comments on the rule. Traditionally, the final IPPS rule is issued early/mid-August. New payments for FY 2014 will then go into effect October 1, 2013.
- Medicare Disproportionate Share Hospitals: Under the ACA, Medicare disproportionate share hospital (“DSH”) payments will be modified beginning in FY 2014 and reduce overall Medicare DSH spending by $1 billion for FY 2014.
- Wage Index Pay. A payment chart was included in the proposed rule showing which states will receive payment increases or decreases thanks to a provision in the Affordable Care Act. CMS’s proposed payment schedule shows Massachusetts would receive a $169 million hike. Other states set to see increases include: California ($86 million), Connecticut ($75 million), New Jersey ($14 million) and Nevada ($10.9 million). States facing potential decreases include: Texas ($31 million), Florida ($29.6 million), Illinois ($26 million), Michigan ($22 million) and Pennsylvania ($21 million).
- Hospital Readmissions Reduction Program. The proposed rule would increase the maximum penalty to 2% of Medicare payments for excessive readmissions in FY 2014. This is up from FY 2013’s figure of 1%.
- New Hospital-Acquired Condition Reduction Program: The proposed rule expands the list of conditions on which hospitals are penalized for excessive readmissions. Beginning in FY 2015, CMS will penalize the top 25% of hospitals with the highest rates of eight hospital-acquired conditions, including central line infections and objects left in the body after surgery.
- Admission and Medical Review Criteria for Inpatient Services. Under this proposal, Medicare contractors would presume hospital inpatient admissions are reasonable and necessary for beneficiaries whose stays span two midnights – more than one Medicare utilization day – and would be paid for under Part A.
- Graduate Medical Education Funding. For hospitals that receive direct graduate medical education funding, CMS proposed to include labor and delivery days for maternity patients as inpatient days in its Medicare payment calculations.
For long-term care hospitals, CMS proposed to raise payments by 1.1%, or approximately $62 million, in FY 2014. However, the proposed rule indicated that, starting next year, CMS would pay LTCHs the lower, regular inpatient rates when they admit more than a quarter of the patients from the same hospital. This has been dubbed the 25 Percent Rule.
CMS Releases FY 2014 Medicare Inpatient Rehab Facilities Rule
On May 2, CMS issued a proposed rule for the FY 2014 Medicare payment policies and rates for the inpatient rehabilitation facilities (“IRFs”) Prospective Payment System (“PPS”). CMS estimates that aggregate payments to IRFs will increase by $150 million, or 2%.
The rule also outlines a requirement that IRFs must demonstrate that 60% of their patients meet criteria specified in the regulations, including the need for intensive rehabilitation services for 1 or more of the 13 listed conditions, in order to be paid on the IRF schedule. The IRF PPS rates are higher than the standard hospital inpatient PPS rates.
Draft FY 2014 SNF Rule Calls for 1.4% Increase
Skilled nursing facilities (“SNFs”) Medicare payments would increase by 1.4%, or $500 million, beginning October 1, 2013 under the proposed rule released by CMS on May 1. The final rule is due out in July, and there is not expected to be significant change from the preliminary regulation.
Legislation Introduced This Week
H.R. 1821: On April 30, Rep. Lois Capps (D-CA) introduced legislation amending Title XVIII of the Social Security Act and establishing safe nursing levels by Medicare participating hospitals. The bill would require Medicare participating hospitals to implement a hospital-wide staffing plan for nursing services furnished in the hospital.
Next Week in Washington
On May 7, the House Ways and Means Health Subcommittee will hold a hearing examining options for repealing the Sustainable Growth Rate formula and replacing it with a quality-based physician payment system. The hearing will feature testimony from various health care providers. On May 9, the Senate Health, Education, Labor and Pensions Committee will hold a hearing examining a recent draft legislative proposal on pharmaceutical compounding.
For more information, please contact John F. Williams, III at 317-977-1462 or jwilliams@hallrender.com.
