CMS Issues FY 2013 Hospital Payment Rule
On August 1, CMS issued the final rule for hospitals paid under the Inpatient Prospective Payment System (“IPPS”) and Long-Term Acute Care Hospital Prospective Payment System (“LTCH”). The FY 2013 payment rates to general acute care hospitals will increase by approximately 2.3% and by 1.7% for all LTCHs, which is down slightly from the 1.9% that was included in the preliminary rule.
It is important to note that budget sequestration provisions in last year’s deficit reduction compromise (PL 112-25) will result in an additional 2% payment cut between 2013 and 2022. This means provider payments will be reduced by 2% when bills are submitted. However, there is still a chance that Congress will extend the sequestration date or address the deficit reduction plan between now and the end of the year.
Skilled Nursing Facilities Receive 1.8% Payment Increase
On July 27, CMS released the annual reimbursement notice for skilled nursing facility (“SNF”) operators. SNFs will receive a 1.8% payment increase from Medicare in FY 2013. The increase will take effect on October 1, 2012 and comes despite a recommendation from the Medicare Payment Advisory Commission that no increase in payments to SNFs occur based on healthy profit margins from Medicare patients. The 1.8% increase means that, under the notice, SNFs receive $670 million more in FY 2013 than in FY 2012. However, like the new hospital payment rule, the SNF increase is also subject to the 2% budget sequestration cut beginning January 2, 2013.
House-Senate Agree to Six-Month Spending Agreement
On July 31, Senate Majority Leader Harry Reid and House Speaker John Boehner reached a tentative deal to keep the government funded for six months, which means there will be no threat of a government shutdown when the fiscal year ends on September 30. Once adopted, the measure will keep government spending at current levels through March 2013. The funding extension means Congress can now delay passage of annual spending bills that are also the easiest way to modify the looming 2% cut to Medicare payments under budget sequestration. Both chambers will likely vote on the resolution when Congress returns from recess in September.
CMS RAC Demonstration Program Begins August 27
CMS announced August 27, 2012 as the new start date for the Recovery Audit Contractor (“RAC”) prepayment demonstration program. The demonstration was originally scheduled to begin January 1, 2012, but providers pushed for delayed implementation. RACs are paid on a contingency fee basis to identify improper Medicare provider payments. The RAC prepay demo will be conducted over three years in 11 states (MI, IL, OH, FL, CA, TX, NY, LA, PA, NC, MO). CMS also announced it will host an August 9 conference call for interested hospitals. Details on the 2 PM EST call will be posted on the CMS website next week.
CMS Issues FY 2013 Inpatient Psychiatric Facility Payment Update
On August 2, CMS issued a notice that will update payment rates to 467 freestanding inpatient psychiatric facilities (“IPFs”) and 1,152 IPF units of acute care hospitals, including IPF units in critical access hospitals (“CAHs”) that are paid under the IPF Prospective Payment System. Effective for discharges beginning October 1, 2012 (FY 2013) the market basket estimate is 2.7%.
White House Predicts Lower-Than-Expected Medicare Spending for Next Decade
On July 27, the White House submitted the FY 2013 Mid-Session Review budget update to Congress. The budget update estimates that Medicare federal expenditures will drop sharply over the next decade. The White House projection for Medicare spending is $121 billion less than the $7.1 trillion estimated in the February Budget report between fiscal years 2012 – 2022.
The budget review attributes the Medicare reduction to updated costs and estimates and lower productivity. This budget update will be used by both sides of Congress during the upcoming deficit-reduction negotiations.
Health-Related Bills Introduced this Week
On July 31, Rep. Burgess (R-TX) indicated he will introduce legislation urging the Congressional Budget Office (“CBO”) to score health programs that promote preventive care and wellness as producing budgetary savings. CBO has traditionally declined to score such savings in the past. Rep. Burgess introduced similar legislation last Congress, which had 40 congressional cosponsors. The government printing office has yet to assign the legislation a bill number.
HR 6272: Rep. Markey (D-MA) introduced legislation that would require companies to report the results on all clinical trials conducted in the U.S. and abroad. According to the Markey press release, the legislation would close clinical trial loopholes and bring transparency to research studies.
S. 3461: Sen. Sherrod Brown (D-OH) introduced a bill that would amend title IV of the Public Health Service Act to provide for a National Pediatric Research Network. A particular focus of the research would center on pediatric rare diseases.
Next Week in Washington
Starting August 6, the House and Senate are scheduled to be out of session for the remainder of August. The annual August recess is scheduled from August 6 – September 10.
Special Notice
In light of the ongoing Congressional recess, This Week in Washington will not be published again until August 24. In the meantime, updates on important health care news from Washington can be found by visiting this blog.
For more information, please contact John F. Williams, III at 317.977.1462 or jwilliams@hallrender.com.
Please visit the Hall Render Blog at http://blogs.hallrender.com/ for more information on topics related to health care law.
