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Marilyn Tavenner

CMS final rule on inpatient stays offers payment increases

By Joseph Conn
Posted: August 2, 2013 - 7:30 pm ET

The CMS has issued its final Medicare 2014 payment rule for inpatient stays at acute-care hospitals and long-term care facilities.

The new rule provides inflation-adjusted payment increases to hospitals for capital and operating costs totaling $1.2 billion, a net increase of 0.7%, while long-term care facilities will receive an additional $72 million, or an increase of 1.3%, according to the CMS.

The final rule also incorporates changes in the Patient Protection and Affordable Care Act, including a new patient safety program and refining of the hospital readmissions reduction program.

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Hospitals that are in the lowest quartile for medical errors or serious infections that patients contract while in the hospital will be paid 99% of what they otherwise would have been paid under the IPPS.

Hospitals with excess 30-day readmissions for heart attack, heart failure and pneumonia patients will face payment reductions of up to 2%. Hip and knee surgery and chronic obstructive pulmonary disease will be added to the list of conditions used to determine the reduction, effective in 2015.

“This rule helps improve hospital care and establishes clearer guidance to hospitals for when we will consider inpatient care to be appropriate so the system works better for patients and providers,” said CMS Administrator Marilyn Tavenner in a news release accompanying the rule update.

In addition to inflation-related payments, the new rule permits hospitals to receive payment for inpatient services under Medicare Part B for hospital inpatient admissions denied as not medically necessary under Part A, according to a CMS fact sheet.

Under the rule, if a physician expects a beneficiary's surgical procedure, diagnostic test or other treatment to require a stay in the hospital lasting at least two midnights, and admits the beneficiary to the hospital based on that expectation, it is presumed to be appropriate that the hospital receive Medicare Part A payment.

“A hospital also can bill and be paid for these inpatient services under Part B if—after the patient has been discharged—it determines through self-audit (utilization review) that the patient should have not been admitted as an inpatient,” the fact sheet said.

Hospitals serving lots of low-income patients will be affected. The ACA directed the CMS to revise the methodology used to recalculate the additional amount Medicare pays hospitals that serve a disproportionate share of low-income patients. Under the new rules, part of those payments will be distributed to hospitals based on an estimate of how much uncompensated care they provide relative to other hospitals.

The new rule updates a proposed rule released this spring.

The final rule, which applies to about 3,400 acute-care hospitals and roughly 440 long-term care hospitals, will go into effect for discharges on or after Oct. 1, 2013, according to the CMS.

Follow Joseph Conn on Twitter: @MHJConn

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