Urban hospitals participating in the CMS' voluntary quality reporting initiative would receive an average 4.7% total Medicare payment increase in 2005 under inpatient prospective payment regulations proposed today. The average total increase for urban hospitals was 1.2% in 2004. Hospital officials attributed the greater increase to provisions in the Medicare reform law designed to boost hospital reimbursement, such as a change in how labor costs are calculated. Rural hospitals, which were singled out for greater financial assistance, will see an average 6% total increase, compared with 5.8% in 2004. The CMS estimated that Medicare payments to 3,900 acute-care hospitals would total $105 billion in 2005, up from a projected $100 billion this year. Hospitals that submit quality data to the CMS would receive a full-inflation payment update, or 3.3%; hospitals that don't submit data would receive a 2.9% increase. Many hospitals would receive additional payment increases because of provisions of the Medicare law, raising the average total increase.
The proposed regulations, to be published in the May 18 Federal Register, would set the threshold required to qualify for outlier payments at $35,085 in 2005, up from $31,000 this year. The regulations carry out several provisions of the Medicare law designed to benefit rural hospitals. For instance, critical-access hospitals would be allowed to designate up to 25 beds as acute care or swing, up from 15 currently. The proposed regulations also include assistance for remote hospitals serving a low volume of Medicare patients, higher payments for new medical technologies, and better targeting of physician training slots for where they're most needed, CMS Administrator Mark McClellan said in a news release. The CMS will accept comments through July 12 and will issue final regulations later this year. -- by Jeff Tieman