The American Hospital Association said a CMS proposal to increase the number of DRGs subject to the post-acute transfer policy to 223 from the current 29 would cost hospitals $880 million in fiscal 2006 alone. The Federation of American Hospitals joined the AHA in criticizing the proposal. Federation President Chip Kahn said the move was misdirected and tantamount to a reduction in the Medicare payment update. Under the post-acute transfer policy, hospitals receive per-diem rates instead of full DRG payments for patients discharged to post-acute facilities before the average length of stay for the DRG.
The CMS, in a wide-ranging Medicare payment proposal late Monday, also seeks to lower the proportion of Medicare rates adjusted for wage differences for hospitals with higher-than-average labor costs -- to 69.7% from the current 71.1%. All other hospitals would continue to see 62% of payments adjusted for wage differences. The CMS also proposed fiscal 2006 Medicare inpatient updates, with hospitals that report data on 10 quality measures to receive a 3.2% increase in inpatient reimbursement and hospitals that don't slated to receive a 2.8% increase, as mandated by the Medicare Modernization Act. The proposed regulations will be published in the May 5 Federal Register. The comment period ends June 24, and a final rule is scheduled to be published by Aug. 1. At deadline, the regulations were not available online on the CMS Web site. -- by Tony Fong