The continued phase-in of a new payment system for inpatient care is likely to be the biggest regulatory issue for hospitals in the coming year, although the industry will need to be watchful for other rule changes that may affect patient care.
Last summer, the CMS made sweeping changes to the DRGs for hospital inpatient services, replacing it with a system that bases payments on hospital costs rather than charges, and reclassifying DRGs to more accurately reflect severity of illness in patients. The agency made the decision to phase in these changes over several years.
Speculation abounds on which hospitals would win or lose under this new cost-based system that aligns payment with the cost of care by increasing payments for some admissions and decreasing payments for others. The new system in particular addressed concerns that specialty hospitals, which provide a limited range of services and are owned wholly or in part by physicians who serve as referral sources, were cherry-picking the most profitable cases at the expense of general acute-care facilities.
Depending on their case mix, specialty hospitals taking on less-intensive cases are likely to see a reduction in revenue because sicker patients cost more money, and the funds will follow the complexity of the patient under this new system, says Randy Fenninger, Washington lobbyist for Physician Hospitals of America. Cardiac hospitals, which in the past have had the most-profitable DRGs, are likely to see the biggest reductions in payments, he says. In addition, community hospitals that have emphasized cardiac care and other profitable business lines will experience similar reductions, Fenninger says.