Floodwaters from Tropical Storm Harvey flow in the Buffalo Bayou in downtown Houston, Texas, Monday, Aug. 28, 2017.
The CMS finalized a policy judging the spending of hospitals participating in the Comprehensive Care for Joint Replacement Model if they are hit with a natural disaster.
The CJR model is a mandatory bundled-payment program for hospitals in 34 geographic areas around the country and 465 hospitals are participating in the effort, according to the CMS.
The rule comes just as hurricane season is about to kick off. The CMS said it won't penalize hospitals located in areas facing emergencies such as floods, hurricanes and wildfires if they exceed their spending goals in a 30-day period around the event, according to a regulation issued Thursday.
CJR beneficiaries in emergency and disaster areas could require unplanned, and possibly extensive, healthcare services as a direct result of evacuations or emergency-related injuries, according to Joanna Hiatt Kim, vice president of payment policy at the American Hospital Association.
For instance, a hospital may have to use air transport to move a CJR patient out of the impacted area, and that would increase costs for that episode of care, Kim said.
"CMS recognizes the many unique challenges presented to hospitals and health systems on the front lines of providing patient and community care following natural disasters and public health emergencies and is modifying the CJR model to ensure that they are not unfairly penalized due to these circumstances," Kim said in a statement.
The policy will cut potential Medicare savings from the CJR model, according to the CMS. Before, the rule the model was expected to save $189 million over the next three years.
Depending on the frequency and severity of disasters over the next three years, the new rule could cut savings by up to $15 million, the CMS estimates.