CMS Proposes Hospital Payment Rule for 2014

The Centers for Medicare and Medicaid Services (CMS) posted a rule on Friday raising the hospital payment amounts for Medicare patients. According to the rule, which is set to be published in the Federal Register on May 10^th, hospitals could get a net rate increase of 0.8 percent next fiscal year; beginning on October 1, 2013.

The determining factor for who receives the increase will be participation in the quality reporting program developed by CMS. According to an article in CQ, hospitals that fail to successfully participate in the program will not only lose out on the 0.8 percent increase, but could also be penalized equal to a two percent reduction in the proposed payment increase.

The quality reporting provisions are a step in the new patient safety program, a provision of the Affordable Care Act that will be launched in fiscal year 2015.

The 0.8 percent increase was calculated by a formula, starting with a 2.5 percent increase in the costs of goods and services in hospitals. That number was then adjusted for various reasons including required reductions by law, and recovering previous overpayments to hospitals totaling $11 million.

Overall, the percentage of increase on reimbursements for both operating and capital payments is expected to cost an additional $27 million. That additional money will come from a pool of $1.1 billion dollars that was created around the new Value Based Purchasing Plan. Under the plan, Medicare inpatient hospital payments were cut to all facilities by 1.25 percent. Hospitals and facilities can earn back this money, along with up to the 0.8 percent more, by performing well according to the standards.

These standards include two sets of measurements, one consisting of how well hospitals perform according to six patient safety measures, and the other consisting of patient infection rates.

The proposal can also penalize hospitals for high readmission rates. NAHAM previously reported on this at penalties of up to one percent for 2013. The penalty will be raised up to two percent in fiscal year 2014.