CMS on Wednesday issued its inpatient prospective payment system (IPPS) final rule for fiscal year (FY) 2013, which would increase Medicare operating payments to acute-care hospitals by 2.3%.
The final rule increases hospital payments significantly more than the proposed rule released earlier this year, which included a significantly smaller increase in Medicare operating payments to acute-care hospitals.
The FY 2013 rule, which would affect about 3,400 acute-care facilities, establishes a 2.8% net update after accounting for the market basket update, productivity improvements, a statutory adjustment factor, and adjustments to account for hospital documentation and changes.
When combined with other policies in the final rule, including provisions to strengthen the Hospital Value-Based Purchasing (VBP) program, the rate increase for Medicare’s operating payments to acute-care hospitals in FY 2013 will be about 2.3%. Altogether, the final rule is expected to increase inpatient hospital payments by $2 billion from FY 2012 to FY 2013.
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The final rule also includes a payment update for long-term acute-care hospitals (LTCH), which would affect about 440 facilities. It will increase Medicare operating payments for those facilities by about 1.7%, after account for various adjustments. Overall, CMS says LTCH payments are expected to increase by $92 million from FY 2012 to FY 2013.
Rule finalizes changes to VBP, readmissions reduction programs
In addition, the final rule implements various provisions of the Affordable Care Act’s VBP, hospital readmission reduction, and quality reporting programs. Specifically, the rule:
- Finalizes the methodology and payment adjustments for hospitals with excess readmissions for myocardial infarctions, heart failure, and pneumonia;
- Includes a new outcome measure in the VBP program that rewards hospitals that avoid certain infections; and
- Finalizes reporting requirements for ambulatory surgical centers.
Hospitals commend rule
Responding to the final rule, American Hospital Association President and CEO Richard Umbdenstock said, “We commend CMS for recognizing that its proposed new cut of 0.8%, approximately $850 million, in Medicare payments would have been detrimental for America’s seniors.”
He noted that, “Today’s rule will help hospitals maintain the resources necessary to continue providing services for the patients and communities they serve.”