CMS Payment Proposal Disappoints Hospitals

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imageThe American Hospital Association (AHA) has publicly said its constituents are “deeply disappointed” by a proposed rule for fiscal 2012 issued Tuesday by the Centers For Medicare and Medicaid Services (CMS). Effective for discharges occurring on or after October 1, 2011, the proposed rule would decrease average inpatient payments to acute-care hospitals by approximately 0.5%, or $498 million, compared with fiscal 2011. Payments to long-term care hospital would simultaneously increase to about $95 million, or by about 1.9%.

The proposed rule, which applies to some 3,400 acute-care hospitals and 420 long-term care hospitals, also incorporates a hospital update of 1.5% and a coding adjustment of 3.15%. These inclusions account for changes in coding and documentation following the adoption of Medicare severity diagnosis-related groups. CMS deems the latter not reflective of actual increases in patients’ severity of illness.

AHA President and CEO Rich Umbdenstock says the AHA is concerned that CMS “continues to move forward” with the proposed coding offset, “which is excessive and wrongly assumes spending on inpatient hospital care has increased solely due to changes in coding.” Umbdenstock adds that independent research confirms that CMS’ methodology “does not recognize that hospitals are caring for patients who are older and sicker.”

Also included in the proposed rule are several quality improvement initiatives intended to promote quality of care and patient safety efforts. One such initiative, the Partnership for Patients program announced last week by the Department of Health and Human Services, is aimed at decreasing preventable complications during transitions from one care setting to another.

Public comments on the proposed rule will be accepted by CMS until June 20, 2011. CMS will respond to the comments in a final rule to be issued by August 1, 2011.