on April 30, 2012 |
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Topics: Around the Nation, Finance, Payer and Regulatory Policy, Market Trends, Strategy
Our Experts Offer a First Read
On April 24, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule for FY 2013 reimbursement under the Inpatient Prospective Payment System (IPPS).
2013 will be another tough year for Medicare reimbursement.
CMS announced a 2.3% increase in payment rates, but this number is misleading: because of a series of adjustments, operating payments will only increase by 0.9% under the proposed rule. It is worth noting that last year’s final rule included a greater increase than the proposed rule, but health systems around the country should brace for another year of margin pressure.
CMS proposes adding a new efficiency metric to the Value-Based Purchasing (VBP) program in FY 2015.
This would measure average spending per Medicare beneficiary. Spending would include aggregate Part A and Part B spending beginning three days before admission and extending 30 days post-discharge, with risk adjustment for patient age and acuity with geographic and other payment adjustments excluded from the calculation.
The Hospital Readmissions Reduction Program is forecast to reduce payments by $300 million.
In 2013, a majority of hospitals around the country will face penalties for higher than average readmissions for any of three diagnoses—heart failure, AMI, and pneumonia—with no upside potential for strong performance. Although the scope of the program will expand over time, these penalties will be fairly modest for most health systems. Our modeling suggests that only one in ten hospitals will face penalties above $200,000 in 2013.
CMS continues to tinker with Hospital Inpatient Quality Reporting (IQR) requirements.
In addition to several new measures, CMS proposes removing 17 largely duplicative measures from the FY 2015 reporting requirements.
General acute care hospitals participating in the Hospital IQR program will see payment rates increase by 2.3% which accounts for inflation, productivity improvements, a statutory adjustment factor, and adjustments for documentation and coding changes. Organizations that do not participate would receive a 2% reduction, or an overall payment rate update of 0.3%.
In Conclusion
It is worth reiterating that this is a proposed rule, and there are bound to be some—perhaps significant—changes before the final rule is published. This rule offers hints about what we can expect from Medicare in the future—slow price growth and a continued emphasis on various pay-for-performance programs.
Additional resources
Assess the impact on your organization’s inpatient Medicare revenues
Cardiovascular Roundtable, Financial Leadership Council, and Health Care Advisory Board members, get an organization-specific estimate of change for inpatient Medicare reimbursement based on the provisions in the proposed rule. Or visit our Customized Assessment Portal for a one-stop executive dashboard, providing customized, at-a-glance impact assessments of various payment policies.
Further reading
Please download the final rule and accompanying CMS fact sheet. A summary of several provisions in the proposed rule is available from Becker’s Hospital Review.
