New penalties and deeper cuts: Four Medicare changes for hospitals this Oct. 1

Oct. 1 ushers in a new fiscal year for Medicare. And with that new fiscal year comes many changes for hospitals.

Broadly speaking, the Inpatient Prospective Payment System will reduce operating payments to hospitals by 0.6% from FY 2014 to FY 2015. According to Eric Fontana, practice manager of the Advisory Board's Data and Analytics Group, that reduction is driven by various high-profile adjustments.

In these four blog posts, Eric walks us through some of those adjustments.  

1. New penalties for patient harm start today

The Affordable Care Act's third and final penalty program launch on Oct. 1, 2014. It is expected to penalize 761 hospitals for hospital-acquired conditions, such as bloodstream infections. And according to Eric, hospitals receiving a HAC penalty are unlikely to break even on the three ACA programs. Find out more.  

2. Readmission penalties get bigger and include two new conditions

FY 2015 brings changes to the Affordable Care Act's readmission penalty program, including the inclusion of two new conditions. According to Eric, about 12% hospitals set to receive penalties this fiscal year would not get one if not for those new conditions. Find out more.

3. The one P4P program that can give hospitals a bonus

According to Eric, value-based purchasing "is important because it represents the only program of the three pay-for-performance programs where you can actually get a bonus for your inpatient reimbursement if you do well." Find out more.

4. The big cuts coming for safety-net hospitals in the new fiscal year

The cuts to disproportionate share hospital funds represent the single biggest Medicare adjustment for hospitals in fiscal year 2015, Eric says. Find out more.

Want a broader overview of the payment changes?

Read Eric's takeaways from the FY 2015 inpatient rule and check out his in-depth presentation on the changes for hospitals.

Get the big picture: How pay-for-performance fits into other Medicare initiatives


This popular infographic presents an overview and assessment of the major Medicare programs accelerating the transition to population health, including ACOs, bundled payments, and the three pay-for-performance programs.


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