Inpatient Facility Coding & Compliance Alert

Here’s your chance to let CMS know what you think.

Changes are afoot for facility payments, after CMS issued a proposed rule on April 26, 2013, that would update FY 2014 Medicare payment policies and rates for inpatient stays at general acute care and long-term care hospitals. The proposed rule includes an overall hospital payment increase (capital and operating) by $27 million, and lays out the framework for a new patient safety program aimed at reducing the frequency of hospital-acquired conditions.

“The new policies in this proposed rule support hospitals’ important work and the people with Medicare who depend on them by promoting safety and care improvement,” CMS acting administrator Marilyn Tavenner said in a prepared statement.

Read on for highlights of the proposed rule and how they might affect your facility.

Expect Acute and Long-Term Care Payment Boosts

If the proposed rule holds, you’ll see IPPS operating rates increase by 0.8 percent after accounting for inflation and other adjustments required by law. A temporary reduction to recoup overpayments from prior years to fulfill requirements of the American Taxpayer Relief Act is also factored into the final rate.

CMS projects that payments to long-term care facilities would increase by 1.1 percent (approximately $62 million) in FY 2014.

Exception: Disproportionate share hospitals (DSH), however, will see a down turn in Medicare reimbursement. The hospitals will still receive additional payment for serving a high percentage of low-income patients, but that amount will be reduced to 25 percent of the amount Medicare would pay under the current policy. The remaining 75 percent will be adjusted for decreases in the rate of uninsured individuals nationally and distributed to DSH hospitals based on how each hospital’s amount of uncompensated care ranks among all Medicare DSH hospitals. 

“Disproportionate share hospitals should review this proposed rule with great care because the economic consequences may be significant,” according to Duane Abbey, President of Abbey & Abbey, Consultants in Inc., in Ames, Ia. “Given the relatively small increase in hospital payments along with possible redistribution of DSH payments could be devastating in certain cases.”

Know the Incentives for HAC and Readmission Reductions

Several areas of the proposed rule focus on ways to improve patient care. Changes that could affect your facility include:

·         New hospital-acquired condition (HAC) reduction program: Beginning in FY 2015, hospitals that have some of the lowest statistics for HACs will be paid 99 percent of what they would otherwise be paid under the IPPS. The proposed rule suggests the criteria and methodology that CMS would use to rank hospitals with a high hate of HACs.

·         Hospital readmissions reduction program: The maximum reduction in payments under the Hospital Readmissions Reduction Program will increase from one to two percent, as required by law. CMS also proposes to add two new readmission measures that could be used when calculating readmission penalties for FY 2015.

·         Admission and medical review criteria: The proposed rule includes clarification from CMS regarding its medical review criteria to presume that hospital inpatient status is appropriate for payment under Medicare Part A if the beneficiary is admitted to the hospital based on a physician’s order and receives care over at least two midnights. The proposal is intended to address longstanding concerns from hospitals that they need more guidance on when a patient is appropriately treated and paid by Medicare as an inpatient. Proposed changes would also benefit patients who have sometimes been staying in the outpatient unit longer than necessary because of the hospital’s uncertainty about Medicare payment if the patient is admitted.

Take Time to Share Your Perspective

A full copy of the proposed rule will be published in the May 10, 2013, Federal Register. CMS will accept comments on the proposed rule until June 25, 2013, and will respond to comments in a final rule to be released by August 1, 2013.