IPPS Proposed Rule Has Good and Bad News for Hospitals

The Centers for Medicare & Medicaid Services (CMS) has proposed a 1.3 percent increase in payments to hospitals under the inpatient prospective payment system (IPPS) for 2015. However, it projects a decrease in overall payments of about $241 million, primarily because of payment reductions for readmissions and hospital acquired conditions (HAC). Provisions related to readmissions and HAC are intended to improve the quality of hospital care.


Starting in FY 2015, CMS is required by law to raise the maximum readmissions penalty from 2 percent to 3 percent. CMS also is proposing to implement the ACA HAC reduction program. Beginning in FY 2015, the poorest performing hospitals will see a 1 percent reduction in their inpatient payments. (“CMS Projects Decline in Medicare Payments to Hospitals in FY 2015 IPPS Proposal,” Health Lawyers Weekly, May 2, 2014)


Other factors contributing to the decrease in payment include Medicare disproportionate care hospital changes, the expiration of certain statutory provisions that provided special temporary increases in payments to hospitals, and other proposed changes to IPPS payment policies,” according to a CMS fact sheet.


Hospital Transparency

The IPPS proposed rule also gives hospitals guidance on complying with an Affordable Care Act requirement that hospitals publish a list of their standard charges. Of course, charges differ from what hospitals are actually paid by private insurers (typically percentage discounts off charges). “Charge information is widely seen as less useful to consumers than data on the actual prices negotiated by insurance companies, especially because high-deductible health plans sharpen consumer interest in insurers’ negotiated rates.” (“CMS proposes long-delayed price transparency rule,” Modern Healthcare.com, May 1, 2014)


CMS officials justify the emphasis on charge data by noting the “wide variability” in hospital charges.


To see the CMS fact sheet, please click here.



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