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CMS Issues Proposed FY2014 Payment and Policy Changes for Acute and Long-Term Care Hospitals

Posted on 4/29/2013 by NTOCC ®

On Friday, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for hospitals paid under the Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital Prospective Payment System (LTCH PPS). In addition to setting proposed payment rates for hospital inpatient services, the rule updates and lays out a framework for implementation of several programs aimed at improving quality of care including: the new Hospital-Acquired Conditions Reduction Program, which would begin in 2015, the Hospital Value-Based Purchasing (VBP) and Readmissions Reduction program.

Specifically, the rule proposes increasing payment rates for hospital inpatient services by 0.8 percent in 2014, which generated praise from the hospital community as they are set to absorb a two percent in payment cut enacted through the sequester. However, as early as next year, hospitals could be subject to higher penalties for excessive readmissions due to heart attack, heart failure, and pneumonia.  The proposed rule outlines that the maximum reduction for hospital payment under the Hospital Readmissions Reduction program penalty will increase to from one to two percent in FY2014. In addition, CMS also proposes to add two new readmission measures, which would be used to calculate readmissions penalties for FY2015: readmissions for hip/knee arthroplasty and chronic pulmonary disease.

CMS also proposes to continue to expand the LTCH Quality Reporting Program, and includes five new quality measures that would affect the FY2017 and FY2018 LTCH payment rates, including an all-cause unplanned readmission measure for 30 days post- discharge from long-term care hospitals.

NTOCC staff will continue to examine the details of the proposed rule and the Policy & Advocacy working group will be discussing the development of comments on an upcoming call. 

Attached are the CMS press release, and two fact sheets: Proposed Policy and Payment Changes for Inpatient Stays, and CMS Proposals to Improve Quality of Care.   Click here to view the proposed rule.