2015 Medicare rates increase financial pressure on hospitals

The proposal for next year’s Medicare inpatient payments to hospitals continues the pressure on them, and doubles down on a controversial policy.

The Centers for Medicare & Medicaid Services’ fiscal year 2015 proposal for Medicare’s hospital inpatient prospective payments offers a small inpatient increase of 1.3 percent, along with a “market basket” increase of 2.7 percent for hospitals that report on quality metrics and qualify for the EHR incentive program.

But the agency is also proposing increased reductions for readmissions, calling for a 3 percent downward adjustment, compared to 2 percent this year, and a new penalty for hospitals with a large proportion of patients who acquire preventable conditions and infections during their stays.

Under the proposal, the 25 percent of hospitals with the highest hospital-acquired condition rates would see a 1 percent reduction in inpatient payments.

Meanwhile, long-term care hospitals would see a 0.8 percent increase in rates, and hospitals participating in the value-based incentive program would see a 1.5 percent increase for operating diagnosis-related group payments from a total incentive pool of $1.4 billion.

“The policies announced today will assist the highly committed professionals working around the clock to deliver the best possible care to Medicare beneficiaries,” said CMS Administrator Marilyn Tavenner in a media release. “This proposed rule is geared toward improving hospital performance while creating an environment for improved Medicare beneficiary care and satisfaction.”

Public comment is open through June 30.

CMS is also asking for input on an alternative financing for short-stay inpatient cases that can be treated on an outpatient basis.

For now though, CMS is going forward with the controversial “two midnights” rule covering only beneficiary stays greater than 48 hours as inpatient admissions. The rule takes effect in September, after two delays, as long it survives a lawsuit filed by the American Hospital Association.

[See also: Two-midnight rule a double-edged sword.]

The AHA and other advocates and stakeholders are still digesting the 1,600-plus page proposal, but at first glance, argued AHA Executive Vice President Richard Pollack, it seems the requirements “would put further stress on vital care for seniors,” amid “an unprecedented amount of change.”

Premier, the group purchasing organization, “is deeply disappointed that CMS failed to address fundamental problems in the two midnight benchmark,” said Blair Childs, senior vice president, in a media release. “This leaves hospitals trying to implement an unclear, unfair policy where they will soon be subject to audits.”