AHA charges CMS rules changes will cost $25 billion
Changes in Medicare contained in a massive proposed federal rule will result in nearly $25 billion in reductions in hospital payments over five years, a national advocacy group is charging.
The American Hospital Association released its analysis of the proposed rule, called the Inpatient Prospective Payment System, which was published by the Centers for Medicare & Medicaid Services on April 13.
The calls for refinements in the diagnosis-related group system used to classify patients for IPPS. Medicare sets payments for each DRG, setting the maximum amount the federal program will pay for its beneficiaries, barring comorbidities or complications.
AHA said its analysis of the 1,200-page rule said refinements in the DRGs will result in “significant changes in Medicare payments.”
The analysis suggested that CMS erred in setting a 2.4 percent “behavioral offset” payment cut, which will result in $24 billion in payment reductions over five years. CMS is proposing the adjustment to payments to eliminate predicted increased use of coding for complications and comorbidities as hospitals move to the new system.
The proposed rule would create 745 new severity-adjusted DRGs to replace the current 538 DRGs. CMS contends that projected aggregate spending from the reforms will not change, but it says that payments would increase for hospitals serving more severely ill patients and decrease for facilities serving patients who are less severely ill.
AHA couched its concerns by noting the impact it would likely have on services provided to senior citizens.
“The rule proposed by CMS fails to put patients first,” said Rich Umbdenstock, AHA’s president. “Cutting payments for services for America’s seniors will put in jeopardy hospitals’ ability to care not only for Medicare patients but also for anyone who comes through the doors.”
AHA said CMS also has proposed freezing capital payments to hospitals planning to purchase advanced imaging technology, such as MRI devices and CT scanners. The move also would affect spending to update facilities and information systems. AHA estimated the impact on capital spending from reduced Medicare payments would total $1 billion over five years.
Comments on the CMS proposal will be accepted until June 12. A final rule will be released by August 1, and the policies and payment rates will take effect on October 1, the start of the federal government’s 2008 fiscal year.
