CMS Issues Several Final Rules Detailing FY 2016 Provider Payments
The rule -- which affects about 3,400 acute-care facilities -- takes into account factors like productivity improvement, coding changes and market conditions in the region in which the hospital is located.
Overall, the rule will increase FY 2016 Medicare operating payments to acute-care hospitals by 0.9%, a slight decline from last year's 1.4% raise and from the 1.1% increase proposed in April. The rule includes a:
- 2.4% market-basket update for facilities that were meaningful users of electronic health records in FY 2014 and submitted data on quality metrics;
- 0.5% productivity cut;
- 0.2% market-based cut, as required by the Affordable Care Act; and
- 0.8% cut to meet the requirements of the American Taxpayer Relief Act of 2012.
Rule Includes DSH Cuts, Other Changes
Under the rule, CMS will pay $1.2 billion less in Medicare Disproportionate Share Hospital uncompensated care funds in FY 2016 than in FY 2015, in part because of the decline in the uninsured population because of the ACA (AHA News , 7/31).
The rule also outlined changes to three ACA-created penalty programs the:
- Hospital-Acquired Condition Program;
- Hospital Readmissions Reduction Program; and
- Value-Based Purchasing Program (Rice, et al., Modern Healthcare, 8/1).
The agency also finalized its proposal to require hospitals to report certain clinical quality measures electronically during calendar year 2016 in order to receive payment in the FY 2018 Inpatient Quality Reporting program.
In a contentious decision, CMS did not extend its delay of partial enforcement of the two-midnight rule, which expires Sept. 30. There was no extension even though it has proposed changes to the policy in the hospital outpatient prospective payment system proposed rule that are not set to take effect until the beginning of 2016.
American Hospital Association Vice President Ashley Thompson said hospitals are "dismayed" that the rule did not include a delay. "We urge CMS to issue an extension of the delay quickly," she said, adding, "Hospitals need this" (AHA News , 7/31).
Update to Long-Term Care Hospital Reimbursements
Meanwhile, the agency also released payment policies for long-term care hospitals.
Under the rule, such facilities will operate under a dual-rate payment structure for inpatient stays, with one standard payment rate for more acute cases and a separate site-neutral policy for less acute cases. The system will be phased in over the next two years beginning Oct. 1 (AHA News , 7/31).
For FY 2016, CMS projects that payments to LTCHs will decrease on net by 4.6% -- or about $250 million in the next fiscal year -- including a 1.7% increase in LTCH PPS rates for higher acuity patients (CMS fact sheet, 7/31).
In addition, the rule included several AHA recommendations, including forgoing the use of inpatient PPS discharge status codes to determine which cases are eligible for standard LTCH PPS payment and decreasing the proposed fixed-loss amount for high-cost outlier cases.
CMS also finalized three measures for the FY 2018 LTCH quality reporting program in order to attest to the requirements for the Improving Medicare Post Acute Transformation Act of 2014 (AHA News , 7/31).
Hospice, Psychiatric, Rehabilitation Facility Payments Also Addressed
Under a separate final rule released by CMS on Friday, hospice providers will see a 1.1% increase in Medicare payments in FY 2016, which equates to a net $160 million pay increase. The increase is lower than the 1.3% increase proposed in April and the 1.4% increase the agency gave hospice facilities last year (Rubenfire, Modern Healthcare, 7/31).
Meanwhile, under another final rule released Friday, inpatient psychiatric facilities will see a 1.5% rate increase, which will result in a $75 million pay bump. There are nearly 1,600 inpatient psychiatric hospitals in the U.S., and they treat about 300,000 Medicare beneficiaries.
Under another final rule released by CMS, rehabilitation facilities will see a pay bump of 1.8%, which will lead to an increase of $135 million in pay during FY 2016 (Rice et al., Modern Healthcare, 8/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.