• CMS FY 2010 IPPS Proposed Rule Would Result in $979 Million Decrease to Hospitals
  • May 19, 2009
  • Law Firm: King & Spalding LLP - Atlanta Office
  • On May 1, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule for the inpatient prospective payment system (IPPS) in FY 2010 that, according to CMS, would result in a $979 million decrease in operating and capital payments to hospitals. The proposed rule contains a 2.1% increase in the IPPS market-basket. This change is smaller than updates in previous years, as a result of the slowing economy and rate of inflation.

    Over 3,500 acute care hospitals, approximately 58% of all Medicare-participating hospitals, would be affected by the updated payment rate, which would go into effect for services provided on or after October 1. Long-term care hospitals (LTCHs), on the other hand, would experience a 2.4% increase in their payments. LTCHs use a different mix of resources to provide care, which requires a separate market-basket calculation to update payments to LTCHs. The market-basket updates are coupled with payment cuts of 1.9% for acute care hospitals and 1.8% for LTCHs, in order to control for hospitals changing their coding and documentation practices to increase payments from Medicare. Based on payment simulations run by CMS, the low market-basket update, along with the documentation and coding adjustments and other aspects of payment reform introduced in the proposed rule, would result in a $979 million decrease in operating and capital payments to IPPS hospitals in FY 2010. This would represent a 0.5% decrease in operating payments and a 4.8% decrease in capital payments. The decrease in capital payments is primarily attributable to the phase-out of capital payments for indirect medical education costs.

    CMS also introduced four new quality measures to the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program and retired one measure. The first two new RHQDAPU measures are extensions to the existing Surgical Care Improvement Project measures: removal of a urinary catheter on postoperative day 1 or 2, and perioperative temperature management for surgery patients. The last two are participation in systematic clinical database registries for nursing sensitive care and stroke care. CMS retired the quality measure for administration of beta-blockers to acute myocardial infarction patients upon arrival, due to evolving evidence and changes to clinical practice guidelines published by the American College of Cardiology and American Heart Association. Hospitals must report on their compliance with the RHQDAPU quality measures in order to receive the full market-basket increase. Failure to do so would result in receiving a payment update that is 2% age points lower than the full update. CMS did not propose any changes to the hospital-acquired conditions (HAC) list for FY 2010.

    The proposed rule is scheduled to be published in the May 22 Federal Register and comments from the public are due by June 30. CMS anticipates the finalization of the rule by August 1.