$3.1 Billion Inpatient Hospital Pay Boost Expected for 2018

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By Mike Stankiewicz

Inpatient hospital services would see a $3.1 billion increase in their Medicare pay in fiscal year 2018, under a proposed rule released April 14.

The proposal (RIN:0938-AS98) from the Centers for Medicare & Medicaid Services would affect about 3,330 acute care hospitals, according to a CMS fact sheet.

In addition, the proposal specified that about 420 long-term care hospitals are expected to experience a total $173 million decrease in payments in fiscal 2018 compared with the previous year. The proposal will be published in the April 28 Federal Register, with comments due June 13.

The CMS proposal also would distribute roughly $7 billion in uncompensated care payments in FY 2018, an increase of about $1 billion from FY 2017 amount, due to changes in the way the agency reimburses uncomplicated care that include incorporating data from its National Health Expenditure Accounts to estimate the change in the uninsurance rate.

Reactions from industry groups included praise for a readmission reduction policy, but concerns over data used in determining the costs of treating the uninsured.

Regulation Changes

The CMS said the proposal would relieve regulatory burdens for the acute care industry and promote flexibility and innovation.

The proposal would require national accrediting organizations to post provider/supplier survey reports and acceptable plans of corrections on their websites, in a move to promote more transparency.

“Through this proposed rule we want to reduce burdens for hospitals so they can focus on providing high quality care for patients,” Seema Verma, CMS administrator, said in a statement April 14. “Medicare is better able to support the work of dedicated hospitals and clinicians who provide the care that people need with these more flexible and simplified approaches.”

The CMS also proposes eliminating mandatory newspaper notices for the Medicare termination for ambulatory surgical centers, federally qualified health centers, rural health clinics and organ procurement organizations. The proposal would allow termination notices to be posted through website postings and press releases.


The proposal would make changes to the hospital readmissions reduction program, under which pay is cut to account for excess readmissions associated with certain conditions.

The agency noted in its fact sheet that it’s making changes in accordance with the 21st Century Cures Act, to “assess penalties based on a hospital’s performance relative to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid.”

The agency said it’s proposing a methodology for calculating the proportion of dual-eligible patients, a methodology to assign hospitals to peer groups and a payment adjustment calculation methodology.

An industry purchasing organization, Premier Inc., praised the CMS approach on readmissions reduction, to account for the socioeconomic status of patients served by the hospital.

Blair Childs, senior vice president of public affairs at Premier, said in a statement April 14, “This is an important change that hospitals have long sought, and we appreciate the range of proposed policy alternatives for calculating ranges of dual-eligible patients, assigning hospitals to peer groups and computing payment adjustments.”

Premier also supported the CMS’s request for comments on ways the agency can improve its policies.

“Today, there are a range of contradictory programs, conflicting incentives and other regulatory hurdles that hamstring providers from delivering quality, innovative care,” Childs said. “We are hopeful that CMS takes meaningful steps to streamline and simplify the heavy regulatory burden hospitals face.”

Industry Concerns

Another industry group had a mix of praise and criticism for the proposed CMS rule.

The American Hospital Association praised elements of the rule, such as a proposal to implement a 90-day electronic records meaningful use reporting period in fiscal year 2018.

However, AHA Executive Vice President Tom Nickels said in a statement the group is concerned about the agency’s “intent to not restore last year’s excess cut to reimbursement rates for hospital services.”

“While a reduction to the hospital update factor was mandated by law in 2012, CMS ignored Congress’ intent by imposing a cut that was nearly two times what was specified,” Nickels said. “We will continue to urge the agency to restore the excess cut and help ensure that hospitals have sufficient resources to be able to care for their communities.”

The AHA also faulted the agency for proposing to use “Worksheet S-10" data to determine the cost of treating uninsured patients “without taking sufficient action to ensure the accuracy, consistency and completeness of these data prior to their use.”

To contact the reporter on this story: Mike Stankiewicz in Washington at mstankiewicz@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The proposed rule is at http://src.bna.com/nXx

The CMS fact sheet is at http://src.bna.com/nXB

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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