Medical Billing Outsourcing
Inpatient Prospective Payment System

CMS is continuing to move Medicare program to paying providers on quality rather than on quantity of the care offered to patients, as stated in the final rule for the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) PPS for FY 2017. The final rule appeared on Aug 22 in the Federal Register, and will affect the discharges on or after October 1, 2016.

As per the ruling, general acute care hospitals that are pain under IPPS, and successfully take part in Hospital Inpatient Quality Reporting (IQR) Program as well as use meaningful EHR, will get about 0.95% increase in their operating payment rates. This increase shows the projected hospital market basket update of 2.7%.

CMS clarified that hospitals that do not take part in the Hospital IQR Program and do not produce the required quality data will be subject to a one-fourth reduction. In addition, hospitals that are not meaningful EHR users will be liable for a three-fourth reduction in the payments.

Other than updating the incentive programs, CMS also discussed the changes brought to IPPS payment rates and highlighted the adjustments that are made related to the two-midnight policy and uncompensated care payments in Medicare.

The Payment Cut

Medical Billing Consultants
Medicare & Medicaid Services

CMS has confirmed a 1.5% cut to engage compliance with a law of 2012 that directs agencies to bring back the effect of 2010-2012 documentation and changes in coding that took place with the switch from DRGs to MS-DRGs. The American Hospital Association (AHA) News Now reports that this increase from 0.8% to 1.5% has led to lot of stir among hospitals.

“We are disappointed that CMS finalized an unjustified cut to reimbursement rates for hospital services,” AHA report says. “While a reduction to the hospital update factor was mandated by law in 2012, CMS is undermining Congress’ intent by imposing a cut that is nearly two times what Congress specified.”

CMS estimated that the expected 0.8% reduction would have left the government short of 5 billion dollars while recovering the overpayments by the end of 2017. The agency said that the changing healthcare and economic trends made it necessary for them to increase the payment cut.

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