CMS Proposes 0.8% Boost in Medicare Inpatient Rates for 2014

Written by Bob Herman | April 26, 2013

CMS has issued its proposed rule for hospitals paid under the inpatient prospective payment system and the long-term care hospital perspective payment system. CMS has recommended acute-care hospitals receive a 0.8 percent increase in Medicare operating rates. 

The low proposed Medicare rate increases are due to several factors. First, when Congress passed the American Taxpayer Relief Act of 2012, better known as the fiscal cliff deal, legislators included $11 billion in MS-DRG documentation and coding adjustments. This meant hospitals and other providers would lose $11 billion in Medicare payments between fiscal year 2014 and FY 2017 due to past overpayments the government made to hospitals as the country transitioned to MS-DRGs.

In the proposed rule, CMS accounted for a 0.8 percent reduction in Medicare payments to follow the ATRA, though the agency is asking for public comments on how the documentation and coding adjustments should be enforced.

CMS also gave more details for the second year of the Value-Based Purchasing program. In FY 2014, hospitals will have 1.25 percent of their Medicare payments withheld, and the resulting $1.1 billion in incentive payments will be doled out to hospitals that deliver the best quality of care.

In addition, starting in October under the Hospital Readmissions Reduction program, hospitals could lose up to 2 percent of Medicare payments for excessive readmissions — up from 1 percent in FY 2013.