CMS Issues 2012 IPPS/LTCH/IRF Proposed Rules

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  • April 29, 2011
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The Centers for Medicare & Medicaid Services (CMS) is proposing to update fiscal year 2012 payment policies and rates for hospitals paid under the inpatient, long-term care, and inpatient rehabilitation facilities prospective payment systems (PPS). The two proposed rules with comment periods also would further implement certain Affordable Care Act provisions and several other policy changes.


Under the Inpatient Prospective Payment System and the Long Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) proposed regulations, issued April 19, CMS projects that Medicare payments to LTCHs in 2012 will increase by $95 million or 1.9 percent. Medicare payments to acute care hospitals, however, will decrease by $498 million, or 0.55 percent, compared to that in 2011. Acute care hospitals not submitting quality data measures will see an even greater reduction under the proposed rule.
Industry stakeholders were quick to respond.
“America’s hospitals are deeply disappointed that today’s proposal puts further stress on vital care on which seniors depend on,” said American Hospital Association (AHA) President and CEO Rich Umbdenstock. “Medicare already fails to covers the cost of hospital services and these reductions ultimately make hospitals’ ability to care for patients and communities even more challenging.”
The 0.55 percent payment decrease to acute care hospitals includes:

  • a payment update of 1.5 percent (based on a market basket update of 2.8 percent, reduced by a productivity adjustment of -1.2 percent and an additional -0.1 percent in accordance with the Affordable Care Act),
  • increased by 1.1 percent to correct a technical error related to the calculation of the rural floor budget neutrality adjustment, and
  • further reduced by -3.15 percentage points to account for documentation and coding changes. (A statutory provision requires CMS to adjust payments to remove the effect of increased aggregate payments due to changes in documentation and coding that did not reflect increases in patients’ severity of illness after adoption of the MS-DRGs.)

A CMS Fact Sheet provides more highlights of this proposed rule. For complete details, though, you’ll need to read the proposed rule. You have until June 20 to comment. CMS will publish the final rule Aug. 1, and regulations will go into effect Oct. 1.


CMS also proposed, April 22, to update 2012 Medicare payment policies and rates for inpatient rehabilitation facilities (IRFs). The rule proposes to increase payment rates under the IRF PPS by 1.8 percent and establish a new quality reporting system.
The quality reporting system would be aligned with the goals of the Partnership for Patients. Initially IRFs would submit data on two out of the nine quality measures the Partnership has identified as important places to begin the campaign on improving patient care:

  • Urinary catheter-associated urinary tract infection
  • Pressure ulcers that are new or have worsened

IRFs that do not submit quality data would see their payments reduced by 2 percentage points beginning in 2014. CMS plans to establish a process for making the quality data public domain.
The IRF PPS also would update the case-mix group relative weights using 2010 IRF claims and 2009 IRF cost report data; and set the high cost outlier at $11,822 for 2012, compared to $11,410 for 2011.
You may comment on the 2012 IRF PPS proposed rule until June 21. The final rule will be published in the Federal Register Aug. 1.

Certified Inpatient Coder CIC

Tip: A new Medicare Learning Network (MLN) fact sheet titled “Inpatient Rehabilitation Services” provides education on inpatient rehabilitation services and includes information on the documentation needed to support an inpatient rehab service claim submitted to Medicare.

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No Responses to “CMS Issues 2012 IPPS/LTCH/IRF Proposed Rules”

  1. Donna D. Taylor says:

    Thank you so much for the publication of this information…..I have taken a new position as a CDS coordinator and I’m very eager to obtain any information (new) information concerning this…
    Have a great day:)