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CMS Issues Supplemental IPPS Proposed Rule

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  • June 11, 2010
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On May 21, the Centers for Medicare & Medicaid Services (CMS) issued a supplemental proposed rule implementing changes in payments for inpatient stays in general acute care hospitals paid under the 2011 Inpatient Prospective Payment System (IPPS) and long-term care hospitals (LTCHs) that were required by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively known as the health reform law). CMS also issued a notice publicizing revised rates effective for payment years beginning Oct. 1, 2009. These revised rates are used to pay hospitals for discharges on or after April 1, as a result of provisions in the health reform law. The resulting change in aggregate payments across all IPPS hospitals is projected to decrease by $820 million, while payments to LTCHs in 2011 are projected to increase by $13 million.
In the proposed rule issued April 19, CMS proposed for 2011 an estimated full market basket update for IPPS hospitals and LTCHs, or 2.4 percent for both types of hospitals. The health reform law, however, sets the annual update for 2011 IPPS equal to the market basket update minus 0.25 percentage points and also reduces the 2011 LTCH PPS annual update by 0.5 percentage point, which results in a 0.5 percentage point reduction applied to the full market basket update. Consequently, the proposed annual update for IPPS has been revised to 2.15 percent, and the proposed LTCH PPS annual market basket update has been revised to 1.9 percent in the IPPS and LTCH PPS supplemental proposed rule.
Other provisions in the 2011 supplemental proposed rule and 2010 notice include:

  • Protection for hospitals in frontier states;
  • Additional payments for hospitals with low per enrollee Medicare spending;
  • Temporary improvements to the low-volume hospital adjustment;
  • Wage index improvement related to geographic reclassification (extends reclassifications through Sept. 30);
  • National budget neutrality in the calculation of the rural floor for hospital wage index (beginning in 2011);
  • Extension of Medicare dependent hospitals (through Oct. 1, 2012);
  • Technical correction related to critical access hospital services;
  • Extension of certain payment rules for LTCH services and of moratorium on the establishment of certain facilities; and
  • Extension of the rural community hospital demonstration program (for five years).

CMS is accepting comments on the 2011 IPPS/LTCH supplemental proposed rule until June 18, 5 pm EST.

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