Hospitals that take part in CMS’ Inpatient Quality Reporting Program will receive 0.8% in extra payments, while those not successfully participating would have payments reduced by 2%, the Centers for Medicare and Medicaid Services (CMS) proposed on Friday to the USA’s 3,400 acute care hospitals.

CMS says its proposed Inpatient Prospective Payment System (IPPS) rule would represent an increase in payments to hospitals of almost $27 million in 2014 (fiscal).

CMS says that the extra money has factored in an increase for inflation as well as an 0.8% cut that it took as step towards recovering part of the $11 billion in overpayments from previous years, as ordered in the American Taxpayer Relief Act, 2012.

Adjustments will have to continue annually until the end of fiscal 2017 to address the remaining overpayments.

Long-term care hospitals will also get more IPPS money in fiscal 2014, an extra $62 million, which represents an increase of 1.1%, CMS informed.

These changes will come into effect for patients who are discharged on October 1st, and thereafter.

New Hospital-Acquired Condition Reduction Program – the new proposal also explains the criteria and methodology work for assessing the quality of care acute hospitals provide – quality of care will be linked to financial rewards.

As from fiscal 2015, the hospitals in the bottom quarter in quality ranking would get 1% less than they otherwise would through the IPPS.

Value-Based Purchasing Program – a further $1.1 billion in incentive payments under CMS’ Value-Based Purchasing Program represent an increase of 1.25%, CMS announced. CMS also proposes to add new measures to the program.

Hospital Readmissions Reduction Program – two new measures to calculate readmission penalties for 2015 were proposed by CMS under its Hospital Readmissions Reduction program. As from the end of the next fiscal year, the maximum payment reduction penalty would rise to 2% (from the current 1%).

CMS Acting Administrator Marilyn Tavenner, said:

“Dedicated professionals are working day and night in hospitals to provide the care that Medicare beneficiaries need. The new policies in this proposed rule support hospitals’ important work and the people with Medicare who depend on them by promoting safety and care improvement.”

Medicare Disproportionate Share Hospitals (DSHs) – hospitals that have a disproportionate number of low-income patients receive extra money from Medicare. While these DSHs will carry on receiving payments “they will be reduced to 25 percent of the amount Medicare would pay under the current policy.

The remaining 75 percent will be adjusted for decreases in the rate of uninsured individuals nationally and distributed to hospitals that receive DSH payments based on each hospital’s share of uncompensated care relative to all Medicare DSH hospitals.” CMS says it is inviting comments as to how these extra payment will be distributed.

Chronically Ill and Medically Complex Criteria – CMS is inviting comments on initial findings from research on criteria to identify patients who are CCI/MC (chronically critically ill and medically complex).

CMS believes that CCI/MC patients are “the most appropriate core population for LTCH care and also for full payment under the LTCH PPS.” The research has not been completed yet. However, the Agency is describing the current findings in the fiscal year 2014 IPPS proposed rule and invites feedback on this approach.” Proposed changes are planned to occur to the LTCH PPS in fiscal year 2015.

Payment and quality provisions in the proposed IPPS/LTCH PPS rule.

Written by Chrisitan Nordqvist