The Centers for Medicare and Medicaid Services (“CMS”) published a proposed rule on April 30th that would increase Medicare inpatient reimbursements to hospitals for fiscal year 2015. The proposed rule would increase Medicare inpatient reimbursements for acute care hospitals by 1.3%, and for long-term care hospitals by 0.8%. Even with this projected increase in payment rates, the agency expects that aggregate payments (operating and capital) would decrease by $241 million.

The proposed rule also would increase penalties for hospitals that have poor metrics for both readmission rates and hospital-acquired conditions. Penalties for hospitals that perform poorly in five readmissions measures under the Readmissions Reduction Program would increase from a 2% maximum payment reduction to a 3% maximum. Readmissions related to initial admissions for heart attacks, heart failure, pneumonia, hip or knee arthroplasty, and chronic obstructive pulmonary disease are all considered under the program. Under the proposed rule, readmissions after coronary artery bypass graft surgery would be added as a sixth measure in 2017. The agency estimates that the 2% payment reduction penalty previously in place has successfully reduced hospital readmissions for Medicare by 150,000 in 2012 and 2013 and hopes that an increase in the penalty will improve metrics further.

CMS has also proposed changing the scoring methodology for its hospital-acquired conditions (“HAC”) reduction program. HACs range from foreign object retained after surgery to surgical site infection to falls and trauma. The proposed program would penalize the 25% of hospitals with the most HACs with a 1% payment inpatient cut.

CMS’s press release summarizing the proposed rule can be found here. The full rule, spanning almost 1,700 pages, will be published in the Federal Register on May 15th and can be found electronically here. Comments on the proposed rule are due June 30, 2014.

Once the rule is published, instructions on how to submit comments will be available here. All comments should cite to the rule’s docket number: CMS-1607-P. The proposed rule specifically asks for public input on an alternative payment methodology for short stay inpatient cases that also may be treated on an outpatient basis, including how to define short stays. In addition, the proposed rule reminds stakeholders of the existing process for requesting additional exceptions to the two-midnight benchmark.