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The Centers for Medicare & Medicaid Services late today issued its hospital inpatient prospective payment system  for fiscal year 2016. The rule would increase rates by 1.1% in FY 2016 compared to FY 2015, after accounting for inflation and other adjustments required by law. Specifically, the proposed rule includes an initial market-basket update of 2.7% for those hospitals that were meaningful users of electronic health records in FY 2014 and that submit data on quality measures, less a productivity cut of 0.6% and an additional market-basket cut of 0.2%, as mandated by the Affordable Care Act. In addition, CMS proposes a 0.8% cut that would, in part, fulfill the requirement of the American Taxpayer Relief Act of 2012 that the agency recoup what it claims is the effect of documentation and coding changes from FYs 2010-2012, which CMS says do not reflect real changes in case mix. The rule also includes ACA-mandated Medicare Disproportionate Share Hospital reductions, which would reduce overall Medicare DSH payments by $1.3 billion in FY 2016 compared to FY 2015. The agency did not propose or discuss changes to its two-midnight policy; however, CMS indicated that it is considering feedback from the hospital field, as well as recent recommendations from the Medicare Payment Advisory Commission, and expects to address the issue in the calendar year 2016 hospital outpatient PPS proposed rule that will be published this summer. CMS proposes that a number of clinical quality measures be submitted electronically for the FY 2018 Inpatient Quality Reporting Program. It also proposes changes to the Hospital-Acquired Condition Program, the Hospital Readmissions Reduction Program and the Value-Based Purchasing Program. “Today’s rule implements numerous congressionally-mandated policies and provisions in the context of the existing payment system,” said AHA Executive Vice President Rick Pollack. “These very modest increases will make it even more challenging for hospitals to deliver care patients and communities expect.” The proposed rule will be published in the April 30 Federal Register and comments will be accepted through June 16. AHA staff are reviewing the rule, and members will receive a Special Bulletin on Monday with further details.