Inpatient Prospective Payment Systems (IPPS)
More than three-quarters of the nation's inpatient acute-care hospitals are paid under the inpatient prospective payment system, while nearly a quarter are paid based on costs and are called Critical Access Hospitals. The IPPS pays a flat rate based on the average charges across all hospitals for a specific diagnosis, regardless of whether that particular patient costs more or less. Everything from an aspirin to an artificial hip is included in the package price to the hospital.
Today's rule includes a very important outcome because it reverses the inappropriate and unfair 0.2 percent payment reduction for inpatient services that was implemented as part of the original "two-midnight" policy.
The Issue
The Affordable Care Act (ACA) required the Centers for Medicare & Medicaid Services (CMS) to penalize hospitals for 鈥渆xcess鈥 readmissions when compared to 鈥渆xpected鈥 levels of readmissions. Since the start of the program on Oct. 1, 2012, hospitals have experienced nearly $1.9 billion鈥
The Centers for Medicare & Medicaid Services yesterday issued a correction notice to the fiscal year 2016 inpatient and long-term care hospital prospective payment system final rule, which was published Aug. 17.
Finding in favor of hospitals, a federal judge late yesterday rejected CMS's arguments that it met all legal requirements for rulemaking when the agency cut hospitals inpatient payments by 0.2 percent in conjunction with its "two-midnight" policy.
The AHA last week called on the Centers for Medicare & Medicaid Services (CMS) to extend the partial enforcement delay of the two-midnight policy to conform with other proposed changes to the policy.
Late July 31, the CMS issued its hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) PPS final rule for fiscal year (FY) 2016. Select highlights of the final rule related to the inpatient PPS are highlighted in this Bulletin.