August 7, 2014

CMS Issues FY2015 Inpatient PPS Final Rule

On Aug. 4, the Centers for Medicare & Medicaid Services (CMS) issued the final Medicare inpatient prospective payment system (IPPS) rule for fiscal year 2015. The rule will be published in the Aug. 22 Federal Register and will be effective Oct. 1, 2015.


Key provisions of the final rule include:


  • An increase in the IPPS base payment rate of 1.4 percent, which includes a 0.8 percent coding and documentation adjustment. Despite the projected increase to the base rate, CMS projects payments to acute care hospitals will decrease by $756 million
  • A decrease in the amount allotted to the 75-percent pool for Medicare disproportionate share (DSH) to reflect additional decreases in the percentage of uninsured as well as estimates from the Office of the Actuary of lower projected hospital inpatient spending. CMS will distribute $7.65 billion in DSH payments, a drop from the initially proposed $8.56 billion
  • Application of the new Core-based Statistical Areas to determine the labor market areas for the wage index and transition periods for hospitals that will face reductions in their wage index due to the new geographic areas
  • An increase in the maximum payment reduction from 2 percent to 3 percent under the Readmissions Reduction Program
  • An adjustment of up to 1.5 percent of the base operating Medicare payments based on each hospital's performance on certain quality of care measures under the Value-Based Purchasing Program
  • One percent reimbursement reductions for hospitals in the worst quartile under the Hospital-Acquired Condition Reduction Program


While CMS received numerous comments related to the development of a short stay payment policy, they opted to continue to study this issue without implementation at this time. The rule also supports price transparency by reminding hospitals of the Patient Protection and Affordable Care Act requirement to post or otherwise make their charges available to patients and the public.


For more information, contact Kathy Reep, vice president of financial services, at (407) 841-6230.