CMS Finalizes Overpayment Cut Rate for Hospitals

The Centers for Medicare & Medicaid Services (CMS) recently released a final rule stating that it will keep a 1.5% cut to hospital reimbursement after industry stakeholders opposed the move. CMS aims to recoup $11 billion in overpayments by 2017.

Since 2014, the hospital cut remained at a constant 0.8% after Congress mandated the CMS to recover funds that were lost as a result of incorrect coding for inpatient hospital visits.

Tom Nickels, executive vice president at the American Hospital Association said in a statement, “CMS is undermining Congress' intent by imposing a cut that is nearly two times what Congress specified.”

CMS estimated that the government would be short recouping $5 billion in overpayments by its 2017 deadline if the 0.8% remained constant. CMS officials stated that the cut increase was necessary due to the constantly changing economics of health care.

_________________________________________________________________________________________________________________________________________________________________________

RELATED CONTENT
CMS Announces Hospital Quality Ratings, Approximately Half of Hospitals Rated Average
CMS Pilot Program Improves Care for Dual Eligible Older Adults
________________________________________________________________________________________

CMS also said that it will delay its changes to the way it distributes disproportionate-share payments to safety-net hospitals. A move that’s likely to please industry stakeholders. The new formula, would have relied mostly on the amounts of uncompensated care and chartable care each hospital claims on its Medicare cost report. CMS hopes to use a version of their formula by 2021.

According to the rule, CMS intends to deliver $6 billion in uncompensated care payments in 2017, a drop of approximately $400 million. However, hospitals will still receive $746 million more under the 2017 Inpatient Prospective Payment System than in 2016.

Furthermore, long-term-care hospitals will see rates fall by 7.1%, approximately $363 million in 2017 due to the new site-neutral policy. The policy states that off-campus hospital outpatient departments are to be paid under Medicare Part B systems instead of outpatient prospective payment systems. The plan is set to go into effect January 2017. -Julie Gould

References:

Office of the Federal Register. Centers for Medicare & Medicaid Services Rules. https://www.federalregister.gov/public-inspection. August 2016.

Dickson V. CMS finalizes controversial hospital overpayment cut. Modern Healthcare. Published August 2, 2016. Accessed August 4, 2016.