Medicare Payments for Inpatient Services

CMS has issued final rules on federal fiscal year '09 Medicare payments to acute care hospitals, nursing facilities, and inpatient rehabilitation facilities.   The final rule affecting 3,500 acute care hospitals will require them to report data on 42 quality measures in order to receive a 3.6 percent inflation increase.   The rule will also withhold DRG payment upgrades on 11 types of preventable conditions such as certain types of surgical infections, if acquired during a hospital stay, and reduce payments for indirect medical education (IME) costs.   The net effect of all of the acute care hospital rule changes, including the inflation increase, is a $4.75 billion Medicare increase in '09.  
 
The final rule affecting over 9,000 Medicare nursing facilities rescinds an earlier, proposed recalculation of Resource Utilization Group (RUG) payment categories so that nursing facilities will receive the full benefit of a 3.4 percent inflation increase, $780 million, in '09.  The final rule affecting 1,200 inpatient rehabilitation facilities (IRFs) recalculates weights assigned to Case Mix Groups (CMGs).   These and other IRF payment adjustments will reduce Medicare payments to IRFs by 0.7 percent, $40 million, in '09.
 
CMS is encouraging State Medicaid agencies to adopt its Medicare policies reducing  payments for preventable conditions acquired in acute care hospitals in order to create additional Medicaid incentives for hospital quality assurance initiatives.  PCG can help States submit necessary State plan amendments and implement changes in their Medicaid reimbursement methods.

Tom Entrikin

Tom Entrikin is a PCG manager and former Medicaid policy specialist with the U.S. Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS).