News From the College

CMS Releases FY 2014 IPPS Proposed Rule


The Centers for Medicare & Medicaid Services (CMS) on April 26 released the fiscal year (FY) 2014 Inpatient Prospective Payment System (IPPS) proposed rule, which would increase average inpatient payments by 0.8 percent starting when FY2014 begins on October 1, 2013. This reimbursement update is contingent upon hospitals reporting data as specified in the Inpatient Quality Reporting program, which requires hospitals to report on a specified list of quality measures in order to receive the full annual update to their payment rates.

The proposed rule also would reduce disproportionate share hospital payments to 25 percent of the amount that Medicare currently pays. The remaining 75 percent would be distributed to hospitals based on their share of uncompensated care provided to Medicare patients.

In addition, the proposed rule would make a number of changes aimed at quality improvement, such as increasing the percentage of Medicare payments that hospitals would lose due to excessive readmissions under the Hospital Readmissions Reduction Program from the current 1 percent to 2 percent; increasing the reduction in hospital Medicare payment to fund the Hospital Value-Based Purchasing program from the current 1 percent to 1.25 percent; and reducing Medicare payments by 1 percent for hospitals that are in the highest quartile with respect to their rates of hospital-acquired conditions.

Another significant provision calls for revising the definition of inpatient. The new definition would presume that hospital inpatient admissions are reasonable and necessary for patients receiving medically necessary services who require more than one Medicare use day, which would be defined as a hospital stay crossing two midnights.

ACS regulatory staff is evaluating the proposed rule to determine the potential impact on surgery and will submit a comment letter to CMS. View a copy of the proposed rule at] -13=10234.PI.pdf. View fact sheets on the payment and quality aspects of the proposal, both released April 26, at

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