Medicare Proposes 2012 Pay Cut for Hospitals


The Centers for Medicare and Medicaid Services is proposing to reduce payments for hospitals by $498 million, or 0.55%, in fiscal 2012.

The proposals under the Inpatient Prospective Payment System and the Long-Term Care Hospital Prospective Payment System continue a flat-to-downward trend in Medicare reimbursement over the past few years. A big reason for the reduction: The agency is adjusting for overpayments made for coding errors in the previous fiscal years, according to Ira Loss and his colleagues at Washington Analysis, a company that monitors policy developments for investor clients.

The cuts will “will maintain pressure on makers and suppliers of certain device categories, like orthopedics, general surgery, routine lab tests, and medical supplies, for the foreseeable future,” said Mr. Loss.

The April 19 announcement included new quality improvement proposals. “The proposals … reflect an underlying premise that we can improve the quality of and access to care while at the same time slowing the growth in health care spending,” CMS Administrator Donald Berwick said in a statement.

The rule will encourage support of Partnerships for Patients, a joint effort by the Department of Health and Human Services and private entities to improve patient safety and quality.

Beginning in fiscal 2013, the agency is to start reducing payments to hospitals that have excess readmissions for certain conditions. The proposed rule lays the groundwork for that by publishing rates of readmissions for three conditions: acute myocardial infarction, heart failure, and pneumonia.

The proposal also would add one category to the list of hospital-acquired conditions that the CMS will not pay for at a higher rate, if the condition occurred during the hospital stay. That category is acute renal failure after contrast administration (also known as contrast-induced acute kidney injury, or CI-AKI).

The new rule contains provisions that will support the hospital value-based purchasing regulation when that final rule is issued in “the near future.” One of those proposals is to adopt a Medicare Spending per Beneficiary Measure for the value-based purchasing program.

The CMS also proposes to reduce the reporting burden for physicians and hospitals by retiring some quality measures, introducing others that will more closely align with measures collected for other purposes, and streamlining the submissions process, said the agency.

On the reimbursement side, cardiac and orthopedic procedures will see an overall slight reduction in payment, according to Washington Analysis. Heart transplants and heart assist systems will have about a 9% pay reduction. Defibrillator implantation will range from a decrease of 2.1% to an increase of 4.5%, depending on the patient's status, the analysts said. Deep brain stimulation, vagus nerve stimulation for epilepsy, and spinal cord stimulation will see a small increase.

The rule is open for comment until June 20. The final rule is to be issued by Aug. 1.

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