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Beginning in October, Medicare will double the penalties for preventable hospital readmissions and change the rules for determining when to admit patients or place them in observation status.
Under the fiscal year 2014 Hospital Inpatient Prospective Payment System rule, Medicare is raising the maximum penalties for preventable, unplanned hospital readmissions from 1% of base operating payments to 2%, starting in October 2013. Details of the payment hike, which is mandated by the Affordable Care Act, were announced Aug. 2 and will be published Aug. 19 in the Federal Register.
Marilyn Tavenner
The changes impact the Hospital Readmissions Reduction Program, which was originally launched in October 2012. That program penalizes hospitals with excess 30-day Medicare readmissions for acute myocardial infarction, heart failure, and pneumonia.
The new payment rule exempts more types of planned readmissions from the program. It also expands the program to include total hip and knee arthroplasty and acute chronic obstructive pulmonary disease, starting in October 2014.
In response to concerns from hospitals and patients, the hospital inpatient payment rule also provides greater guidance about which patients are appropriate for admission to the hospital and thus covered under Part A, and which patients should be considered for observation status, which is covered under Medicare Part B. The criteria now will be based on the amount of time the physician expects the patient to spend as an inpatient.
Starting in October 2013, Medicare contractors will assume that a hospital stay is eligible for Part A payment if the physician expects the patient to stay as an inpatient in the hospital for at least 2 midnights. The inpatient stay is not triggered until the physician formally admits the patient.
However, officials at the Centers for Medicare and Medicaid Services said physicians may consider the patient’s time in observation, the emergency department, the operating room, and other in-hospital treatment areas when deciding if it is appropriate to expect the patient to stay for at least 2 midnights.
"This rule helps improve hospital care and establishes clearer guidance to hospitals for when we will consider inpatient care to be appropriate so the system works better for patients and providers," CMS Administrator Marilyn Tavenner said in a statement.
The CMS estimates that the policy change will increase spending by approximately $220 million because of increases in inpatient admissions, so the agency is reducing hospital payments accordingly.
Medicare’s changed admission policy is already drawing some critics.
The new criteria will do nothing to protect hospitals from "burdensome" audits and appeals, and it will require physicians to have a "sixth sense and predict the future treatment needs for patients," warned Blair Childs, senior vice president of public affairs for Premier, an alliance of hospitals and other health facilities.
"Moreover, these changes add insult to injury, imposing an associated 0.2% payment reduction to offset what CMS believes will be an increased inpatient volume," Mr. Childs said in a statement. "We expect that this will result in even more confusion around what constitutes an appropriate inpatient hospital admission, all while cutting payments for following CMS’s rules."
mschneider@frontlinemedcom.com
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