CMS Issues IPPS Proposed Rule to Implement Health Reform Changes - May 26, 2010

On May 21, the Centers for Medicare & Medicaid Services (CMS) issued a supplemental proposed inpatient prospective payment system (IPPS) rule implementing payment reductions and other changes mandated by the Patient Protection and Affordable Care Act (PPACA). CMS will accept comments through June 21 and will finalize this rule at the same time as the proposed IPPS rule published on May 4. Important provisions for safety net hospitals include:

• A reduction in the fiscal year (FY) 2011 market basket update from 2.4% to 2.15% (or 0.15% for hospitals that fail to report quality data).
• A proposed methodology for distributing $400 million to hospitals located in counties in the lowest quartile of Medicare spending. NAPH members in Polk County, Iowa, Bernalillo County, New Mexico, and Onondaga County, New York would be eligible for payments proportional to their FY 2009 IPPS operating payments.

CMS also issued a separate notice implementing PPACA-mandated changes for FY 2010. The notice reduces the FY 2010 market basket update from 2.1% to 1.85% for discharges on or after April 1, 2010.