In April the Centers for Medicare & Medicaid Services published its proposed rule governing how it plans to pay hospitals for Medicare-covered inpatient services in FY 2017. The rulemaking process includes an invitation to stakeholders to submit comments on what CMS has proposed.

NAUH LogoNAUH submitted extensive comments in response to the proposed rule, addressing six aspects of what CMS proposed:

  • Medicare disproportionate share (Medicare DSH) payments
  • the Medicare hospital readmissions reduction program
  • inpatient rates
  • observation status/the two-midnight rule
  • the outlier threshold
  • reporting data for the Medicare area wage index

This week the NAUH blog presents NAUH’s comments. Our schedule is as follows:

  • Monday – objections to the proposed new methodology for calculating Medicare DSH uncompensated care payments
  • Tuesday – NAUH’s own proposed alternative methodology for calculating Medicare DSH uncompensated care payments
  • Wednesday – NAUH’s concern about the size of the proposed Medicare DSH uncompensated care pool
  • Thursday – the Medicare hospital readmissions reduction program
  • Friday – inpatient rates, observation status/the two-midnight rule, and the outlier threshold

Find NAUH’s complete comment letter here.

Inpatient Rates

 CMS has proposed increasing the final documentation and coding adjustment called for by the American Tax Relief Act of 2013. NAUH believes the rate of growth in inpatient services between 2016 and 2017 will more closely resemble the historic trend than the decreases that were observed in recent years. We ask that the Office of the Actuary re-examine its analysis to ensure that it has not “overcorrected” by not accounting for the return to the historic trend that we expect to see in 2017.

 Observation Status/Two-Midnight Rule

NAUH appreciates the care with which CMS has addressed the provider community’s concerns about observation status and the two-midnight rule, including the decision to compensate hospitals for FY 2014-2016 payment reductions associated with this program.

Outlier Threshold

The proposed rule calls for raising the Medicare outlier threshold from the current $22,544 to $23,681 in FY 2017. Actual outlier payments in FY 2015 (the last year for which complete data is available) amounted to 4.68 percent of total Medicare DRG payments, which means they fell short of the congressional established minimum target of 5.1 percent. NAUH believes CMS should calculate the outlier threshold by estimating a threshold that would result in expenditures at the midpoint of the target range rather than the bottom of that range, which should reduce rather than raise the outlier threshold for FY 2017.

Find NAUH’s complete comment letter here.