Earlier this month, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (Final Rule) modifying the Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year (FY) 2017. CMS pays acute-care hospitals for services provided to Medicare beneficiaries under the IPPS and pays long-term care hospitals (e.g. hospices, nursing homes) under the LTCH PPS. For FY 2017, CMS projects that the Final Rule’s provisions will increase total Medicare spending for acute care hospital services by $746 million. In contrast, payments to long-term care hospital services are expected to decrease by $363 million, or 7.1 percent. According to CMS, the adjusted payments demonstrate an ongoing effort to move the Medicare program away from volume-based payments and toward a pay-for performance (value-based) reimbursement methodology as supported by a pay-for-reporting program.
The Final Rule, which goes into effect October 1, 2016, will affect an estimated 3,330 acute care hospitals and 430 LTCHs.