The following article first appeared at Becker’s Hospital Review on July 29, 2011 (written by Molly Gamble).
Medicare and hospitals go hand in hand. Hospital payments account for the greatest share of the federal program’s spending, and Medicare is the largest payor for hospital services, comprising a significant portion of most hospitals’ revenue. As of Oct. 1, though, hospitals will operate under a revised inpatient prospective payment system — one that could put many hospitals at risk.
The proposed changes to IPPS for fiscal year 2012
Imagine if the method of assessing individual taxes changed and the government scrapped its traditional, income-based approach for a model that taxed Americans based upon their personal caliber.
This may sound far-fetched, but healthcare leaders might share a strange yet familiar connection with the scenario — particularly in light of the Centers for Medicare & Medicaid Services’ proposed changes to IPPS. These rules, unveiled in April 2011 for fiscal year 2012 (thus going into effect Oct. 1), contain payment rate changes, coding adjustments, and the quality reporting program which mandates hospitals to report on 55 measures for FY 2012.
More than 60 percent of hospitals already lose money on Medicare, according to the American Hospital Association. Section 3401 of the Patient Protection and Affordable Care Act detailed across-the-board Medicare payment reductions for hospitals. These cuts are estimated to reduce reimbursements by $155 billion from 2010-2019, a strategy hospitals agreed to accept in 2009 to help fund healthcare reform. While good news for CMS, these additional Medicare cuts could prove devastating to hospitals, particularly when paired with extensive performance-based healthcare delivery reforms, such as value-based purchasing, which is set to begin in Oct. 2012.
Putting IPPS into context
From an academic and legal standpoint, Craig B. Garner, a professor of law at Pepperdine University in Malibu, Calif., says the proposed changes are fascinating. “Throughout its history, Medicare has employed variations of cost-based reimbursement, originally factoring in the actual cost to a provider and then transitioning to a predetermined rate based upon a patient’s particular diagnosis. Soon it may not matter anymore,” says Mr. Garner. “The new regulations are changing a very complex system and steering it in a totally new and equally complicated direction, only this time based on performance. This will include what people think of a hospital, the patient experience during a hospital stay, and ultimately the reliability of a hospital in its delivery of patient care,” says Mr. Garner.
The complete article can be viewed HERE.