CMS announces series of proposed regulations, including payment cuts

CMS last week announced a series of proposed regulations, including a proposal to reduce Medicare payments for inpatient hospital care by 0.5% in fiscal year 2010, CQ HealthBeat reports. The agency said the proposed cut primarily is the result of adjustments for excessive payments to hospitals in past years.

According to CQ HealthBeat, the disproportionate payments came from changes made in how hospitals coded patients when Medicare adjusted reimbursement levels based on the severity of inpatient illness. CMS officials said the system was intended to be budget neutral, but the hospital coding resulted in overpayments, necessitating the proposal.

CMS said it has the ability to reduce payments even further. The agency said in a press release that it "believes it would be prudent to phase in the adjustment carefully over time." CMS said that total adjustments will be about 8.5%, which would necessitate cuts of 6.6 percentage points combined in FY 2011 and FY 2012 (Reichard, CQ HealthBeat, 5/1).

CMS also announced proposed cuts in payments to skilled nursing facilities in FY 2010 by 1.2%, or $390 million, compared with FY 2009 payments. The agency again cited excessive payments caused by the switch in coding practices as the primary reason for the reduction (CQ HealthBeat, 5/1).

CMS last week also announced proposals that would increase payments to long-term care hospitals by 2.4% and would enact requirements for reporting data on quality of care in 2012 based on propriety measures of quality. However, that payment would be reduced by 1.8 percentage points to make up for documentation and coding practices by the facilities, CMS officials said (Reichard, CQ HealthBeat, 5/1).