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American Hospital Association Raises Concerns About Proposed Rule On Medicare Hospital Reimbursements
The American Hospital Association on Thursday raised concerns about the implementation of a proposed CMS rule that seeks to improve the accuracy of Medicare reimbursements to acute care hospitals, CQ HealthBeat reports (Reichard, CQ HealthBeat, 4/13). CMS on Wednesday proposed a rule that would increase Medicare reimbursements for inpatient services at acute care hospitals by 3.4%, or about $3.3 billion, in fiscal year 2007. In addition, the rule would base the weights assigned to diagnosis related groups on hospital costs rather than charges and would adjust DRGs for patient severity to "eliminate biases in the current DRG system arising from the differential markup hospitals assign for ancillary services among the DRGs." The rule marks the first step in a two-step process for reform of the DRG system. The second step, scheduled for FY 2008, would replace the system of 526 DRGs with either the proposed 861 consolidated severity-adjusted DRGs or an alternative security adjusted DRG system developed in response to public comments submitted to CMS on the issue (Kaiser Daily Health Policy Report, 4/13). Don May, vice president of policy for AHA, said, "It's going to take time to understand all the different changes in the rule, how those changes will interact and the impact of the changes both intended and unintended." After the 60-day public comment period, CMS will have only a few weeks to prepare a final rule, May said, adding, "This is a very aggressive timeline." According to CQ HealthBeat, "AHA seems to be hinting that it will seek a delay for parts of the rule" (CQ HealthBeat, 4/14). Effect on Specialty Hospitals
"Specialty hospitals are expected to feel the biggest pinch" under the proposed rule, and some are "already feeling pressure," Dow Jones reports. David Shove, a Prudential Equity Group analyst, said, "If both CMS proposals to move to hospital-specific cost weights in fiscal 2007 and severity-adjusted DRGs in fiscal 2008 are realized, the impact will be largely felt in the specialty hospital industry." Shove added, "By 2008, the urbans end up with a net neutral impact, while rural hospitals could see a slight decrease in payments by" FY 2008 (Koons, Dow Jones, 4/13).
"Reprinted with permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.
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