Implementing Medicare hospital payment changes required by PPACA for FY 2011, CMS recently posted a display copy of a proposed supplemental rulemaking (Supplemental Rule) to its annual update issued April 19, 2010, for inpatient prospective payment system (IPPS) hospitals and long-term care hospitals (LTCHs). (For more information, please see the April 29, 2010, issue of the Health Law Update.)

According to CMS, PPACA payment changes contained in the Supplemental Rule will result in (1) a reduction of $820 million in aggregate payments across all IPPS hospitals; (2) a $13 million increase in payments to LTCH hospitals; (3) a slight increase in the proposed outlier thresholds for both; and (4) $400 million in payments for FY 2011 and 2012 for qualifying hospitals located in counties that rank, based on adjusted Medicare spending per beneficiary, among the lowest quartile in the country.

Other PPACA changes in the Supplemental Rule include improvements to the low-volume hospital adjustment and the wage index related to geographic reclassification. Programs extended under the Supplemental Rule include: (1) the Rural Community Hospital Demonstration Program (five years); (2) the Medicare Dependent Hospitals (MDHs) program (through October 1, 2012); and (3) certain requirements under the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA) affecting LTCH satellite facilities and co-located LTCHs (two years). The application of a specific payment adjustment for short stay outlier discharges from LTCHs and a one-time adjustment to the LTCH PPS rates also were given a two-year extension.

The proposed Supplemental Rule is slated for publication in the June 2, 2010 issue of the Federal Register. The deadline for comments is June 21, 2010. According to the agency, CMS will review these comments along with comments received on the April 19, 2010, IPPS/LTCH PPS proposed annual rulemaking and respond to all comments in its final rule.

Also scheduled for publication in the June 2, 2010, Federal Register is a CMS notice implementing PPACA-mandated payment reductions for IPPS hospitals and LTCHs for FY 2009, effective for discharges on or after April 1, 2010.