The Centers for Medicare & Medicaid Services released the Hospital Inpatient Prospective Payment System (IPPS) final rule for fiscal year (FY) 2014 on August 2, 2013.  The final rule addresses changes in payment rates for general acute care and long-term care hospitals effective October 1, 2013, as well as revisions to the Hospital Value-Based Purchasing Program, hospital quality measures programs, and CMS guidance relating to when hospital inpatient admissions are determined reasonable and necessary for payment under Medicare Part A.  The IPPS final rule also includes changes pertaining to implementation of the FY 2015 payment adjustment under the Hospital-Acquired Condition Reduction Program established by the Affordable Care Act (ACA) and implements a revised methodology for determining disproportionate share hospital (DSH) payments, as required by the ACA. 

Overall hospital payments under the IPPS will increase by $1.2 billion.  The final rule increases IPPS operating rates by 0.7 percent after accounting for inflation and other adjustments required by the law.  CMS will increase payments to long-term care hospitals by 1.3 percent, or approximately $72 million. 

CMS also responds to comments on a proposed rule, released in March 2013, in which CMS changed its policy to allow hospitals to bill Medicare Part B for the reasonable and necessary care provided to patients after a Medicare review contractor has denied payment under Part A, or the hospital has determined through a self-audit, that the care should have been provided in the outpatient setting, rather than in an inpatient setting. CMS finalizes its proposal to allow hospitals to bill Medicare Part B in such cases only when the Part B claims are submitted within one year of the date of service, and CMS clarifies that this policy applies to admissions with dates of service on or after October 1, 2013.