On May 2, 2014, the Centers for Medicare & Medicaid Services (“CMS”) issued a proposed rule to update the Medicare hospice payment rates and the Medicare wage index for fiscal year (“FY”) 2015. CMS estimates that under this proposed rule hospice providers would see an estimated 1.3 percent increase (approximately $230 million) in their payments for FY2015. The rule also proposes requirements related to the self-reporting of payment caps and updates for the hospice quality reporting programs, and solicits comments on the definitions of “terminal illness” and “related conditions.” The proposed rule will be published in the May 8, 2014 Federal Register. A display copy is available here

On April 30, 2014, CMS issued the inpatient prospective payment system (“IPPS”) proposed rule for FY2015. The IPPS proposed rule would implement several statutory provisions contained in the Affordable Care Act, including policies relating to the Hospital Value-based purchasing program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (“HAC”) Program. Other key changes from the proposed rule include:

  • a 1.3 percent increase in IPPS operating payment rates;
  • penalties for hospitals that do not participate in the Hospital Inpatient Quality Reporting Program and fail to submit the required data or that are not meaningful electronic health record users;
  • adjustments to the methodology for Medicare disproportionate share hospital (“DSH”) payments; and
  • changes to the wage index for acute care hospitals based on the 2010 Census and hospital reclassifications and redesignations by the Office of Management and Budget (“OMB”).

The rule also asks stakeholders to provide comments on, among other things, an alternative payment approaches for short hospital stays. 

The IPPS proposed rule will be published in the May 15, 2014 Federal Register. A display copy of the rule is available here


On May 2, 2014, CMS rejected Louisiana Gov. Bobby Jindal’s plan to privatize six state-owned hospitals in New Orleans, Lafayette, Houma, Lake Charles, Shreveport and Monroe. 

According to CMS, the arrangements are not consistent with the restrictions on Federal Medicaid funding when a state receives donations from, or imposes taxes on, providers or provider-related entities. In particular, CMS questioned the $266 million in “advance lease payments” that the hospitals managers paid pursuant to their no-bid contracts with the state. The agency noted that the information submitted by the state indicated that these payments were in excess of fair market value and that, as such, the payments appear to be an improper payment (i.e., a non-bona fide provider related donation) from the private hospitals to the state. 

CMS’ decision may have a significant impact on the state’s budget since the hospitals are already operating under the Governor’s plan. Gov. Jindal’s administration did not wait for approval from the Federal government before it shifted the hospital management. 


CMS recently announced that it will begin fingerprint-based background checks for any individual with a five percent or greater ownership interest in a provider or supplier that falls under the “high” risk category. The high level risk category includes newly enrolling home health agencies, newly enrolling durable medical equipment, prosthetics, orthotics, and supplies (“DMEPOS”) suppliers, and any other provider or supplier that CMS elevates to this category. 

Applicable providers will receive notification of the fingerprint requirements from their Medicare Administrative Contractor (“MAC”). This notification will include a list of the individuals who are required to be fingerprinted. Once notified, the individuals will have 30 days to comply. 

Fingerprint-based background checks are part of the Affordable Care Act’s enhanced enrollment screening provisions, set forth at 42 C.F.R. §424.518. Additional information regarding the background checks is available here.