CMS Issues Final Rule for FY 2014 Medicare Inpatients Stays in Acute-Care and Long-Term Care Hospitals


On August 2, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (CMS-1599-F) updating FY 2014 Medicare payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital Prospective Payment System (LTCH-PPS).

The final rule, which applies to approximately 3400 acute care hospitals and approximately 440 LTCHs, will generally be effective for discharges occurring on or after October 1, 2013.  According to the rule, operating rates for inpatient stays in general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program will be increased by 0.7%.  Those that do not successfully participate in the IQR program will receive a 2.0 percentage point reduction in the increase.  Total IPPS payments (capital and operating payments) are projected to increase by $1.2 billion.  Based on the changes being made in the final rule, Medicare payments to LTCHs in FY 2014 are projected to increase by approximately $72 million or 1.3% as compared to FY 2013 Medicare payments.


The rule finalizes a proposal that hospital inpatient admissions spanning at least two midnights would presumptively qualify as appropriate for payment under Medicare Part A.  Pursuant to the fact sheet accompanying the final rule, the timeframe to determine the expectation of a stay spanning two midnights begins when the beneficiary starts receiving services in the hospital, including outpatient observation services or services in an emergency department, operating room, or other treatment area. 

The final rule also implements section 3133 of the ACA, which reduces the Medicare disproportionate share hospital (DSH) adjustment to reflect the expected reduction in uncompensated care as more individuals gain insurance coverage. 


In addition, the final rule makes a number of changes to quality programs mandated by the ACA, including the Hospital-Acquired Conditions (HAC) Reduction Program; the Hospital Value-Based Purchasing and Readmissions Reduction programs; the IQR program; the Inpatient Psychiatric Facility Quality Reporting and LTCH Quality Reporting programs; and the PPS-Exempt Cancer Hospital Quality Reporting Program. 


The final rule will be published in the August 19, 2013 Federal Register.



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Categories:Health and Human Services


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