2011 IPPS draft rule released by CMS: Good news, bad news for hospitals

The good news is that the acute hospital market basket update in Medicare payment proposed in the 2011 IPPS draft rule released by CMS on April 19 (to be published in the Federal Register on May 4) is 2.4% (subject to revision based on data clarifications in the final rule). 

The bad news comes in two parts.  First, the 2.4% includes 2% for RHQDAPU compliance, and there are a number of new measures to report.  Second, and even worse, is that the rule also includes a -2.9% adjustment (yes, Virginia, a net cut of 0.5%) to account for part of the anticipated overpayment resulting from zealous documentation of claims under the relatively new MS-DRG system. 

CMS gave hospitals a bye last year, when this adjustment was supposed to start.  Part 2 of the adjustment is supposed to be implemented in FFY 2012.  (More on the budget neutrality issue is available in this CMS fact sheet.  A fact sheet on the entire 2011 IPPS rule is available from CMS as well.)

One wild card thrown in the mix is the Affordable Care Act (the health reform law).  CMS couldn't incorporate all changes required by the new law into this draft rule in time, so more changes will be on their way.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting