Dive Brief:
- Medicare will send $2.1 billion more to acute care hospitals in 2027, according to a new payment rule released Friday.
- The total amounts to a 2.3% increase in payments for inpatient hospital services, about the same as the 2.4% bump the Trump administration proposed in April.
- Still, hospitals said the new payment rates were inadequate and chafed against a new mandatory joint replacement payment model that will go into effect in 2028. “Lasting improvements in care delivery come through collaboration and innovation, not one-size-fits-all mandates,” Charlene MacDonald, CEO of trade group the Federation of American Hospitals, said in a statement.
Dive Insight:
The Inpatient Prospective Payment System final rule includes a 3.2% market basket increase, offset by a 0.9 percentage point productivity adjustment.
Nonprofit hospitals are slated to get a 3.2% increase, while for-profits are expected to get 2.2% more, regulators said in the final rule.
However, net rates could fall from other factors like declines in certain payments to long-term care hospitals and the possible expiration of payments to Medicare-Dependent Hospitals, which are scheduled to run out on Dec. 31 unless Congress extends them.
Considering those factors, including another wage index reduction, for-profit facilities receive a 1.4% pay increase. Although the payment rate would fall below historic increases of 2% to 3%, it’s still higher than rates proposed in April, according to a Sunday note from TD Cowen.
Still, hospitals said the pay increase didn’t keep up with the cost of providing care or the financial pressures facing hospitals.
Many hospitals provide care that outpaces government reimbursement, Joanna Hiatt Kim, vice president of payment policy at the American Hospital Association, said in a statement.
“Despite this, CMS has made another inadequate update to inpatient payment rates,” she said.
In addition to the pay increase, regulators also finalized a mandatory joint replacement model, dubbed CRJ-X. Regulators say the model, which holds providers accountable for Medicare spending related to joint replacements, hospitalization and recovery, will save the government $725 million over five years.
All acute care hospitals, except those located in Maryland or participating in another model named TEAM, will be required to participate in CRJ-X.
Hospitals pushed back on the mandatory nature of the model, arguing that forcing hospitals to adopt payment experiments could hurt facilities already pressured by rising costs.
Medicare will also tweak several measures of the hospital inpatient quality reporting program, which reduces reimbursement to hospitals that don’t submit data or meet all requirements.
CMS will add measures that track how long diabetes patients spend in acute care hospitals and how many patients contract hospital-acquired venuous thromboembolism, a serious post-surgery complication.
Medicare will also incorporate Medicare Advantage patients into its measures and adopt five mortality data measurements.
In addition to the inpatient rule, regulators on Friday also finalized a 2.3% pay raise to long-term care hospitals.
