BREAKING: CMS finalizes controversial hospital-overpayment cut

BREAKING: CMS finalizes controversial hospital overpayment cut

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In a final rule released Tuesday, the CMS said it will keep a controversial 1.5% cut to hospital reimbursement. Industry stakeholders had pushed against the cuts which aim to recoup a total of $11 billion in alleged overpayments.

Hospitals expected the cuts to remain at 0.8% as they had been since 2014, two years after Congress mandated the CMS to recover funds allegedly lost as a result of incorrect coding on inpatient hospital stays by the end of 2017.

Industry leaders say they were shocked when in April, the CMS proposed raising the cut to 1.5% given the Medicare Access and CHIP Reauthorization Act (MACRA) held the cut at 0.8%.

The CMS, however, estimated that another 0.8% reduction would have left the government $5 billion short of recouping the overpayments. The agency said changing economic and healthcare trends upended its earlier projections and made it necessary to increase the cut.

Overall, hospitals will still receive $746 million more under the 2017 Inpatient Prospective Payment System than they did in fiscal 2016 as a result of several changes, including the reversal of the 0.2% payment reduction under the two-midnight rule and a one-time increase to offset the two-midnight cut applied in fiscal 2014-2016.

Elsewhere in the rule, the CMS said it is distributing almost $6 billion in uncompensated care payments next year. That’s a drop of approximately $400 million from last fiscal year. The cut for was outlined in the Affordable Care Act, which called for adjustments based on the rate of uninsured individuals and other factors.

Finally, long-term-care hospitals will see rates fall by 7.1% or approximately $363 million in 2017 because of a new site-neutral policy that states off-campus hospital outpatient departments will be paid under Medicare Part B systems instead of outpatient prospective payment systems. It is set to go into effect on Jan. 1 of next year.

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Virgil Dickson reports from Washington on the federal regulatory agencies. His experience before joining Modern Healthcare in 2013 includes serving as the Washington-based correspondent for PRWeek and as an editor/reporter for FDA News. Dickson earned a bachelor’s degree from DePaul University in 2007.

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