CMS has released its proposed federal fiscal year (FFY) 2014 prospective payment system (PPS) rule for inpatient stays in acute care and long-term care hospitals (LTCHs). The rule projects a net increase in operating payments to acute care hospitals in the amount of twenty-seven million dollars for FFY 2014, a 0.8% increase in comparison with FFY 2013. LTCHs would see a net increase of 1.1%, or sixty-two million dollars. The proposed rule can be viewed here [PDF]. Comments on the proposed rule are due by June 25, 2013.

In addition to the usual DRG weighting adjustments and routine updates, the proposed rule would:

• Establish that inpatient admissions spanning at least two midnights would be treated as presumptively appropriate for payment under Medicare Part A. A patient who does not stay for two midnights would presumptively be inappropriate for payment under Medicare Part A. This presumption could be overcome by documentation supporting the admitting physician’s expectation that the patient would stay for two midnights, but that unforeseen circumstances resulted in a shorter stay.
• Initiate the documentation and coding adjustment required under the Taxpayer Relief Act of 2012. The adjustment accounts for changes in MS-DRG documentation and coding that do not reflect real changes in case-mix. CMS estimates a total adjustment of 11 billion dollars, with the total impact to be spread over FFYs 2014-2017.
• Include labor and delivery patients when determining the Medicare patient load for direct graduate medical education (GME) reimbursement. CMS anticipates that the inclusion of such days in the patient load calculation would reduce the total GME reimbursement.
• Reduce the Medicare disproportionate share hospital (DSH) adjustment to 25 percent of what would otherwise be paid under the under the DSH formula. The remaining 75 percent of DSH payments would be reduced proportionately to reflect the reduction in uninsured patients nationwide, and distributed to DSH-eligible providers based on each provider’s relative share of uncompensated care.
• Create separate cost to charge ratios for implantable devices charged to patients, MRIs, CT scans and cardiac catheterizations.
• Establish a new condition of participation for critical access hospitals (CAHs), which would require that CAHs have the capacity to treat inpatients on-site.
• Allow the temporary changes to the Medicare-Dependent Hospital (MDH) program and the definition of low-volume hospital to expire. As we noted here, the temporary changes were set to expire at the end of FFY 2012, but were extended by the American Taxpayer Relief Act of 2012.
• Implement a threshold of 25 percent for LTCH admissions from a single acute care hospital. LTCHs that admit more than 25 percent of their patients from a single acute care hospital would be paid at a rate comparable to IPPS rates for patients in excess of the threshold.