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Medicare Updates for the Payments to Hospitals for FY 2018 Released

The Centers for Medicare & Medicaid Services (CMS) recently issued its final rule on the Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH-PPS) Prospective Payment System. Under IPPS and LTCH-PPS, hospitals are paid by assigning a single payment based on the patient’s diagnosis and severity of illness assigned at discharge. Typically, the payment amount increases each year to account for various factors that affect hospitals’ costs.

This year, hospitals that met the criteria will receive an increase of 1.2%, which is below what some hospitals may have been expecting for the year given the typical government calculations. Certain mandated adjustments, including a 0.75% decrease mandated by the Affordable Care Act, have affected hospital payments. There are other payments directly to hospitals, such as those for uncompensated care that will increase the pool of money hospitals will receive for patient care this year. Uncompensated care payments will increase by approximately $800 billion.

Overall, under the changes included in this final rule, CMS projects that LTCH-PPS payments will decrease by approximately 2.4%, or $110 million, in 2018, which is due in large part to the continued phase in of the dual payment rate system.

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