CMS Proposes Payment Reforms For Inpatient Hospital Services In 2008

The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that takes significant steps to improve the accuracy of Medicare’s payment under the acute care hospital inpatient prospective payment system (IPPS), while providing additional incentives for hospitals to engage in quality improvement efforts.

The payment reforms include a proposal to restructure the inpatient diagnosis related groups (DRGs) to account more fully for the severity of the patient’s condition. In addition, the proposed rule includes provisions to ensure that Medicare no longer pays hospitals for their additional costs of hospital-acquired conditions (including infections), and includes an expanded list of publicly reported quality measures. The proposed rule would also reduce payment for a DRG involving the implantation of a device, when a hospital replaces a device and the replacement is supplied to the hospital at no or reduced cost.