On August 1, 2011, the Centers for Medicare & Medicaid Services (CMS) released a final rule updating Medicare payment policies and rates for general acute care hospitals and long-term care hospitals (LTCHs) for inpatient stays in fiscal year (FY) 2012. The rule is published in the August 18, 2011 Federal Register [PDF]. The rule also implements and builds upon certain statutory mandates set forth in the Affordable Care Act (ACA). Among other things, the rule establishes the Hospital Readmissions Reduction Program, broadens both the Hospital Inpatient Quality Reporting (IQR) Program and the Hospital Value-Based Purchasing (VBP) Program, and erects the framework for a new quality reporting program for LTCHs. The new regulations, which govern approximately 3,400 acute care hospitals and 420 LTCHs, will apply to discharges occurring on or after October 1, 2011, unless otherwise specified in the rule.

Payment Rate Updates

The payment rate updates concern acute care hospitals paid under the Inpatient Prospective Payment System (IPPS), as well as hospitals paid under the Long Term Care Hospital Prospective Payment System (LTCH PPS).