Under the Inpatient Prospective Payment System (IPPS) Proposed Rule for federal fiscal year (FFY) 2012, hospitals that serve a disproportionate share of Medicaid or end-stage renal disease (ESRD) patients would see changes to their payment adjustments. Hospitals that treat a large number of hospice patients on an inpatient basis will be particularly interested in proposed changes to the indirect medical education (IME) and disproportionate share hospital (DSH) adjustments. Hospitals that qualify for the add-on payment for hospitals with at least 10% ESRD discharges would also be affected by the proposed rule.

Hospitals that receive an IME or DSH adjustment should take note of the proposed change to rules for calculating those adjustments, which may be viewed here (see alert below for link). CMS has proposed to eliminate hospice beds from the IME calculation and hospice days from the DSH calculation. Hospice days would be removed from both the numerator and denominator of the Medicare and Medicaid fractions. In proposing to remove this hospice data, CMS notes that hospice care is not reimbursed under the IPPS, and that the level of care given to hospice patients is generally not on par with acute inpatient care. CMS argues that hospice days are comparable to observation and swing bed days, which were removed from the DSH adjustment in the FFY 2005 IPPS Final Rule. CMS has proposed an exception for IPPS-level acute care hospital services to a hospice patient for which it would receive payment under IPPS, such as treatment for a broken bone that is unrelated to the terminal illness.