Medicare Payments to Acute and LTC Hospitals to Increase in FY 2012

The Centers for Medicare & Medicaid Services (CMS) published a final rule on Monday that increases payments to general acute and long term care facilities.

“The final rule continues a payment approach that encourages hospitals to adopt practices that reduce errors and prevent patients from acquiring new illnesses or injuries during a hospital stay,” said CMS Administrator Donald M. Berwick, M.D. “This approach is part of a comprehensive strategy being implemented across Medicare’s payment systems that is intended to reduce overall costs by improving how care is delivered.”

Acute care hospitals for inpatient services are projected to see Medicare payments increase by $1.13 billon or 1.1% in fiscal year 2012.  Medicare payments to LTCHs in are also projected to increase by $126 million or 2.5% in FY 2012, due to a 1.8% increase in payment rates together with other policies adopted in the final rule.


The Affordable Care Act also requires CMS to implement the Hospital Readmissions Reduction Program that will reduce payments starting in FY 2013 to hospitals that have excess readmissions for certain selected conditions.  Readmissions for acute myocardial infarction (or heart attack), heart failure, and pneumonia will be used to calculate excess readmission rates for these conditions.

“CMS has developed its update policy in response to many comments expressing concerns about our original proposal,” said Deputy Administer and Director for the Center for Medicare, Jonathan Blum. “We believe that our final policy strikes the appropriate balance between providing a fair update to hospitals and ensuring careful stewardship of the Medicare Trust Fund.”

CMS said last week that funding for skilled nursing facilities would be cut by 11.1% in FY 2012.


View the final rule here.