CMS Issues Final Inpatient Rates, Policies for Fiscal Year 2014

August 15, 2013


The Centers for Medicare & Medicaid Services has issued final rates and policies for inpatient hospital services for Fiscal Year 2014, which begins October 1, 2013.


  • The rule would increase inpatient operating rates by 0.7 percent after accounting for inflation and other adjustments required by the law.
  • The rule finalizes criteria to rank hospitals with a high rate of hospital-acquired conditions.  Beginning in Fiscal Year 2015, under the Affordable Care Act, hospitals that are in the lowest 25 percent in avoiding medical errors or serious infections acquired during the hospital stay will lose one percent of Medicare funding.
  • The rule expands Medicare’s Readmissions Reduction Program. In October 2012, Medicare began encouraging hospitals with excess 30-day readmissions to lower these rates for heart attack, heart failure, and pneumonia patients by reducing a portion of the hospital’s payments by up to one percent, depending on their performance on key readmissions measures. This FY 2014 inpatient rule increases the maximum reduction of payments to up to two percent. It adds hip and knee surgery and chronic obstructive pulmonary disease to the list of conditions used to determine the reduction, effective in FY 2015. CMS has increased the number and types of planned readmissions that no longer count against a hospital’s readmission rate.
  • The proposed rule makes changes in the Hospital Inpatient Quality Reporting program that now includes the 57 quality measures listed in the rule. For those hospitals that do not participate successfully in the reporting program, CMS will reduce annual updates by two percentage points.
  • In the Value-based Purchasing Program for fiscal year 2014, the proposed rule increases to 1.25 percent the applicable percent reduction to base operating DRG payment amounts. It also increases the total estimated amount available for value-based incentive payments (approximately $1.1 billion).


Click to view CMS press release on inpatient rule.

Click to view CMS press release on quality measures.