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2015 Medicare Hospital Payment Proposal = Less Inpatient Spending

April 30, 2014

Medicare spending for inpatient hospital care in fiscal year 2015 would be reduced by $241 million, under a proposed rule issued April 30, 2014, by the Centers for Medicare and Medicaid Services (CMS). Comments on the proposal are due June 30, 2014, and the final rule will go into effect October 1, 2014, affecting some 3,400 acute care hospitals.

The proposal includes payment reductions for preventable readmissions and hospital-acquired conditions, adjustments in the hospital quality reporting system, and greater financial incentives under the value-based purchasing program for hospitals.

  • Value-Based Purchasing: Base operating payments for all hospitals would be cut by 1.5% to fund the incentive payments that hospitals meeting CMS quality measures will receive. The proposal would also update the measures.
  • Hospital Readmissions: The maximum payment reduction for preventable hospital readmissions would increase from 2% to 3%. CMS proposes to assess hospital readmission penalties using five readmission measures endorsed by the National Quality Forum (NQF).
  • Hospital-Acquired Conditions: The 25% of hospitals with the poorest performance in the rate of hospital-acquired conditions will see payment reductions of 1%


The proposal also reminds hospitals of their obligation under the Affordable Care Act to establish and make public a list of their standard charges for items and services. CMS guidelines for implementing the provision require hospitals to either make public the list of standard charges or their policies for allowing the public to view the list in response to an inquiry.


A fact sheet on the proposed rule is available from CMS:

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