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Medicare Announces 2016 Inpatient Rates

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August 5, 2015


Medicare inpatient payment rates will rise, quality-performance reporting will expand, and Medicare will continue its shift toward paying providers for quality, rather the quantity.Those are among the highlights of the Centers for Medicare & Medicaid Services final policy and payment regulation for Medicare inpatient services for the fiscal year 2016, which begins October 1, 2015.


  1. Payment rates will increase 0.9% for hospitals that successfully participate in the hospital quality reporting program and demonstrate meaningful use of certified electronic health record technology. Those that do not will face downward adjustments.

  2. Quality-related provisions include continued penalties for preventable readmissions, a continued -1.0% penalty for hospitals performing in the lowest 25% in reducing hospital-acquired conditions, and continued bonuses and penalties for hospital value-based purchasing.

  3. With regard to value-based purchasing, CMS is updating and expanding the number of quality measures, including a care coordination measure starting in FY 2018 and a 30-day mortality measure for chronic obstructive pulmonary disease beginning in FY 2021.

  4. CMS is updating and adjusting quality measures in the quality performance reporting programs for hospital inpatient care, cancer hospitals that are exempt from inpatient prospective payment, and long-term care hospitals. This includes a new quality measure requiring long-term care hospitals to report the percentage of residents that experience falls resulting in major injury.

  5. Prospective payments for many long-term care hospitals would decrease by -4.6%, or about $250 million, as CMS continues to make changes in the LTCH prospective payment system.

  6. CMS says that some of the payment reductions included in the final regulation recoup coding overpayments related to the transition to MS-DRGs that began in fiscal year 2008


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