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Final Medicare Inpatient Rates for FY 2018

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August 4, 2017

Hospitals will see an increased $2.4 billion in overall Medicare spending for the inpatient care they provide Medicare beneficiaries during Fiscal Year 2018 (FY18). That is the result of a final rule recently issued by the Centers for Medicare & Medicaid Services (CMS) that updates payment rates and policies for hospital inpatient care during FY18, which begins October 1, 2017.



Rates: CMS will update the prospective payment rates that hospitals receive for treating Medicare beneficiaries by approximately 1.2%. This applies to hospitals that successfully report their quality performance and are meaningful users of electronic health records. CMS will update the payment rates for long-term care hospitals by 1.0%. 


Uncompensated Care: Hospitals with a disproportionate share of uncompensated care cases will receive $6.8 billion in FY 2018—an increase of about $800 million from FY 2017.


Hospital Acquired Conditions: Hospitals in the worst performing 25% of hospitals in reducing hospital acquired conditions will continue to experience a payment penalty of 1%, as required by existing law. CMS is still considering whether it should add outcomes-focused patient-safety measures related to falls with injuries, adverse drug events, glycemic events, and ventilator-associated events.


Readmissions: For FY 2018 and subsequent years, CMS will continue to reduce payments for excessive readmissions for heart attack, heart failure, pneumonia, chronic obstructive pulmonary disease, total hip/total knee arthroplasty, and coronary artery bypass graft. CMS is finalizing its proposal to judge a hospital’s performance in comparison to other hospitals with a similar proportion of patients who are dually eligible for Medicare and full-benefit Medicaid.


Value-Based Purchasing: CMS is removing one quality measure and adopting two new ones in future fiscal years, as well as adjusting the weight of efficiency and cost-reduction measures in FY 2021 to reflect the implementation of condition-specific payment measures. CMS continues to consider whether to account for social risk factors in measuring quality and patient health outcomes.

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