News archive 2017

Medicare Inpatient Rates Proposed for Fiscal Year 2018

April 20, 2017

Medicare Inpatient Rates Proposed for Fiscal Year 2018


Total Medicare spending on inpatient hospital services would rise by about $3.1 billion in Fiscal Year 2018 as a result of changes in payment rates and policies proposed by the Centers for Medicare & Medicaid Services.  The agency will accept comments on its proposal, which applies to about 3,300 acute care hospitals nationwide, until June 13, 2017, and will implement its final policy changes for FY 2018 on October 1, 2017.




  • Rates: To reflect changes in costs and other factors, CMS is proposing to update the prospective payment rates that hospitals receive for treating Medicare beneficiaries by approximately 1.6%.  This applies to hospitals that successfully report their quality performance and are meaningful electronic health record users. CMS is proposing to update payment rates for long-term care hospitals by 1%. 
  • Uncompensated Care: CMS is proposing to pay about $7 billion in FY 2018 to hospitals with a disproportionate share of uncompensated care cases—an increase of $1 billion 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. Under the proposed rule for FY 2018, CMS is asking for comments on 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 proposing 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 proposing to remove one quality measure and adopt two new ones in future fiscal years, as well as adjust the weighting of efficiency and cost-reduction measures in FY 2021 to reflect the implementation of condition-specific payment measures. CMS also is inviting public comment on accounting for social risk factors in measuring quality and patient health outcomes.


The CMS proposal also seeks comments on how it can reduce the administrative and regulatory burden on providers.