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IPPS Advocacy

CMS Does Not Adopt Coding Reduction;
Agency Restores Capital IME Adjustment

On July 31, the Centers for Medicare & Medicaid Services (CMS) issued its hospital inpatient prospective payment system (PPS) final rule for fiscal year (FY) 2010, which made two significant improvements compared to the proposed rule issued in May. The final rule does not implement the 1.9 percent cut for changes in documentation and coding initially proposed by CMS. This represents an increase of $2.2 billion in payments to hospitals in FY 2010. CMS’ proposed rule called for an average decrease of 0.5 percent in hospitals’ FY 2010 operating payments compared to 2009. The final rule increases average payments by 1.6 percent. This amounts to a $1.7 billion increase in operating payments compared to FY 2009. In addition, the final rule does not eliminate the indirect medical education (IME) adjustment for teaching hospitals’ capital-related costs, but maintains the full capital IME adjustment in FY 2010 and beyond. Retaining this adjustment increases payments to teaching hospitals by approximately $5 billion over 10 years. The AHA had voiced strong concerns about several provisions in the proposed rule and is pleased that CMS recognized that its planned cuts would have been detrimental to hospitals’ mission of caring for patients. View the August 3, Special Bulletin (Members Only ) for more details.