Press Release

Statement on Medicare Final Inpatient Prospective Payment System Rule

Rich Umbdenstock
President and CEO

August 1, 2007

Today, CMS struck an unnecessary and demoralizing blow against hospitals' ability to care for patients across America.  In its final rule, CMS cut more than $20 billion in Medicare payments for hospital inpatient services, further depleting scarce health care resources.  This move flies in the face of Congressional intent and makes hospitals' mission of caring for patients even more challenging.

While hospitals support a reasonably paced move to a payment system that better reflects how sick patients are, we strongly oppose these payment cuts.  This misguided policy wrongly assumes major changes in how hospitals categorize patients for payment purposes, penalizing hospitals in advance based on a "guess" by CMS.

The overwhelming majority of Congress has sent a strong message rejecting the cut and urging CMS to protect access to care for the people and communities hospitals serve.  In fact, 269 Representatives and 63 Senators signed on to a letter in opposition to this cut.  Senators Baucus and Grassley, the Chair and Ranking Member of the Senate Finance Committee, sent their own letters to CMS, strongly opposing this cut.  And nearly the entire House-by a vote of 412-12-voted to restrict CMS from spending funds on prospective implementation of this payment cut.  Clearly, CMS chose to ignore the obvious intent of Congress. 

Also in today's final rule are cuts in capital-related payments to large hospitals in urban areas and teaching hospitals that provide education to the next generation of physicians.  Capital payments help hospitals invest in new, high-tech equipment that can help enhance patient quality and reduce health care costs and make critical updates to their facilities and information systems.  Hospitals that have made long-term investments to improve care counting, in part, on Medicare paying its share of these costs have now had the rug pulled out from under them.

With no supporting data or evidence and facing an overwhelming mountain of opposition, CMS has gone well beyond its charge by implementing these backdoor budget cuts to payments for hospital services.  Such cuts put in jeopardy the vital hospital care that the elderly and disabled covered by Medicare and everyone else served by our nation's hospitals depend upon.  That's why America's hospitals will work with Congress to overturn these inappropriate and irresponsible cuts.

About the AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which include nearly 5,000 hospitals, health care systems, networks, other providers of care and 43,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. For more information, visit the AHA website at

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