The Centers for Medicare & Medicaid Services late today issued its hospital inpatient prospective payment system final rule for fiscal year 2016, which will increase rates by 0.9% after accounting for inflation and other adjustments required by law. Specifically, the final rule includes an initial market-basket update of 2.4% for those hospitals that were meaningful users of electronic health records in FY 2014 and that submit data on quality measures, less a productivity cut of 0.5 percentage point and an additional market-basket cut of 0.2 percentage point, as mandated by the Affordable Care Act. In addition, CMS finalizes a 0.8 percentage point cut that would, in part, fulfill the requirement of the American Taxpayer Relief Act of 2012 that the agency recoup what it claims is the effect of documentation and coding changes from FYs 2010-2012, which CMS says do not reflect real changes in case mix. The rule also includes ACA-mandated Medicare Disproportionate Share Hospital reductions, which will reduce overall Medicare DSH payments by $1.2 billion in FY 2016. CMS also finalizes its proposal to require hospitals to submit certain clinical quality measures electronically in calendar year 2016 for payment in the FY 2018 Inpatient Quality Reporting program. However, the agency will require the submission of four electronic clinical quality measures rather than the 16 it had proposed. CMS also will expand the patient population of the pneumonia readmission measure used in the Hospital Readmissions Reduction Program beginning in FY 2017 but will exclude certain patients from the expanded population. CMS did not extend the partial enforcement delay of the two-midnight policy that expires on Sept.30, despite proposing changes to the policy in the outpatient PPS rule that would not take effect before Jan. 1, 2016. Ashley Thompson, AHA vice president and deputy director, policy, said hospitals were “dismayed” by the lack of a delay. “Hospitals need this delay…We urge CMS to issue an extension of the delay quickly.” Most of the provisions in the final rule will take effect Oct. 1. AHA staff are reviewing the rule, and members will receive a Special Bulletin on Monday with further details.