CMS Drops Controversial Payment Cut


The Centers for Medicare & Medicaid Services dropped a two-midnight inpatient payment cut to hospitals earlier this month.

CMS had announced inpatient admissions that spanned shorter than two midnights could be payable under Medicare Part A based on the ruling of an admitting physicians. As part of that rule, CMS cut inpatient payments to hospitals by 0.2%, saying the rule would increase Part A reimbursements.

The new policy was halted when the American Hospital Association took the Department of Health and Human Services to court last year. This resulted in a federal judge ruling the department must better justify the cut.

Though CMS plans to remove the cut, it says it still stands by its assumptions around the 0.2% cut and recommends a one-time boost of 0.6% to hospitals to offset losses.

Rick Pollack, president and CEO, American Hospital Association, issued the following statement in response to the ruling:

“Today’s rule includes a very important outcome because it reverses the inappropriate and unfair 0.2 percent payment reduction for inpatient services that was implemented as part of the original “two-midnight” policy. The AHA successfully challenged the Centers for Medicare & Medicaid Services’ (CMS) interpretation through the courts to convince them to restore the resources that hospitals are lawfully due.
At the same time, we are deeply disappointed that the rule nevertheless includes another large, unwarranted reduction to America’s hospitals, health systems and the patients they serve. While a cut in the hospital update factor was mandated by law in 2012, CMS’s proposal is significantly larger than Congress indicated and the hospital field anticipated. Congress was clear in its passage of physician payment reform last year that this cut should be 0.8%, but CMS ignored this directive and almost doubled the reduction. This cut poses another challenge to hospitals’ ability to care for their communities.

We will continue to analyze the proposed rule and work with CMS to make improvements.”


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