Government Affairs Home > Washington Highlights > May 16, 2003

CMS Publishes Medicare Inpatient PPS FY 2004 Proposed Rule

May 16, 2003 - On May 9 the Centers for Medicare and Medicaid Services published its annual proposed rule that contains changes to the Medicare inpatient prospective payment system (PPS) for federal fiscal year 2004. While the proposed rule will not be published in the Federal Register until May 19, CMS is stating that the 60 day comment period clock began on May 9 since the rule was available on the Agency's web site.

The proposed rule contains a number of important changes and clarifications that will affect Medicare payments for teaching hospitals. These include:

• Changes related to Medicare payments associated with residents training in nonhospital sites,
• Medicare payments for nursing and allied health programs, and

• Counting of beds and Medicaid days for purposes of calculating Medicare disproportionate share (DSH) and indirect medical education (IME) payments.

In addition, CMS proposes that the base per case payment rates be updated by the full market basket increase of 3.5 as set forth in current law. The Bush Administration believes that the update should be the market basket increase less 0.4 percentage points, as recommended by the Medicare Payment Advisory Commission (MedPAC).

The proposed rule would increase the outlier threshold to $50,645, up from $33,560 in FFY 2003. However, the threshold is likely to be significantly lower in the final rule pursuant to changes that will be made to Medicare outlier policies that are soon to be published in a separate outlier final rule.

Finally, the proposed rule would expand the number of diagnosis-related groups (DRGs) that are subject to the post-acute transfer policy by 19-up from the current number of ten.

Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140

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