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AAMC Submits Letter to CMS on Notice of 0.2 Percent Reduction to IPPS Rates

February 5, 2016

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PRESS CONTACTS
Susan Xu, Lead Research Analyst

The AAMC Feb. 2 submitted comments to the Centers for Medicare and Medicaid Services (CMS) regarding a Dec. 1, 2015 notice that outlined the basis for a 0.2 percent payment reduction in Inpatient Prospective Payment Systems (IPPS) rates to account for expenditures resulting from the two-midnight policy [see Washington Highlights, Dec. 4, 2015].

The AAMC urges CMS to restore the 0.2 percent ($220 million) payment reduction to IPPS rates that began in fiscal year (FY) 2014. The reduction was the result of a CMS estimate that the two-midnight policy, also implemented in FY 2014, would lead to a net increase in inpatient stays, thereby increasing Medicare spending. CMS was ordered to issue the notice by a Federal Court in the case of Shands Jacksonville Medical Center, Inc., et al. v. Burwell.

The AAMC further identifies flaws in calculations and assumptions, and therefore concludes there is no justification for the payment reduction imposed by CMS. The letter also recommends additional criteria and analysis to refine CMS’s method. The AAMC urges CMS to restore the reduction for FY 2014 and all subsequent payment years. At a minimum, the 0.2 percent reduction should be restored beginning in FY 2017. CMS is expected to release a final notice on March 18.

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