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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Additional Payments for Hospitals with Low Per Enrollee Medicare Spending

Section 1109 of ACA requires CMS to make additional payments for FYs 2011 and 2012 totaling $400 million to qualifying hospitals located in counties that rank in the lowest quartile of per enrollee Medicare spending under parts A and B, adjusted for age, sex, and race.  Because this is a “new policy,” and because CMS added two additional eligible counties (with no qualifying hospitals) in the final rule, the agency finalized its proposal to distribute $150 million in FY 2011 and $250 million in FY 2012.  However, CMS will determine the bottom quartile of counties only once, through the FY 2011 IPPS rulemaking process.  The agency finalized a methodology for adjusting county level per enrollee Medicare spending for age, sex, and race to determine the counties that are in the lowest quartile of per enrollee Medicare spending. 

The list of providers qualifying for these payments under the proposed methodology is located on page 68 (Table 3) of the supplemental proposed rule.  Note that of the 786 counties in the lowest quartile, 273 contain qualifying hospitals.

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