August 22, 2007

Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems & Fiscal Year 2008 Rates

On August 22, 2007 the Centers for Medicare and Medicaid Services (CMS) issued a new rule governing payments made to hospitals by Medicare. These new measures hope to improve the current inpatient prospective payment system (IPPS) and the quality of care provided to patients by their hospitals.

In accordance with these new regulations, Medicare will no longer pay for certain medical procedures that have now been deemed preventable. Such conditions include infections, bed sores, and falls incurred by patients while in the hospital, surgeries to recover materials left behind from previous surgeries, or patients who receive the wrong blood type during transfusions. Instead, individual hospitals will be forced to bear the costs of these mistakes.

These measures seek to serve as incentives for hospitals to take better care of their patients and in the process save Medicare millions of dollars. In addition, IPPS payment reforms would describe more clearly the true nature of a person's illness. Those hospitals taking care of more severely ill patients would subsequently receive increased Medicare payments.

However, many other concerns about these new regulations have been raised. Some have noted the difficulty in telling whether or not some of the preventable conditions were hospital incurred. Medicare procedures also have an influence on private health insurance and these new payment reforms might have spill-over effects.