The Centers for Medicare & Medicaid Services late today issued its hospital inpatient prospective payment system and long-term care hospital PPS proposed rule for fiscal year 2014. The proposed rule would increase inpatient PPS rates by 0.8% in FY 2014 compared to FY 2013, after accounting for inflation and other adjustments required by law. Specifically, the proposed rule includes an initial marketbasket update of 2.5% for those hospitals that submit data on quality measures; hospitals not submitting data would receive a 0.5% update. The rule makes a productivity cut of 0.4% and an additional market basket cut of 0.3% as mandated by the Patient Protection and Affordable Care Act of 2010. In addition, CMS proposes a 0.8% cut that would, in part, fulfill the requirement of the American Taxpayer Relief Act that it recoup what the agency claims is the effect of documentation and coding changes from FYs 2010, 2011 and 2012 that CMS says do not reflect real changes in case-mix. The rule also includes the ACA-mandated Medicare Disproportionate Share Hospital reductions, which would reduce overall Medicare DSH spending by $1 billion in FY 2014. For LTCHs, CMS proposes to increase payments by 1.1% in FY 2014, compared to FY 2013. The rule also would allow the 25% Rule threshold to go into effect in FY 2014. The proposed rule will be published in the May 10 Federal Register and comments will be accepted through June 25. AHA staff is reviewing the rule and members will receive a Special Bulletin with further details.