The Centers for Medicare & Medicaid Services today released the fiscal year 2014 hospital inpatient prospective payment system final rule. Under the rule, inpatient PPS rates will increase by 0.7% in FY 2014 compared to FY 2013, after accounting for inflation and other adjustments required by law. Specifically, the rule includes an initial market basket update of 2.5% for those hospitals that submit data on quality measures; hospitals not submitting data will receive a 0.5% update. The rule makes a productivity cut of 0.5 percentage points and a 0.3 percentage point cut mandated by the Patient Protection and Affordable Care Act. In addition, CMS will make a 0.8 percentage point 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 agency also will make a 0.2 percentage point cut to offset the effect of its inpatient admission and medical review criteria for hospital inpatient services. CMS finalized its proposal to generally consider hospital inpatient admissions spanning two midnights as reasonable and necessary for payment under Part A. “While hospitals have wanted clarification of inpatient admission criteria, this final rule is unlikely to reduce the number of appeals of Part A claim denials, which CMS said was one of the primary goals of its rulemaking,” said (LINK) AHA Senior Vice President Linda E. Fishman. The rule also implements the ACA-mandated Medicare Disproportionate Share Hospital reductions, which will reduce overall Medicare DSH spending by about $550 million in FY 2014, as opposed to the proposed $1 billion cut. As proposed, CMS will use inpatient days of Medicaid beneficiaries plus inpatient days of Medicare supplemental security income beneficiaries as a proxy for measuring the amount of uncompensated care each hospital provides. AHA members will receive a Special Bulletin with further details Monday.