Medicare News
| For Immediate Release: | Contact: |
| Wednesday, March 31, 2004 | CMS Office of Public Affairs 202-690-6145 |
For questions about Medicare please call 1-800-MEDICARE or visit www.medicare.gov. |
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CMS INCREASES PAYMENTS TO RURAL AND SMALL URBAN HOSPITALS
The Centers for Medicare & Medicaid Services today implemented several provisions of the new Medicare law that will improve payment rates for rural and urban hospitals in areas with fewer than 1 million population, beginning with discharges on or after April 1, 2004. Taken together, the provisions will increase payments to the affected hospitals by nearly $12 billion over the next ten years. In addition, as a result of these changes, the outlier threshold for all hospitals to be eligible for extra payments for unusually costly cases, will decrease from $31,000 to $30,150.
The law, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which was signed by President Bush on December 8, 2003, represents the most comprehensive reform of the Medicare program since its inception in 1965.
Rural hospitals and urban hospitals with fewer than 100 beds, in addition to other hospital types, that serve a disproportionate share of low-income Medicare and Medicaid patients will receive a boost in their disproportionate share hospital (DSH) payments beginning for discharges on or after April 1, 2004. As provided in the new Medicare law, the cap on DSH payment adjustments will increase from 5.25 percent to 12 percent for urban hospitals fewer than 100 beds, sole community hospitals, and rural hospitals with fewer than 500 beds. There is no cap on rural referral centers, large urban hospitals over 100 beds, or rural hospitals over 500 beds.
"The Bush Administration is strongly committed to ensuring that quality medical care is available to Americans in rural areas or in communities with significant numbers of low income people," Health and Human Services Secretary Tommy G. Thompson said. "The rural provisions of the MMA are designed to bring relief to hospitals that are critical to these patients."
The MMA also makes permanent a provision that would have expired March 31, 2004, creating a uniform standardized amount as the basis of Medicare payments to hospitals. Previously, there were two separate standardized amounts, one for hospitals in large urban areas (with populations over 1 million), and a lower one for hospitals in other areas. A separate standardized amount applies to hospitals in Puerto Rico. The standardized amount is used by CMS in the formula to establish payment rates for individual inpatient stays.
“As we work to improve and modernize Medicare, we intend to do all we can to help rural beneficiaries and others served by small hospitals,” said CMS Administrator Mark B. McClellan, PhD., M.D.
Hospitals in Puerto Rico will receive an additional $400 million over ten years, as a result of changes made to the payment formula applicable only to Puerto Rico. These hospitals are currently paid on a blend of 50 percent Federal standardized rate and 50 percent of the lower Puerto Rico-specific rate. Effective for discharges from April 1, 2004 through September 30, these hospitals will see an increase in their reimbursement as the blend changes to 62.5 percent Federal rate and 37.5 percent Puerto Rico-specific rate. There will be a further increase beginning with discharges on or after October 1, 2004, as the blend changes again to 75 percent Federal and 25 percent Puerto Rico-specific rates.
