Medicare News
| For Immediate Release: | Contact: |
| Tuesday, July 31, 2001 | 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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MEDICARE TO INCREASE PAYMENT RATES FOR INPATIENT CARE
Medicare will increase its payment rates for inpatient hospital care by 2.75 percent starting October 1, 2001, the Centers for Medicare & Medicaid Services (CMS) announced today.
The increase for fiscal year 2002 will affect about 4,800 acute care hospitals that are paid under Medicare's inpatient prospective payment system. The new rates, which reflect the law's requirements for updating Medicare payment rates, will be published in a final rule in the August 1 Federal Register.
Medicare law pegs the annual updates for acute care hospitals for FY 2002 to the estimated increase in the "hospital market basket" - the inflation rate for goods and services used by acute care hospitals - minus 0.55 percentage points. For FY 2002, the hospital market basket is projected to increase by 3.3 percent. Therefore, the update is 2.75 percent.
Under prospective payment, Medicare pays hospitals a predetermined amount for each Medicare patient based on either the patient's diagnosis or the procedure performed. Hospitals in urban areas with a population greater than one million receive slightly higher payment rates than hospitals in other urban and rural areas.
The FY 2002 payments to hospitals reflect the annual update to the wage index levels, calculated on the basis of FY 1998 wage data. The wage index also reflects the third year of a five-year phase-out of certain costs from the calculation of the index. Medicare pays separately for these costs, which are associated with certain teaching physicians, residents, and certified registered nurse anesthetists.
The final rule establishes a process by which all hospitals in a state may apply to be treated as a single geographic entity for purposes of computing and applying the area wage index beginning in FY 2003. The final rule also provides that average wages over a three-year period can be used to establish eligibility for geographic reclassification.
The final rule addresses not only provisions of the May 4 proposed rule, but also those set out in interim final rules implementing the Balanced Budget Refinement Act of 1999 (BBRA), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA). Those rules were published in the August 1, 2000, and June 13, 2001 Federal Registers, respectively.
This final rule does not address provisions in the proposed rule dealing with expediting the incorporation of new medical services and technologies in the IPPS coding and payment methodology. CMS will address this issue in a separate final rule to be published later this summer.
