Rate hike will be only a part of the new Medicare reality

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AHCA President and CEO Mark Parkinson
AHCA President and CEO Mark Parkinson

Many providers are relieved that Medicare rates are slated to go up by 2% in the next fiscal year. After all, who wants to turn down $750 million, especially in a rate-cutting climate?

But what many are overlooking is that the Centers for Medicare & Medicaid Services is also making some subtle and not so subtle geographic adjustments. For example, the government may soon begin tying reimbursements to new statistical area designations set by the Office of Management and Budget in February 2013, the agency stated. 

This means some providers could go from rural to urban status, and vice-versa. The result could be an estimated 22% of providers experiencing a wage index decrease. To ease the transition, CMS has proposed a one-year period in which each provider's index would be a 50/50 split of its current and new designation.

But at least skilled operators are not being docked a percentage of their Medicare payments, which is not the case for more than 76% of the nation's hospitals. 

More than 2,600 hospitals will lose up to 3% of their Medicare payments in 2015 for readmitting too many patients. It's part of the federal effort to get providers to deliver better care. Hospitals will be docked because patients with certain conditions were readmitted within 30 days at rates that exceeded national averages.