Health Information Management

News: Bill introduces new hospital payment system

CDI Strategies, December 4, 2014

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The House Ways and Means Committee recently released a draft of the Hospital Improvements for Payment (HIP) Act of 2014. The act addresses the 2-midnight rule, short stays, a new hospital prospective payment system (HPPS), and the Recovery Audit Contractor (RAC) program.

If passed by the House, the bill would repeal the 0.2% payment reduction associated with the 2-midnight rule and implemented by CMS in the 2014 IPPS final rule. This would be accompanied by a prospective adjustment to payments beginning October 1, 2015.

The bill also proposes a new payment rate for short stays. The base operating DRG would be calculated at 80% for each DRG, which CMS would use as the basis for calculating a per diem rate. If the per diem rate is passed, hospitals will be reimbursed at a higher rate for the first two days of a stay than for the remaining days.

The bill proposes establishing a new HPPS by fiscal year 2020. 

The bill recommends reducing the look-back period for RAC audits from four years to three years. It would also limit additional documentation requests based on a provider or supplier’s Medicare payment system. It would require RACs to offer providers and suppliers a 30-day discussion period prior to issuing a denial. RACs who perform pre- and post-payment reviews would be required to enter active audits into the RAC data warehouse.

Read the draft legislation. The House Ways and Means Committee is accepting comments on the draft at HDDWAMR@mail.house.gov.



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