Medicare Rate Increase To Raise Payments to Hospitals by $5B
CMS officials on Tuesday proposed a rate increase that would give hospital operators $5 billion more in Medicare payments starting Oct. 1, the Bloomberg/Los Angeles Times reports. Under the proposal, urban hospitals would receive an average 4.7% increase in Medicare payments and rural hospitals would receive a 6% increase. Total Medicare spending for inpatient services would increase to about $105 billion in fiscal year 2005 from an estimated $100 billion in fiscal year 2004, which ends Sept. 30. The rate increase would include an inflation update, as well as other payment increases called for under the new Medicare law. According to the Times, the proposed rate increase would mark only the third time in 21 years that acute-care hospitals would get an increase in reimbursements for inpatient care that fully accounts for the governments' calculation of inflation, currently estimated at 3.3%. In a statement, CMS Administrator Mark McClellan said, "The bottom line, particularly for rural hospitals, is significant increases in hospital payment rates," adding, "And the bottom line for Medicare beneficiaries, whether in urban or rural areas, is better access to high-quality inpatient care." The proposal will be published in the May 18 Federal Register (Bloomberg/Los Angeles Times, 5/12). On Monday, CMS officials announced that Medicare managed care plans will receive at least a 6.6% increase in reimbursement rates in 2005. The increase is part of an effort to encourage health insurers to expand their role in Medicare (Kaiser Daily Health Policy Report, 5/11).
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