News Updates — Changes to Medicare Reimbursements


Our biweekly news updates are designed to keep you up to date with current developments relating to the Acute Care Continuum. Feel free to share your perspective on these stories or link to articles that you have found relevant to today's healthcare environment.

Bipartisan Deal Reached for SGR Repeal

After years of delays and disagreement, Congressional leaders announced last week that they have reached an agreement "to repeal Medicare's physician payment formula and replace it with a system that would provide stable payment updates for five years and shift Medicare to a system based on value versus volume of care," thereby eliminating the unstable sustainable growth-rate (SGR) formula. The SGR has loomed over physicians' heads for years, as Congress was required to replace or extend the reimbursement formula every year or automatically implement payment reductions. However, while the deal was initially lauded, critics are now concerned that Congress will need to pass tax reforms or cut healthcare spending to successfully implement the $128 billion payment plan.

CMS Delays and Clarifies "Two-Midnight Rule"

The Centers for Medicare & Medicaid Services (CMS) has delayed the implementation of the controversial "two-midnight rule" for a third time, saying the rule will not go into effect until October. The rule, which has been opposed by hospitals across the county, requires a patient to stay in "a hospital for two consecutive midnights before Medicare reimburses the hospital at inpatient rates." CMS' additional clarification specifies that the admitting physician must also sign the patient's discharge documentation or hospitals will be forced to report the care as outpatient care.

Hospitals in States without Medicaid Expansion Facing Closure

When some Republican governors rejected the Affordable Care Act's Medicaid expansion, many of their constituents applauded their resistance. Now, hospitals in those states are facing financial crises as they are treating fewer insured patients while hospitals in states that did expand Medicaid are better off. As a result, Republican leaders in Georgia and Mississippi are looking into options that will "bail out" those hospitals that have lost funding or else face a backlash in the midterm elections. Some of the 25 holdout states are exploring options such as expanding payments to hospitals or passing legislation that makes up for some of the lost Medicaid dollars.