CHA News Article

CMS Issues Notice on Two-Midnight Payment Cut Justification

The Centers for Medicare & Medicaid Services (CMS) today issued the attached notice with comment period. CMS believes the notice provides additional justification for the 0.2 percent cut to hospitals’ inpatient payments made in conjunction with the agency’s implementation of the “two-midnight policy.” The permanent, prospective cut was first included in the agency’s fiscal year 2014 inpatient prospective payment system final rule and took effect Oct. 1, 2013.

CMS’ notice responds directly to the October court ruling in a consolidated challenge to the payment reduction that included a lawsuit brought by the American Hospital Association, four hospital associations and four hospital organizations. In the ruling, the District of Columbia federal court ordered CMS to provide further justification for the payment cut, including all actuarial assumptions, data and methodologies underlying its decision to reduce inpatient payments by 0.2 percent, and to allow additional opportunity for hospitals to comment. CMS is accepting comments on the attached notice until Feb. 2 and will issue a final notice by March 18.