irresponsible cuts.

About AHA
The American Hospital Association (AHA) is a not-for-profit association of health care provider organizations and individuals that are committed to health improvement in their communities. The AHA is the national advocate for its members, which include almost 5,000 hospitals, health care systems, networks, and other providers of care. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. For more information, visit the Web site at www.aha.org.


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U.S. Government Announcement:

REFORMS CONTINUE TRANSITION TO MORE ACCURATE PAYMENT SYSTEM; PROMOTE QUALITY CARE FOR ALL HOSPITALIZED PATIENTS

The Centers for Medicare & Medicaid Services (CMS) issued a final rule that takes significant steps to improve the accuracy of Medicare's payment under the acute care hospital inpatient prospective payment system (IPPS), while providing additional incentives for hospitals to engage in quality improvement efforts.

"The IPPS payment reforms we are making today finalize the changes we proposed in April and build upon three years of consistent, incremental improvements to Medicare inpatient hospital payments," CMS Acting Deputy Administrator Herb Kuhn said. "With these changes - first proposed by the Medicare Payment Advisory Commission in 2005 - Medicare payments for inpatient services will be more accurate and better reflect the severity of the patient's condition."

"Moreover, combined with payment system rules we released this week on inpatient rehabilitation facilities and skilled nursing facilities, we are demonstrating our commitment to ensure that the Medicare program is sustained for future generations by paying accurately and efficiently," added Kuhn.

The IPPS payment reforms would restructure the inpatient diagnosis-related groups (DRGs) to account more fully for the severity of each patient's condition. In addition, the rule includes important provisions to ensure that Medicare no longer pays for the additional costs of certain preventable conditions (including certain infections) acquired in the hospital. The rule also expands the list of publicly reported quality measures and reduces Medicare's payment when a hospital replaces a device that is supplied to the hospital at no or reduced cost.

Payments to all hospitals will increase by an estimated average of 3.5 percent for FY 2008 when all provisions of the rule are taken into account, primarily as a result of the 3.3 percent market basket increase. Payments to specific hospitals may increase more or less than this amount depending on the patients they serve. For instance, urban hospitals generally treat more severely ill patients and are estimated to receive a 3.8 percent increase in payments.

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