*This is an archive page. The links are no longer being updated.

1992.06.04 :  Medicare Hospital Update

Contact:  Bob Hardy  (202) 245 -6145    
June 4, 1992
                    
       Urban hospitals will receive an increase of 2.75 percent in
payments for treating Medicare patients, beginning Oct. 1, HHS
Secretary Louis W. Sullivan, M.D., announced today.  At the same
time, payments will rise by 3.75 percent for rural hospitals. 
       The increases will be paid to about 5,400 hospitals,
approximately 2,900 urban hospitals and 2,500 rural, under the
prospective payment system. That includes nearly all the short-
stay, acute-care facilities in the United States.
       The higher payments are based on an estimated 4.3 percent
rise in the hospital market-basket index for fiscal year 1993,
beginning Oct. 1, *This is an archive page. The links are no longer being updated.
*This is an archive page. The links are no longer being updated.
1992.  The index is a measure of the inflation
rate in the cost of goods and services purchased by hospitals.
       Geographic classification criteria are proposed to permit
only those hospitals with above average wages for their areas to be
reclassified.  Currently, the payment increase to hospitals in
urban areas is lowered to fund the reclassification of hospitals. 
The proposal would reduce this offset to urban hospital payments by
several hundred million dollars.
       In his announcement, Dr. Sullivan set a 4.5 percent increase
in fiscal year 1993 for the 1,050 Medicare hospitals excluded from
PPS, including psychiatric, rehabilitation, long-term and
children's facilities.  The percentage rise is based on a market
basket 

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calculated exclusively for these hospitals.  Another 1,893
psychiatric and rehabilitation units in hospitals will receive the
same non-PPS increase.  
       Under PPS, hospitals are paid a predetermined rate for 
inpatient services furnished to Medicare beneficiaries.  The 
predetermined rates are based on payment categories called
diagnosis related groups.
       The Omnibus Budget Reconciliation Act of 1990 requires an
increase in hospital payment rates in fiscal year 1993 equal to the
rise in the market-basket index, minus 1.55 percent for urban
hospitals.  A deduction of 0.55 percent from the market-basket
index is made for rural hospitals, which the Office of Management
and Budget defines as any hospital in a non-metropolitan area.
       In fiscal year 1991, Medicare paid $62.5 billion to
inpatient hospitals providing acute, short-term care, up from $58.8
billion in fiscal year 1990.
       Hospital payments are expected to grow by 8.7 percent from
$67 billion in fiscal year 1992 to $73 billion in fiscal year 1993. 
The payments per case will increase due to the annual update and
changes in the types of cases that hospitals are treating.  Also
contributing to the anticipated increase in overall hospital
payments will be growth in the number of hospital admissions and
new beneficiaries entering the Medicare program.


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       The rate increases announced by Secretary Sullivan are
published in today's Federal Register. The regulation also
describes changes in the amounts and factors necessary to determine
prospective payment rates for fiscal year 1993.
       Moreover, the new regulation proposes technical changes in
the capital-payment policy, which gives a hospital a fixed payment
amount for each Medicare patient it treats to cover capital costs 
directly related to inpatient hospital care.  Medicare pays a
hospital a predetermined rate for capital costs. Congress had
mandated that PPS include capital costs.
       Written comments can be sent for 60 days following the
regulation's publication in the Federal Register to the Health Care
Financing Administration, Department of Health and Human Services,
Attention: BPD-756-P, P.O. Box 26676, Baltimore, Md.
21207.  Comments also may be delivered in person to Room 309-G,
Hubert H. Humphrey Building, 200 Independence Ave., S.W.,
Washington, D.C., or Room 132, East High Rise Building, 6325
Security Boulevard, Baltimore, Md.         

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