Hospitals to See $1.13 Billion U.S. Medicare Pay Raise in 2012

Hospital chains such as HCA Holdings Inc. will see Medicare payments for inpatient care boosted by $1.13 billion in fiscal 2012, the U.S. said.

The 1.1 percent fee increase from the Centers for Medicare and Medicaid Services supplants a proposed 0.55 percent cut the agency proposed in April that would have reduced spending on hospital services by $498 million. The final rule will be published Aug. 18 in the Federal Register.

Medicare, the U.S. health program for the elderly and disabled, reversed the payment policy because of new data on hospital costs and productivity and in response to complaints from the industry, said Jonathan Blum, a deputy administrator at the agency. The payments go to more than 3,400 U.S. hospitals.

Medicare “has developed its update policy in response to many comments expressing concerns about our original proposal,” Blum said in a statement. “We believe that our final policy strikes the appropriate balance between providing a fair update to hospitals and ensuring careful stewardship of the Medicare Trust Fund.”

The agency’s decision is separate from a congressional vote on a U.S. deficit and debt ceiling package that may trigger automatic cuts in Medicare payments to providers including hospitals starting in 2013. The reductions would kick in if Congress fails to produce budget savings of at least $1.2 trillion.

Medicare disclosed the payment rule on its website after trading closed. The American Hospital Association, a trade group that represents Nashville, Tennessee-base HCA and other chains, had criticized the April proposal, saying cuts may limit care for senior citizens.

‘Welcome News’

“Today’s rule is welcome news for patients who depend on hospital care,” Rich Umbdenstock, president and chief executive officer of the Chicago-based American Hospital Association, said in an e-mail. “We are pleased CMS heeded hospitals’ recommendations and recognized the important work that hospitals are doing in their communities to care for patients.”

Ed Fishbough, a spokesman for HCA, the largest U.S. hospital chain, declined to comment on the Medicare fees.

To contact the reporter on this story: Jeffrey Young in Washington at jyoung89@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.