• Prospective Payment System (PPS) hospital marketbasket updates inpatient hospitals’ operating and outpatient PPS payments as well as cost limits for children’s hospitals, cancer hospitals, and religious, non-medical healthcare institutions. • Skilled nursing facility marketbasket updates payments to skilled nursing facilities. • Home health agency marketbasket updates home health PPS payments. • PPS hospital capital marketbasket updates inpatient hospitals’ capital PPS payments. • RPL marketbasket updates inpatientrehabilitation, psychiatric, and long-term care PPS payments. • Medicare economic index is used with the sustainable growth rate to update the physician fee schedule.6
The marketbasket of interest to most hospitals is the Inpatient Prospective Payment System (IPPS), which should closely approximate a hospital’s projected change in Medicare revenue. In FY 2012, CMS revised its estimated marketbasket update for hospitals that report quality data to 3 percent. On August 1, 2012, CMS released its final rule for FY 2013, stating that inpatient payments in the aggregate will increase 2.3 percent to reflect a marketbasket update of 2.6 percent.9 The key cost category in the index is
compensation expense, which includes labor and benefits and is weighted at 60 percent. The index also includes major purchasing categories, such as food, pharmaceuticals, blood and equipment. Additional information is available from the Centers for Medicare & Medicaid Services at www.cms.gov/MedicareProgramRatesStats/05_MarketBasketResearch.asp. References: 1. “PPI program spotlight,” Bureau of Labor Statistics, www.bls.gov/ppi/ppivcpi.pdf. 2. “Measuring price change for medical care in the CPI,” Bureau of Labor Statistics, www.bls.gov/cpi/cpifact4.htm. 3. “Consumer Price Index,” Bureau of Labor Statistics, www.bls.gov/cpi/home.htm. 4. “Producer Price Indexes: program overview,” Bureau of Labor Statistics, www.bls.gov/ppi/ppiover.htm#Link6. 5. “Producer Prices Indexes,” Bureau of Labor Statistics, www.bls.gov/ppi/. 6. “Medicare program rates and statistics,” Centers for Medicare & Medicaid Services, www.cms.gov/MedicareProgramRatesStats/05_M arketBasketResearch.asp. 7. Centers for Medicare & Medicaid Services, http://www.cms.gov/MedicareProgramRatesStats/downloads/mktbskt-pps-hospital2006.pdf. 8. Ibid. 9. “FY 2013 IPPS Final Rule includes 2.3 percent hospital payment update,” Association of American Medical Colleges, https://www.aamc.org/advocacy/washhigh/highlights2012/300648/fy2013ipp sfinalruleincludes2.3percenthospitalpaymentupdate.html.
E C O N O M I C S ECONOMIC O U T LO O K
The marketbaskets are constructed from mutually exclusive spending categories, which use data collected from hospitals’ Medicare cost reports and corresponding price indexes. The overall hospital price index is the sum of each category’s product weight and relevant price index. The price indexes, or proxies, which are used to calculate the marketbasket, include data
from the Bureau of Labor Statistics (most commonly the producer price indexes). The marketbasket levels and percentage changes are updated quarterly, with each new forecast containing an additional quarter of historical data.7 CMS projects payment updates for the coming fiscal year using a marketbasket containing the latest available data at the time the final regulation is published. Once this update has been determined, it is generally not revised to include more recent data. However, because marketbasket data is updated quarterly, the current marketbasket may be different, depending on the variances in the forecast data and data currently available.8
CPI-U, Medical care CPI, and IPPS marketbasket rates (2005-2012) 5%
Annual percent change
4% 3%
■ ▼
▼ ■
▼ ■
■ ▼
■
▼
▼ ▼ ▼ ■
2%
▼ ■
1% 0%
■
-1% 2005
2006
■ CPI-U
2007
Medical care CPI
2008
2009
2010
2011
2012
2013
▼ Medicare marketbasket - inpatient hospital
Note: Rates are current as of August 2012.
OUTLO OK • FALL 2 0 1 2 |
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