Tuesday, August 2, 2011

Acute-care hospitals to see higher Medicare payments

The U.S. government announced an increase in reimbursement rates to acute-care hospitals for 2012, a sharp contrast to the cut it announced for skilled nursing facilities on Friday.

The Centers for Medicare and Medicaid Services (CMS) increased payment rates to acute-care hospitals by 1 percent, compared with a 0.5 percent cut it had proposed earlier.

The CMS expects the rate increase will result in Medicare's operating payments to acute-care hospitals rising by $1.13 billion, or 1.1 percent.

On Friday, the CMS cut 2012 payments for skilled nursing facilities by 11.1 percent, or $3.87 billion, leading to a sharp decline in shares of Skilled Healthcare, Kindred Healthcare and Sun Health Care.

There was a broad sell-off in healthcare stocks on Monday on fears that the debt-ceiling deal to be voted on by the U.S. Congress would cut healthcare spending for federal programs such as Medicare.

Acute-care hospital operators such as HealthSouth Corp, Kindred Healthcare Inc, Tenet Healthcare Corp and Community Health Systems Inc are expected to benefit from the hike in payment rate.

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