On Monday, the Centers for Medicare and Medicaid Services issued its final rule for payment policies and rates for inpatient stays at general acute care and long-term care hospitals, for FY 2015.

They announced that the payment rate update to general acute care hospitals will be 1.4 percent, and 0.9 percent for long-term care hospitals. The rates will go into effect on Oct. 1.

"Today's policies further support our efforts to continue improving the care our Medicare beneficiaries receive while also cutting the growth of Medicare costs," Marilyn Tavenner, administrator for CMS, said in a statement. "This final rule builds on our recent efforts to improve hospital performance while giving hospitals the clarity and resources they need to deliver the best possible patient care."

CMS is implementing the Affordable Care Act's Hospital Acquired Condition Reduction Program and starting in FY 2015, hospitals that have the poorest performance rate for hospital-acquired conditions (HACs) will receive a one percent reduction in their Medicare inpatient payments.

The current HAC program is saving about $30 million each year by not providing Medicare payment to treat conditions that are deemed "reasonably preventable" and occur after the patient has been admitted to the hospital for another condition.

The Hospital Value-Based Purchasing Program awards acute care hospitals with incentive payments based on the quality of care they provide to Medicare patients. CMS is increasing the amount of Medicare payments to all participating hospitals, available to fund the value-based incentive payments under the program, to 1.5 percent of the base operating diagnosis-related group payment amounts.

The agency reported that the estimated amount available for value-based incentive payments in FY 2015 will be about $1.4 billion.

The maximum reduction in payments under the Hospital Readmission Reduction program is currently 2 percent but CMS announced they will increase it to 3 percent. CMS will evaluate the hospitals' readmission penalties with five readmissions measures that are endorsed by the National Quality Forum.

CMS reported that they estimated that hospital readmissions in Medicare decreased by 150,000 from January 2012 to December 2013.

The final rule also included ACA-mandated Medicare Disproportionate Share Hospital (DSH) payment reductions, which will be decrease by 1.3 percent. The American Hospital Association is not pleased with that decision.

"We are very disappointed that the ACA-mandated Medicare disproportionate share hospital (DSH) cut is significantly higher than originally proposed," Linda Fishman, senior vice president of public policy analysis and development for AHA, said in a statement. "While we understand some of the reductions are due to increased coverage, it is unclear how CMS arrived at the remaining reductions."

Additionally, CMS stated that they will continue to work with the stakeholders to find an alternative payment methodology for short inpatient stays.

The final rule will be published in the Federal Register on Aug. 22.

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