CMS Pay Boost Triggers Hospital Stocks To Rally

The Medicare pay increase for hospitals comes with strings attached -- an even stronger tie to how well facilities do at preventing readmissions.

Bloomberg: Hospital Stocks Rally As Medicare Tempers Budget Cut Blow
HCA Holdings Inc. (HCA) led hospital stocks higher after the U.S. government proposed new Medicare payment rates that would soften the blow of federal budget cuts…The U.S. Centers for Medicare and Medicaid Services said April 26 that it plans a net raise in payments to acute-care hospitals of 0.8 percent beginning Oct. 1. Investors were expecting no change to as much as a 1 percent decrease, according to Brian Tanquilut, an analyst at Jefferies & Co (Armour, 4/29).

The Washington Post's Wonk Blog: Medicare Releases 1,424-Page Rule That's Actually Really Interesting!
Overall, hospitals seemed pretty happy with the top line number: a 0.8 percent increase in their payments next year. That works out to about $27 million more going to the Medicare program in 2014 than will in 2013. That’s significant when you consider that Medicare costs grew at half that rate — by 0.4 percent — in 2012. … At the same time, Medicare is making it harder to earn those dollars by increasing the payments to the very best hospitals — and trimming what it will pay poor performers. Starting in 2014, 2 percent of hospitals’ reimbursements will depend on how well they prevent readmissions. That’s twice as much as what’s at stake this year and, combined with a few other quality programs in the health law, some think it could be enough to turn hospitals' heads (Kliff, 4/29).

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