Traditional Medicare Part A reimburses hospitals for inpatient care based on a prospective pricing system (PPS) . The Centers for Medicare and Medicaid Services (CMS) updates the PPS annually. CMS issued a notice of the proposed Fiscal Year 2007 PPS updates and rates in August and on October 11 CMS published the final update in the Federal Register. “CMS is continuing to estimate that payments to hospitals will increase by $3.4 billion or an average of 3.5 percent.” CMS is requiring hospitals to report quality data in order to receive the full FY 2007 PPS update. CMS reported last month that

Out of the nation’s 3,490 acute care hospitals eligible to participate, 99 percent of those chose to report quality data. Out of those hospitals eligible to receive a 2 percent annual payment update from Medicare for participating, 171 failed to meet the FY 2007 reporting requirements (143 failed the submission requirements and 28 chose not to participate).