The Centers for Medicare and Medicaid Services (CMS) have proposed a rule for FY 2024 Inpatient Prospective Payment System (IPPS), with a proposed 2.8% increase in hospital payment rates and policies aimed at advancing health equity. The rule would recognize homelessness as an indicator of increased resource utilization in the acute inpatient hospital setting, leading to higher payments for certain hospital stays. CMS also seeks to make health equity adjustments under the Hospital Value-Based Purchasing Program and add 15 new health equity hospital categorizations. The American Hospital Association (AHA) is unhappy with the IPPS rate increase.
As of April 2023, the Centers for Medicare and Medicaid Services (CMS) has released a proposed rule for the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS). This rule includes updates to hospital payment rates and policies aimed at advancing health equity.
The proposed rule would increase hospital payment rates by 2.8 percent next fiscal year and adopt policies aimed at advancing health equity. Under the rule, CMS has proposed an FY 2024 hospital market basket update of 3.0 percent, less a projected 0.2 percentage point productivity adjustment, for hospitals that successfully participate in the Hospital Inpatient Quality Reporting program and are meaningful EHR users. Hospitals will still be subject to IPPS payment adjustments, including for excess readmissions under the Hospital Readmission Reduction Program.
CMS expects the proposed increase in operating and capital IPPS payment rates to generally increase acute care hospital payments by $3.3 billion. However, the federal agency also projected a $115 million decrease in Medicare’s disproportionate share of hospital payments and Medicare uncompensated care payments next fiscal year.
Hospitals may also see higher payments under a proposal to recognize homelessness as an indicator of increased resource utilization in the acute inpatient hospital setting. CMS said in the rule that this might lead to higher payments for certain hospital stays when hospitals report social determinants of health on claims. The proposal is also part of the Biden Administration’s efforts to advance health equity.
Under the FY 2024 IPPS, CMS is also seeking to make health equity adjustments under the Hospital Value-Based Purchasing Program, which adjusts IPPS payments to acute care hospitals depending on their quality performance in the inpatient hospital setting.
The proposed rule would add incentives to hospitals that perform well on existing measures and to those who care for high proportions of underserved individuals. CMS plans to define “underserved” by dual eligibility status. Similar adjustments have been added to the Medicare Shared Savings Program and in Medicare Advantage and Part D Star Ratings Programs.
If finalized, the proposed rule would also modify several measures under the Hospital Value-Based Purchasing Program, including the MSPB Hospital measure and Hospital-level Risk-standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty measure. It would also adopt measures, including a health equity scoring change for rewarding excellent care in underserved populations.
To advance health equity, the IPPS proposed rule also would add 15 new health equity hospital categorizations for the FY 2024 IPPS payment impacts as part of the CMS Framework for Health Equity 2022-2032. CMS has also proposed to allow rural emergency hospitals to be designated as graduate medical education training sites. The federal agency said this would enable more medical residents to train in rural settings amid worsening clinician shortages, especially in rural communities.
In light of the COVID-19 public health emergency ends, CMS also included an update to the new COVID-19 treatments add-on payment. The agency said in the proposed rule that discharges involving eligible products would continue to get the add-on payment through Sept. 30, 2023. After FY 2023, the add-on payment will expire.
The American Hospital Association (AHA) is upset with the proposed 2.8 percent IPPS rate increase for FY 2024. The trade association representing nearly 5,000 hospitals, health systems, and other healthcare providers said in a statement last night that the update is “woefully inadequate” given high inflation and costs of labor and supplies.
Medicare already pays less than the actual costs of hospital care, AHA pointed out. “Layering these inadequate inflationary adjustments on top of Medicare’s existing underpayments to hospitals does not reflect the reality of the world hospitals are providing care in,” the statement said. “
