This post has been archived and contains information that may be out of date.
What’s happening: The Centers for Medicare & Medicaid Services’ (CMS) proposed fiscal year (FY) 2025 inpatient prospective payment system (IPPS) rule falls short of what hospitals need to keep up with rising costs and health care needs.
What else to know: The rule includes a net market basket update of 2.6%. As a result of all proposed changes, CMS estimates that hospital inpatient payments will increase by $3.2 billion in FY 2025. Comments are due June 10.
Other key provisions of the proposed rule include:
- Uncompensated Care to Disproportionate Share Hospitals: Payments to qualifying hospitals are projected to increase by $560 million.
- Low Wage Index Policy: Continuation of “bottom quartile” policy for three more years. This policy, which CHA continues to challenge in court, increases the wage index for low wage hospitals, while reducing payments to all hospitals to make the adjustment budget neutral.
- Mandatory Episodic Payment Model: A five-year “Transforming Episode Accountability Model” (fact sheet/website) for hospitals in select markets for 30-day episodes would begin with procedures for lower extremity joint replacement, coronary artery bypass, major bowel procedure, spinal fusion, and surgical hip/femur fracture treatment. The model would begin on Jan. 1, 2026.
- Increasing Severity of Housing Instability: Increasing payments for seven diagnosis codes describing inadequate housing and housing instability.
- New Technology Payment for Sickle Cell Disease: Increasing the new technology add-on payment from 65% to 75% for gene therapies indicated and used for treatment of sickle cell disease.
- Separate Payment for Essential Medicines: Establishing a separate payment for small (100 or fewer beds), independent hospitals for the IPPS shares of the additional resource costs to voluntarily establish and maintain a six-month stock of one or more of 86 essential medicines. The payment will be made in a non-budget-neutral manner and is effective for cost reporting periods beginning on or after Oct. 1.
- Hospital Inpatient Quality Reporting (IQR) and Value-Based Purchasing (VBP) Program: Several new measures for the Hospital IQR Program, including structural measures on patient safety and age-friendly care. Changes to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) measure and related changes to the scoring methodology of the Hospital VBP Program.
- Electronic Clinical Quality Measures (eCQMs): Several new eCQMs for the hospital IQR and Promoting Interoperability programs. A significant increase to the number of eCQMs that hospitals must report under each program.
- Promoting Interoperability Program: Modifications to measures and an increase to the performance-based scoring threshold that hospitals must meet to be considered meaningful users of electronic health record technology.
- Hospital and Critical Access Hospital (CAH) Data Respiratory Illness Reporting: Updates to the conditions of participation to require hospital and CAH reporting on acute respiratory illnesses outside of a public health emergency.
- Request for Information on Maternity Care: CMS requests information on the differences between hospital resources required to provide inpatient pregnancy and childbirth services to Medicare patients compared to non-Medicare patients, including understanding the extent to which commercial payers use the IPPS as a basis for determining payment for these services. CMS also seeks comments on a potential future obstetric services condition of participation.
CMS’ detailed fact sheet is available here. CHA will make a detailed summary available shortly.
