What’s happening: The Centers for Medicare & Medicaid Services (CMS) has eliminated its low-wage index hospital policy for federal fiscal year (FFY) 2025.
What else to know: CHA has supported a legal challenge to this policy on behalf of member hospitals since FFY 2020.
In response to the U.S. Court of Appeals for the District of Columbia Circuit decision in Bridgeport v. Becerra — which found that the low-wage index policy and related budget neutrality adjustment violate the Medicare statute — CMS issued an interim final rule eliminating the low-wage index policy for FFY 2025. CMS also eliminated the associated budget neutrality adjustment, which was estimated to reduce payments for California’s hospitals by $37 million under the previous FFY 2025 inpatient prospective payment system final rule policy.
The interim final rule policy is effective Oct. 1 and is applicable for FFY 2025. CHA continues to support a legal challenge to this policy for FFYs 2020-24 on behalf of its members. On Feb. 16, the 9th Circuit Court of Appeals heard CHA’s lead case — Kaweah Delta v. Becerra — and a decision is pending. The lower court ruling was consistent with the decision in Bridgeport v. Becerra, finding in favor of CHA’s hospital plaintiffs.
