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CMS Issues FFY 2024 Inpatient Prospective Payment System Proposed Rule

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The Centers for Medicare & Medicaid Services (CMS) has issued its federal fiscal year (FFY) 2024 inpatient prospective payment system (IPPS) proposed rule. Comments on the proposed rule are due to CMS by June 9. 

CMS proposes to increase payment rates for most hospitals paid under the IPPS by 2.8% in FFY 2024. The net impact of the proposed rule will increase payments nationally in FFY 2024 by an estimated $2.73 billion over FFY 2023. While the update increases payments by $3.3 billion, proposed changes to Medicare disproportionate share and the expiration of eligibility of certain devices for new technology add-on payments decrease the update by $115 million and $460 million respectively.  

Key highlights of the rule include: 

Market Basket Update: CMS proposes a market basket update of 3% reduced by .20% by the Affordable Care Act-mandated productivity adjustment. The resulting net 2.8% market basket update is inadequate. CHA is working closely with other groups representing hospitals to secure a Medicare payment update for FFY 2024 that reflects the significant inflationary pressures facing hospitals.  

Medicare DSH: CMS is proposing to distribute roughly $6.7 billion in uncompensated care payments for FFY 2024, a decrease of approximately $174 million from FFY 2023. The decrease is partly due to a projected decrease in the uninsured population. As recommended by CHA, CMS will use three years of audited data from worksheet S-10 to distribute uncompensated care disproportionate share hospitals in FFY 2024.  

Wage Index: In FFY 2024, CMS proposes to continue the “bottom quartile” wage index policy that was first implemented in FFY 2020. The policy will increase the wage index in CBSAs that are in the bottom quartile of the wage index distribution while reducing payments to all hospitals to maintain budget neutrality. Additionally, the agency also proposes in the rule to include certain hospitals that reclassify to rural areas as rural for purposes of calculating the statewide rural wage index value.  

New Covid Technology Add-On Payment (NCTAP): If the public health emergency ends in May 2023, discharges involving eligible products would continue to be eligible for the NCTAP through Sept. 30, 2023. After that, no NCTAP would be made beginning in FFY 2024 (that is, for discharges on or after Oct. 1, 2023). 

Graduate Medical Education: The rule proposes letting rural emergency hospitals serve as training sites for purposes of Medicare GME payments. 

Medicare Severity Diagnosis Related Groups Weight Setting: CMS proposes to use FFY 2022 claims and 2021 for purposes of the FFY 2024 IPPS and long-term care hospital PPS rate setting. The agency is not proposing any modifications to its usual rate-setting methodologies to account for the impact of COVID-19 on the rate-setting data. 

Hospital Inpatient Quality Reporting (IQR) Program: CMS proposes to adopt three new electronic clinical quality measures (eCQMs), remove three existing measures, and modify three current measures. CMS also proposes to modify requirements for administration of the Hospital Consumer Assessment of Healthcare Providers and Systems survey.  

Hospital Value-Based Purchasing Program: CMS proposes to adopt refined measure specifications for two existing measures and adopt the “Severe Sepsis and Septic Shock: Management Bundle” measure in the safety domain beginning with the FFY 2026 program year. CMS also proposes to modify the program’s scoring methodology to include a health equity adjustment based on both a hospital’s performance on existing program measures and the proportion of individuals with dual eligibility status that a hospital treats. 

Hospital-Acquired Condition Reduction Program: CMS proposes to establish a validation reconsideration process and proposes to modify the targeting criteria for data validation.  

Medicare Promoting Interoperability Program: CMS proposes to establish a 180-day reporting period for calendar year 2025, modify requirements for several existing policies, and adopt three new eCQMs, consistent with the IQR program.  

Long-Term Care Hospitals (LTCHs): For FFY 2024, CMS expects the LTCH standard payment rate to increase by 2.9% and LTCH PPS payments for discharges paid the LTCH standard payment rate to decrease by approximately 2.5% or $59 million. This is due primarily to a projected 4.7% decrease in high-cost outlier payments as a percentage of total LTCH PPS standard federal payment rate payments. CMS also proposes several changes to the LTCH quality reporting program, consistent with cross-setting proposals for all post-acute care settings.  

Additional information is available in a CMS fact sheet. CHA staff are continuing to review the rule and will make a detailed summary available in the coming weeks.