The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2025.
Highlights of the final rule include:
- Increasing the standard operating rate by a net 1.7%, after budget neutrality adjustments, from $6,497.77 to $6,606.51, for hospitals that successfully comply with the CMS quality reporting program and electronic health record requirements. Hospitals that do not meet requirements for these programs are subject to a lower annual update.
- Updating the federal capital rate by 1.3%, from $503.83 to $510.51.
- Increasing the cost outlier threshold by 8%, from $42,750, to $46,152, to maintain the target of paying 5.1% of aggregate IPPS payments as outlier.
- Revising core based statistical areas (CBSAs) as a result of the new Office of Management and Budget labor market delineations based on the 2020 Decennial Census.
- Implementing a separate IPPS payment for small, independent hospitals, defined as those with 100 or fewer beds that are not part of a chain organization, to voluntarily establish and maintain a six-month buffer stock of one or more of 86 essential medicines. This separate payment will not be budget neutral.
- Creating 12 new Medicare Severity Diagnosis Related Groups (MS-DRGs) and deleting 5 MS-DRGs, most of which are within Major Diagnostic Category 08 (Diseases of the Musculoskeletal System and Connective Tissue).
- Establishing a new mandatory CMS Innovation Center model, Transforming Episode Accountability Model, that would provide bundled payment for five surgical procedures to hospitals in 188 selected CBSAs.
- Using the average of FY 2019, 2020 and 2021 Worksheet S-10 uncompensated care cost (UCC) data for the UCC pool allocation, which comprises 75% of Medicare disproportionate share hospital (DSH) payments. After adjusting this pool for the percent of uninsured individuals, total DSH and UCC payments will be approximately $200 million less than FY 2024 payments.
- Adding seven new measures, primarily focused on patient safety-related practices and outcomes to the inpatient quality reporting program, while removing five measures and modifying two existing measures, including the Hospital Consumer Assessment for Healthcare Providers and Systems survey measure.
- Increasing the performance-based scoring threshold from 60 points to 70 points, beginning with the electronic health record reporting period in calendar year (CY) 2025, and from 70 points to 80 points in CY 2026.
- Increasing the number of mandatory electronic clinical quality measures that hospitals must report for both the IQR and the Promoting Interoperability programs.
- Modifying and making permanent weekly reporting by hospitals, including critical access hospitals, of acute respiratory illness data beginning Nov. 1, 2024, on confirmed infection of COVID-19, influenza and respiratory syntactical virus among hospitalized patients, hospital capacity and limited patient demographic information, including age.
- Finalizing the proposal to separate the Antimicrobial Use and Resistance Surveillance measure into separate measures (an Antimicrobial Use Surveillance measure and an Antimicrobial Resistance Surveillance measure), beginning with the electronic health record reporting period in CY 2025.
- Adopting severity level changes related to seven social determinants of health diagnosis codes (SDOH Z codes) that describe inadequate housing and housing instability, moving these from non-complication or comorbidity to complication or comorbidity for FY 2025.
The MHA continues to review the final rule and will provide hospitals with an updated estimated impact analysis in the next few weeks. Members with questions should contact Vickie Kunz at the MHA.