The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2024.
The final rule:
- Increases the standard operating rate by a net 1.9%, after budget neutrality adjustments, from $6,375.74 to $6,497.77 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.
- Maintains the labor-related share at 67.6% for hospitals with a wage-index greater than 1.0 and 62% for hospitals with a wage-index equal to or less than 1.0.
- Treats rural reclassified hospitals as geographically rural in calculating the wage index.
- Increases the federal capital rate by 4.1%, from $483.76 to $503.83.
- Increases the cost outlier threshold by 10%, from $38,859 to $42,750, to maintain the target of paying 5.1% of aggregate IPPS payments as outlier. This will result in fewer cases qualifying for an outlier payment.
- Adds 15 new Medicare-severity diagnosis related groups (MS-DRGs) and deletes 16 MS-DRGs, many of which are Diseases and Disorders of the Circulatory System.
- Decreases disproportionate share hospital and uncompensated care payments by $957 million nationally.
- Allows hospitals to count training time in Rural Emergency Hospitals beginning Oct. 1, 2023, for purposes of Medicare graduate medical education.
- Ends the New COVID-19 Treatments Add-on Payment for eligible products for discharges on or after Oct. 1, 2023.
- Permits the use of web-based surveys for Hospital Consumer Assessment of Healthcare Providers and Systems.
- Returns to pre-pandemic operations for quality-based programs, with hospitals subject to a payment penalty or reward under the value-based purchasing program (VBP) and potential payment penalties under the readmissions reduction and hospital acquired conditions programs depending on performance scores.
- Adds a new health equity adjustment and a sepsis bundle measure to the Hospital VBP beginning with the FY 2026 program.
- Extends the electronic health record (EHR) reporting period from 90 days to 180 days and adjust the attestation requirement for meaningful EHR use.
The MHA is continuing to review the final rule and will provide hospitals with an estimated impact analysis soon. Members with questions should contact Vickie Kunz at the MHA.
The Centers for Medicare and Medicaid Services (CMS) recently released a final rule to update the Medicare fee-for-service (FFS) hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2023. The rule will:
- Reduce disproportionate share hospital and uncompensated care pool (UCC) payments by $360 million, rather than $800 million as proposed. The CMS projects a UCC pool of roughly $6.87 billion to be allocated to hospitals based on audited Worksheet S-10 data from FY 2018 and FY 2019 cost reports. The CMS finalized its proposal to use a 3-year average to calculate UCC payments starting in FY 2024.
- Eliminate payment enhancements for Medicare dependent hospitals (MDHs) and low-volume hospitals absent Congressional action to extend those payments which expire Sept. 30, 2022. The MHA, along with the American Hospital Association and others, continue to advocate for making the enhanced low volume hospital adjustment and MDH program permanent.
- Provide a net 4.15% increase in the federal operating rate for hospitals that successfully participate in the inpatient quality reporting program and are meaningful electronic health record users. This is up from the proposed 3.17% net increase in response to comments received regarding the inflationary increase hospitals are facing and is the highest increase in more than two decades.
- Increase the standard federal capital rate by 2.4% from $472.60 to $483.76, also higher than the proposed 1.6% increase.
- Establish a cost outlier threshold of $38,859, up 25% (compared to 39% in the proposed rule) from the current $30,988 threshold, resulting in fewer cases qualifying for an outlier payment. The CMS adjusts the threshold annually to ensure that outlier payments do not exceed the established target of 5.1% of aggregate IPPS payments.
- Establish a permanent 5% annual cap on wage index decreases.
- Modify graduate medical education policy related to full time equivalent caps and increased flexibility for hospitals that participate in a rural track program.
- Suppress measures in the hospital VBP and HAC reduction programs, resulting in neutral payment adjustment for FY 2023.
- Add 10 new measures to the inpatient quality reporting (IQR) program, including two health equity measures.
- Adopt a new “birthing friendly” designation for hospitals that attest positively to both questions in the IQR’s previously adopted Maternal Morbidity Structural Measure.
The MHA is continuing to review the final rule and will provide hospitals with an updated impact analysis in the near future. Members with questions should contact Vickie Kunz at the MHA.