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.