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  • Washington Highlights

    CMS Proposes Hospital Payment and Quality Changes in FY 2024 IPPS Proposed Rule


    Mary Mullaney, Director, Hospital Payment Policies
    Katherine Gaynor, Hospital Policy and Regulatory Analyst
    Brad Cunningham, Sr. Regulatory Analyst, Graduate Medical Education
    Phoebe Ramsey, Director, Physician Payment & Quality
    For Media Inquiries

    The Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2024 hospital Inpatient Prospective Payment System (IPPS) proposed rule on April 10. The AAMC will provide comments to the agency, which are due by June 9. 

    The proposed rule includes the following key points addressing hospital payment, graduate medical education (GME), and quality: 

    Payment Provisions 

    Payment update. The increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) program and are meaningful electronic health record (EHR) users is projected to be 2.8%. This reflects a projected FY 2024 hospital market basket percentage increase of 3%, reduced by a 0.2 percentage point productivity adjustment. 

    Ratesetting. Use the FY 2022 Medicare Provider Analysis and Review claims file and the FY 2021 Healthcare Cost Report Information System data set for purposes of the FY 2024 IPPS and long-term care hospitals prospective payment system (LTCH PPS) ratesetting.

    Disproportionate share hospital (DSH) payments. Use the three most recent years of audited data on uncompensated care costs from Worksheet S-10 of the FY 2018, FY 2019, and FY 2020 cost reports to calculate Factor 3 in the uncompensated care payment methodology for all eligible hospitals. 

    Low-wage index. Continue temporary policies finalized in the FY 2020 IPPS/LTCH PPS final rule to address wage index disparities affecting low-wage index hospitals, which includes many rural hospitals, in order to collect more data to evaluate effectiveness of the policy. 

    Rural wage index calculation. Include urban-to-rural reclassified hospitals data in the calculation of the wage index for the rural area of the state and in the calculation of the wage index floor for urban hospitals in the state (e.g., rural floor).  

    New COVID-19 Treatments Add-on Payment (NCTAP). The expiration of the NCTAP for eligible products will be effective at the end of FY 2023, on Sept. 30. No NCTAP would be made for discharges on or after Oct. 1. 

    New Technology Add-on Payment (NTAP). Require NTAP applicants for technologies that are not already Food and Drug Administration (FDA) market authorized to have a complete and active FDA market authorization application request at the time of submission of their NTAP application submission. The proposed rule would also move the FDA approval deadline from July 1 to May 1, beginning with applications for FY 2025.

    Safety-net hospitals RFI. Request for information on the unique challenges faced by safety-net hospitals and the patients they serve and potential approaches to help safety-net hospitals meet those challenges. 

    GME Provisions 

    Rural emergency hospitals (REH). Under Section 125 of the Consolidated Appropriations Act, 2021 (CAA, P.L. 116-200), certain rural hospitals may apply for a new hospital designation as an REH. When a hospital transitions to an REH, it does not qualify for direct graduate medical education (DGME) or indirect medical education (IME) reimbursements. Under the proposed rule, an REH may choose to participate as a GME training site either as a nonprovider site, or the REH may incur the direct educational costs and be reimbursed on a reasonable cost basis, similar to a Critical Access Hospital. 

    Affiliation agreement cost report instruction clarification for prior year IME resident-to-bed ratio. Hospitals participating in affiliation agreements may lend resident cap space to other hospitals participating in the same training program. The proposed rule provides detailed clarification for how the number of full-time equivalent (FTE) residents is captured for the interns-and-residents-to-beds ratio (IRB) for prior years on the CMS cost report. The CMS noted that they are providing clarification at the request of hospitals regarding the cost report instructions and are not proposing changes to the IRB calculation.  

    Section 5506 Slot Distributions - Round 20. In the proposed rule, the CMS provided public notice that the slots from the closure of St. Vincent Charity Medical Center in Cleveland are available for redistribution through Section 5506 of the Affordable Care Act. Interested hospitals may access the application through the Medicare Electronic Application Request Information System. The application period for 5506 slot redistributions is 90 days from public notice of the hospital’s closure, meaning applications are due to the CMS by July 10.   

    Quality Provisions 

    Pay-for-performance programs. For the Hospital Value-Based Purchasing (VBP) Program the CMS proposed the adoption of the Severe Sepsis and Septic Shock Management Bundle measure for the Safety Domain beginning with FY 2026, adding a new Health Equity Adjustment to program scoring to reward excellent care for underserved populations beginning with FY 2026 and measure modifications to the Total Hip Arthroplasty and/or Total Knee Arthroplasty complication rate measure and the Medicare spending per beneficiary hospital measure. Feedback is also requested on other health equity changes to the VBP methodology. For the Hospital-Acquired Condition Reduction Program, the agency proposed changes to the validation reconsideration process and the targeting criteria for data validation and seeks feedback on potential future measures for the program.  

    Hospital Inpatient Quality Reporting (IQR) program. The CMS proposed to adopt three new electronic clinical quality measures (eCQMs) for the eCQM measure set beginning with calendar year (CY) 2025 reporting impacting FY 2027 payment determinations. Additionally, the agency proposed incorporating Medicare Advantage admissions into both the Hybrid Hospital-Wide All-Cause Readmission and Hybrid Hospital-Wide All-Cause Mortality measures beginning with FY 2027 payment determinations. The COVID-19 Vaccination Among Health Care Personnel (HCP) measure would also be modified to require hospitals to report the cumulative number of HCP who are up to date with the Centers for Disease Control and Prevention recommended course of COVID-19 vaccinations beginning with fourth quarter CY 2023 reporting, impacting FY 2025 payment determinations. The agency also proposed changes to modify the Hospital Consumer Assessment of Healthcare Providers and Systems Survey, including: adding three new web-first modes of survey implementation; removing the prohibition on proxy respondents; extending the data collection period by seven days; limiting the number of supplemental survey items to 12; requiring official Spanish translation; and removing two administration methods. Finally, the agency requested feedback on two geriatric care structural measures and the potential future establishment of a hospital designation to capture the quality and safety of patient-centered geriatric care. 

    Medicare Promoting Interoperability Program. Among other proposals, the agency seeks to modify the Safety Assurance Factors for EHR Resilience (SAFER) Guides measure by requiring all hospitals attest “yes” to having conducted an annual self-assessment of all nine SAFER Guides at any point in the CY of the EHR reporting period to be a meaningful EHR user, beginning with CY 2024 reporting impacting FY 2026 payment determinations.