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  • Washington Highlights

    CMS Releases FY 2024 IPPS Final Rule

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

    On Aug. 1, the Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule.  

    The CMS finalized a payment rate increase of 3.1% for items and services paid under the IPPS. Hospitals must meet the hospital outpatient quality reporting requirements to be eligible for the full update. The agency will be using the FY 2022 Medicare Provider Analysis and Review claims file and the FY 2021 Healthcare Cost Report Information System dataset for purposes of the FY 2024 IPPS and long-term care hospital prospective payment system rate setting. 

    The rule finalized the continuation of the low wage index, changes to the rural wage index calculation, increases in complexity for Social Determinants of Health Diagnosis (SDOH) codes related to homelessness, and changes to the application process for the New Technology Add-on Payment. It was finalized that the New COVID-19 Treatments Add-on Payment will sunset at the end of FY 2023.  

    Also finalized as part of this final rule is the proposal to exclude from the Medicaid Fraction of the disproportionate share hospital (DSH) calculation certain Section 1115 demonstration days. This proposal was included in a proposed rule issued in February [refer to Washington Highlights, March 3].  Specifically, the Medicaid fraction numerator will only include the days of patients who are covered under a Section 1115 demonstration that provides health insurance that covers inpatient hospital services or receive premium assistance that covers 100% of the patient’s premium cost for insurance that includes coverage for inpatient services — provided in either case that the patient is not also entitled to Medicare Part A.   

    Related to Graduate Medical Education (GME), the CMS finalized a proposal to allow Rural Emergency Hospitals to participate as GME training sites and published instructions for how the number of full-time equivalent residents is captured for the interns-and-residents to beds ratio on cost reports when hospitals participate in affiliated group agreements. 

    The CMS finalized changes to the Value-Based Purchasing Program, including the adoption of a new Health Equity Adjustment to reward high-quality care for underserved populations and the Severe Sepsis and Septic Shock Management Bundle measure for the Safety Domain beginning with FY 2026. The agency also adopted a number of changes to the Hospital Inpatient Quality Reporting Program and Medicare Promoting Interoperability Program.