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  • Washington Highlights

    CMS Releases FY 2025 Inpatient Prospective Payment System Proposed Rule


    Shahid Zaman, Director, Hospital Payment Policy
    Katherine Gaynor, Hospital Policy and Regulatory Analyst
    Brad Cunningham, Sr. Regulatory Analyst, Graduate Medical Education
    Phoebe Ramsey, Director, Physician Payment & Quality

    The Centers for Medicare & Medicaid Services (CMS) on April 10 released the Fiscal Year (FY) 2025 Inpatient Prospective Payment System (IPPS) proposed rule. Comments are due June 10. 

    In the proposed rule, the CMS proposed to increase the payment rates by 2.6% for items and services paid under IPPS for FY 2025. The agency estimates Medicare disproportionate share hospital (DSH) uncompensated care-based payments will increase by $560 million in 2025. The CMS also proposed several additional changes including continuing their low-wage index polices, updating labor market areas based on 2020 census data, establishing an add-on payment for maintaining a buffer stock of essential medicines for certain hospitals, using ICD-10 Z-codes for inadequate housing and housing instability in determining payment amounts, and updating hospital and Critical Access Hospital infection prevention and control and antibiotic stewardship programs' Conditions of Participation, among other proposals. Additionally, the agency included two requests for information related to maternal care.  

    For graduate medical education (GME), the CMS proposed a distribution methodology for the 200 slots created under Section 4122 of the Consolidated Appropriations Act, 2023. At least half of the positions must go to psychiatry or psychiatry subspecialty programs, and no hospital may receive more than 10 positions total. The agency proposed a distribution methodology that would award all qualifying hospitals that submit timely applications for an award of up to 1.0 FTE. If slots remain, the CMS proposed to use the same Health Professional Shortage Area (HPSA) distribution methodology that it finalized for Section 126 of the Consolidated Appropriations Act, 2021 (P.L. 116-260); hospitals with the highest HPSA scores would receive priority. The CMS also announced Section 5506 slot Redistributions — Rounds 21 and 22 — from the closure of McLaren St. Luke’s Hospital in Maumee, Ohio, and South City Hospital in St. Louis.