Earlier this month, CMS issued the FY 2024 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Prospective Payment System Proposed Rule. CMS proposed updates to Medicare fee-for-service (FFS) payment rates and policies for inpatient hospitals and LTCH’s for FY 2024, with a focus on advancing health equity. These proposals also make policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs.
The proposals reflect CMS’ approach to “better measure health care quality and safety in hospitals to reduce preventable harm and our commitment to ensure that people with Medicare in rural and underserved areas have improved access to high-quality health care.”
Key Payment Updates
Proposed IPPS Payment Updates:
CMS is increasing PPS rates by a net of 2.8% in FY 2024 – down from a 4.3% increase in FY 2023 – 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 users. This increase in operating and capital IPPS Payment Rates is expected to increase hospital payments in FY 2024 by $3.3 billion.
Related to Disproportionate Share Hospital (DSH) Payment changes, CMS’ estimates will decrease DSH and uncompensated care payments by $115 million in FY 2024, largely due to an estimated decrease in the uninsured. Additionally, payments for inpatient cases involving use of new technology may also decrease by $460 million due to expiration of new technology add-on payments.
Unlike the previous two years, CMS is not proposing any modifications to its usual rate-setting methodologies to account for the impact of COVID-19.
Hospital Inpatient Quality Reporting (IQR) Quality Measures
CMS proposed changes to the quality data measures hospitals to avoid a reduction in their Annual Payment Update under the IPPS.
As part of its update to the Medicare Promoting Interoperability Program for eligible hospitals and CAHs, CMS is adopting three new electronic clinical quality measures:
- Hospital Harm — Pressure Injury Electronic Clinical Quality Measure (“eCQM”);
- Hospital Harm — Acute Kidney Injury eCQM; and
- Excessive Radiation Dose or Inadequate Image Quality for Diagnostic CT in Adults (Hospital Level — Inpatient) eCQM
CMS also proposed removing three existing quality measures:
- Hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty beginning in FY 2030
- Medicare spending per beneficiary (MSPB) hospital measure beginning in FY 2028
- Elective delivery prior to 39 completed weeks’ gestation: Percentage of babies electively delivered prior to 39 completed weeks’ gestation measure beginning in FY 2024
Rural Health Challenges
As part of its goal to advance health equity, CMS is seeking comment from safety-net hospitals regarding unique challenges they and their patients face, along with potential approaches to meet these challenges. CMS identified financial challenges related to serving more patients insured by public programs and treating low-income patients whose conditions may be complicated by social detriments of health, as well as challenges associated with competing for labor and technology. CMS is also seeking feedback on whether the Safety-Net Index (SNI) or an alternative in which safety-net hospitals would be identified using area-level indices would serve as an appropriate basis for identifying safety-net hospitals for Medicare purposes.
Hospital Value-Based Purchasing (VBP) Program
CMS also proposed adoption of health equity scoring change for rewarding excellent care in underserved populations, such that a health equity adjustment would be added to hospitals’ Total Performance Scores (TPS) based on both a hospital’s performance on existing Hospital VBP Program measures and the proportion of individuals with dual eligibility status that a hospital treats. CMS’ analysis shows that with this equity scoring change, the hospital-weighted average payment adjustment is positive even though the Hospital VBP Program remains budget neutral, and the increase in the number of hospitals receiving a bonus occurs primarily among safety net hospitals compared to non-safety net.
As part of this proposal, CMS seeks to modify the Total Performance Score (TPS) maximum to be 110, such that the TPS numeric score range would be 0 to 110 to afford even top-performing hospitals the opportunity to receive the additional health equity bonus points under the proposed health equity scoring change.
Proposed Wage Index and Geographic Changes
CMS proposed the following in adherence with the proposed rule’s theme of advancing health equity:
- Continue the low-wage index hospital policy and the related budget neutrality adjustment as originally adopted in FY 2020 IPPS/LTCH rule
- Considering hospital reclassified as rural under the as geographically rural hospitals for wage index calculations beginning FY 2024, which would result in almost 600 hospitals receiving the rural floor in FY 2024. This is a switch from the CMS stance initiated in 2019.
Other Noteworthy Proposals
- Proposed Changes to Physician-Owned Hospital Expansion: CMS proposed several changes to physician-owned hospital expansion criteria. CMS proposed to provide additional clarity as to what will be required for requests to be considered. CMS proposed revisions to certain aspects of the process for requesting an expansion exception including reinstating program integrity restrictions regarding the frequency of expansion exception requests, maximum aggregate expansion of a hospital, and location of expansion facility capacity for hospitals that meet the criteria for a high Medicaid facility.
- New COVID-19 Treatments Add-on Payment (NCTAP): CMS established the NCTAP for eligible discharges during the PHE and finalized a change to extend the NCTAP through the end of the fiscal year in which the PHE ends. Upon the PHE ending in May as HHS has indicated, discharges involving eligible products would continue to be eligible for the NCTAP through September 30, 2023.
- Health Equity Hospital Categorizations: CMS is advancing its goal to more explicitly measure the impact of its policies on health equity by adding 15 new health equity hospital categorizations for the FY 2024 IPPS payment impacts.
- Social Determinants of Health Diagnosis (SDOH) Codes: CMS also proposed changing the severity designation of the three ICD-10-CM diagnosis codes describing homelessness (e.g., unspecified, sheltered, and unsheltered) from non-complication or comorbidity (NonCC) to complication or comorbidity (CC), based on the higher average resource costs of cases with these diagnosis codes compared to similar cases without these codes. Consistent with CMS’ annual updates to account for changes in resource consumption, treatment patterns, and the clinical characteristics of patients, CMS is recognizing homelessness as an indicator of increased resource utilization in the acute inpatient hospital setting.
- Rural emergency hospitals (REHs): CMS proposed to also allow REHs, a new Medicare provider type established by the Consolidated Appropriations Act of 2021, as graduate medical education training sites to address workforce shortages in rural communicates.
For any questions regarding this proposed rule, or for assistance in any other healthcare regulatory and operational matters for your organization, please contact Advis through our website or give us a call at 708-478-7030.
Published: April 27, 2023