Inpatient Providers Will Receive 3.1% Reimbursement Increase in FY24

CMS has increased Medicare payment rates for inpatient providers and long-term care hospitals (LTCHs) in the fiscal year (FY) 2024 Medicare hospital inpatient prospective payment system (IPPS) and LTCH PPS final rule.

General acute care hospitals paid under the IPPS will receive a 3.1 percent reimbursement boost, reflecting a 3.3 percent market basket update and a 0.2 percentage point decrease for productivity. This update is slightly higher than the 2.8 percent increase CMS proposed.

The 3.1 percent boost will increase hospital payments by $2.2 billion. CMS projects Medicare disproportionate share hospital (DSH) payments and Medicare uncompensated care payments combined will decline by $957 million. Additionally, the agency projects that additional payments for inpatient cases involving new medical technologies will decrease by $364 million next year.

Hospitals may face other payment adjustments under the IPPS depending on their performances in the Hospital Readmissions Reduction Program (HRRP), Hospital Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program.

The standard payment rate for LTCHs in FY 2024 will increase by 3.3 percent, while LTCH PPS payments for discharges will increase by 0.2 percent or $6 million.

CMS is adding 15 new health equity hospital categorizations for the FY 2024 IPPS payment impacts and finalized a change to the severity designation of the three ICD-10-CM diagnosis codes describing homelessness from non-complication or comorbidity to complication or comorbidity. These changes aim to advance health equity and benefit underserved communities, the agency said.

The rule also includes changes to the Hospital Inpatient Quality Reporting (IQR) Program, which reduces payments for hospitals that fail to meet program requirements and submit quality data. CMS added three new electronic clinical quality measures (eCQMs):

• Hospital Harm — Pressure Injury eCQM, with inclusion in the eCQM measure set beginning with the CY 2025 reporting period/FY 2027 payment determination.
• Hospital Harm — Acute Kidney Injury eCQM, with inclusion in the eCQM measure set beginning with the CY 2025 reporting period/FY 2027 payment determination.
• Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults (Hospital Level — Inpatient) eCQM, with inclusion in the eCQM measure set beginning with the CY 2025 reporting period/FY 2027 payment determination.

The agency modified three measures, including the Hybrid Hospital-Wide All-Cause Risk Standardized Mortality measure, Hybrid Hospital-Wide All-Cause Readmission measure, and COVID-19 Vaccination Coverage among Healthcare Personnel measure.

In addition, the agency removed three measures from the IQR Program: the Hospital-level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty measure, Medicare Spending Per Beneficiary Hospital measure, and Elective Delivery Prior to 39 Completed Weeks Gestation: Percentage of Babies Electively Delivered Prior to 39 Completed Weeks Gestation measure.

CMS also finalized changes to the HAC Reduction Program, Hospital VBP Program, and the LTCH Quality Reporting Program (QRP).

In the HAC Reduction Program, CMS solidified proposals to establish a validation reconsideration process for hospitals that failed to meet data validation requirements and modify the targeting criteria for data validation to include certain hospitals.

In the Hospital VBP Program, CMS will adopt a health equity scoring change for rewarding excellent care in underserved populations, change data submission and reporting requirements of the HCAHPS survey measure, and add severe sepsis and septic shock measures.

In the LTCH QRP, CMS is adding the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure and the Functional Discharge measure. The agency modified the COVID-19 Vaccination Coverage among Healthcare Personnel measure and removed two admission and discharge measures.

The complete final rule can be found here.