News Alert: CMS Releases FY 2024 IPPS Proposed Rule, Focuses on Underserved Communities

The 2024 inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS) rule updates Medicare payments and policies.

Is April the cruelest month, as T.S. Eliot writes, or, as Chaucer describes in his Canterbury Tales, “April with his showers sweet with fruit?” For those in healthcare, the posting Monday by the Centers for Medicare & Medicaid Services (CMS) of the fiscal year (FY) 2024 Inpatient Prospective Payment System proposed rule and the Long-Term Care Hospital PPS prospective rule was a mixed bag—the homeless seem to have triggered an increase of resource utilization among acute care hospitals, while, concurrently, promoting safety, equity and reducing preventable harm in hospitals.

According to the proposed rule, CMS is proposing to increase operating payment rates in FY 2024 by 2.8 percent, reflecting a projected hospital market basket update of 3.0 percent, reduced, however, by a projected 0.2 percent point productivity adjustment.

In its posting of the proposed rule, CMS noted that the proposed payment rate increase applies only to acute care hospitals that participated in the Hospital Inpatient Quality Reporting program and are meaningful electronic health record users, according to language in the rule that was published Monday. CMS also expects the proposed increase in operating and capital IPPS payment rates would generally increase hospital payments by $3.3 billion.

CMS also said that it proposes to increase the LTCH PPS standard federal payment rate by 2.9 percent, noting that it expects LTCH payments under the dual-rate payment system to decrease by 0.9 percent, or $24 million, primarily due to a projected decrease in high-cost outlier payments in FY 2024 compared to FY 2023. 

“CMS continues its emphasis on health equity in this rule by recognizing homelessness as a factor in health and increasing payments to hospitals serving underserved populations,” said former CMS career professional Stanley Nachimson.

“CMS is helping to build a resilient health care system that promotes good outcomes, patient safety, equity, and accessibility for everyone,” said CMS Administrator Chiquita Brooks-LaSure in a statement within the proposed rule language. “This proposed rule reflects our person-centric 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.”

As a follow up, CMS Deputy Administrator Dr. Meena Seshamani noted that with this proposed rule, “CMS is more accurately paying hospitals and recognizing for the first time that homelessness, as a social determinant of health, also impacts resource utilization.” “Creating incentives for hospitals to provide excellent care for underserved populations lays the foundation for a health system that delivers higher-quality, more equitable, and safer care for everyone.”

Programming note: Listen to Stanley Nachimson today on Talk Ten Tuesdays at 10 Eastern with Chuck Buck and Dr. Erica Remer.

Resources:

A CMS fact sheet discusses major provisions of the proposed rule, which can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/2023-07389/medicare-program-proposed-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals