CMS to boost hospital pay 3.1% in 2024, AHA 'deeply concerned': 11 notes

CMS plans to boost inpatient hospital pay 3.1 percent in 2024, which the American Hospital Association called "inadequate" to keep up with inflation.

The agency issued its Hospital Inpatient Prospective Payment System final rule Aug. 1 and arrived at a 3.1 percent pay bump based on a hospital market basket update of 3.3 percent, which was reduced by the required 0.2 percentage point productivity adjustment. Hospitals meeting CMS requirements in the Hospital Inpatient Quality Reporting program and meaningful EHR use will qualify for the rate increase.

"The AHA is deeply concerned with CMS' woefully inadequate inpatient and long-term care hospital payment updates," said Ashley Thompson, AHA's senior vice president for public policy analysis and development, in a statement. "The agency continues to finalize rate increases that are not commensurate with the near decades-high inflation and increased costs for labor, equipment, drugs and supplies that hospitals across the country are experiencing."

Bruce Siegel, MD, president and CEO of America's Essential Hospitals, also issued a statement critical of the final rule.

"Today's final rule for the fiscal year 2024 Inpatient Prospective Payment System will undermine the nation's essential hospitals and safety net for low-income and marginalized patients with its harmful policies on disproportionate share hospital funding," he said.

Eleven things to know:

1. CMS estimates the 3.1 percent pay bump on average will increase 2024 Medicare pay to hospitals by $2.2 billion. Hospitals could face pay reductions under the IPPS for excess readmissions as part of the Hospital Readmissions Reduction Program; appearing in the worst-performing quartile of the Hospital Acquired Condition Reduction Program; and adjustments as part of the Hospital Value-Based Purchasing Program.

2. The final rule will drop Medicare disproportionate share hospital payments and uncompensated care payments next year by around $957 million, CMS estimated.

"A full handicap to the inflation update shortfall is CMS cutting mission-critical uncompensated care payments by more than $900 million," said Chip Kahn, president and CEO of the Federation of American Hospitals in a statement. "This final rule further strains the health care safety net in 2024 and threatens patient access to care."

The CMS' Office of the Actuary estimates the rate of uninsured will decline to 8.3 percent next year from 9.2 percent this year, but the rate of uninsured could be far more amid Medicaid redeterminations.

"This is an inexplicable assumption given that the Department of Health and Human Services itself estimates that 15 million individuals will leave Medicaid once the continuous enrollment provision comes to an end, only one-third of whom will be eligible for Marketplace subsidiaries," said Ms. Thompson.

3. CMS will drop new technology add-on payments for several technologies next year, which the agency estimates will decrease pay by $364 million. CMS will also end new COVID-19 treatment add-on payments when the program expires Sept. 30.

4. Graduate medical education payments will change in the new rule to support training for Medicare providers in rural areas. Rural hospitals can now serve as training sites for Medicare GME payments after becoming rural emergency hospitals.

5. CMS added 15 new health equity hospital categorizations for the 2024 final rule and is prioritizing the CMS Framework for Health Equity 2022-2032 to expand data collection, reporting and analysis.

6. Starting in 2024, CMS will change the regulations for individuals eligible for benefits by section 1115 demonstrations for Medicaid beneficiaries to include only patients who receive health insurance that covers inpatient hospital services or premium assistance covering 100 percent of the premium costs to patients from the demonstration.

"We are also disappointed that CMS finalized its proposal to limit the inclusion of patient days for patients who are regarded as eligible for Medicaid benefits under a Section 1115 demonstration project for purposes of the Medicare DSH calculation," said Ms. Thompson. "This policy could have a devastating impact on access to care for lower-income patients by curtailing much needed resources used to finance health care in historically marginalized communities."

7. CMS clarified it will only consider physician-owned hospital expansion exception requests from eligible hospitals under the rural provider exception. The final rule also reinstated restrictions on the frequency of physician-owned hospital expansion exception requests, maximum expansion and location of the expansion, which had been removed in 2021.

8. CMS adopted three new measures, removed three measures and modified three measures for the Hospital IQR Program. The three measures added are related to electronic clinical quality reporting for pressure injuries, acute kidney injuries, excessive radiation dose or inadequate image quality for adult CT scans.

CMS removed the hospital-level risk standardization complication rate after elective primary total knee and hip replacements; Medicare spending per beneficiary hospital measure; and the elective delivery of babies before 39 weeks gestation.

9. The Medicare Promoting Interoperability Program for eligible hospitals and critical access hospitals changed in the final rule for next year. CMS will define the EHR reporting period in the 2025 calendar year as a minimum of any continuous 180-day period within the calendar year, among other changes.

10. CMS will establish a validation reconsideration process for hospitals that failed to meet requirements of the Hospital-Acquired Condition Reduction Program, which will begin in the 2025 fiscal year.

11. Hospitals participating in the Hospital Value-Based Purchasing Program will also see changes next year. CMS finalized the proposal to adopt the severe sepsis and sepsis shock management bundle measure beginning in the 2026 fiscal year and reward excellent care in underserved populations through a health equity scoring change. CMS is also adopting proposed changes to the data submission and reporting requirements of the HCAHPS survey beginning in the 2027 fiscal year, among other modifications.

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