AHA Comment Letter on Inpatient Prospective Payment System FY 2024 Proposed Rule

June 9, 2023

The Honorable Chiquita Brooks-LaSure
Centers for Medicare & Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Room 445-G
Washington, DC 20201

RE: CMS-1785-P, Medicare Program; Proposed Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2024 Rates; Quality Programs and Medicare Promoting Interoperability Program Requirements for Eligible Hospitals and Critical Access Hospitals; Rural Emergency Hospital and Physician-Owned Hospital Requirements; and Provider and Supplier Disclosure of Ownership, (Vol. 88, No. 83), May 1, 2023.

Dear Administrator Brooks-LaSure:

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, our clinician partners — including more than 270,000 affiliated physicians, 2 million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’ (CMS) hospital inpatient prospective payment system (PPS) proposed rule for fiscal year (FY) 2024. We are submitting separate comments on the agency’s proposed changes to the long-term care hospital PPS.

We support a number of the inpatient PPS (IPPS) proposed rule provisions, such as those that help support rural hospitals care for its communities by allowing rural emergency hospitals (REHs) to be designated as a non-provider site for Medicare graduate medical education purposes and by allowing sole community hospitals (SCHs) to gain their status in a timely manner. We also support several aspects of CMS’ quality-related proposals, including CMS’ proposal to include a health equity adjustment in the Hospital Value-Based Purchasing Program (HVBP), and to modernize the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey.

At the same time, we have strong concerns about the proposed payment updates. In particular, we are deeply concerned about the inadequacy of the proposed market basket update given the changing health care system dynamics and its workforce challenges. As such, we strongly urge CMS to utilize its authority to provide a market basket adjustment to account for what the agency missed in the FY 2022 market basket forecast. We also are concerned about the agency’s proposed cuts to disproportionate share hospital (DSH) payments and the lack of transparency in the underlying calculations. Finally, we have concerns about several of the agency’s quality-related proposals. A summary of our key recommendations follows.

IPPS Payment Update

CMS proposes a market basket update of 3.0% less a productivity adjustment of 0.2 percentage points, resulting in a net update of 2.8%. This update, especially when taken together with the FY 2022 payment update of 2.7%, continues to be woefully inadequate. These updates fail to account for the fact that labor composition and costs have not reverted to “normal” levels and that as a result, the hospital field have continued to face sustained financial pressures. Workforce shortages continue to create outsized pressures on hospitals and health systems, and workforce financial pressures are particularly challenging because labor on average accounts for about half of a hospital’s budget. Therefore, we urge CMS to use its "special exceptions and adjustments" authority to make a retrospective adjustment to account for the difference between the market basket update that was implemented for FY 2022 and what the market basket is for FY 2022. We also urge the agency to use the same authority to eliminate the productivity cut for FY 2024 and to fully restore the shortfall resulting from the American Taxpayer Relief Act of 2012 (ATRA) documentation and coding adjustments.

Disproportionate Share Hospital Payments

The AHA continues to be concerned about the agency’s lack of transparency with regard to how it is calculating DSH payments. Specifically, we disagree with the agency’s estimates of the number of uninsured for FY 2024. For instance, CMS maintains that the rate of the insured stayed the same as FY 2023. However, it is expected that health coverage for millions of people will end as the Medicaid continuous coverage requirements are now unwinding. As such, we expect to see a large increase in the number of the uninsured in FY 2024. We urge CMS to consider additional data by researchers and policy stakeholders to reach a more reasonable estimate of the percent of uninsured.

Hospital Quality and Value-based Programs

AHA supports CMS’ proposal to adopt a health equity adjustment for the HVBP, and thanks CMS for recognizing the complex interplay between quality performance and the social drivers of health. We also applaud CMS’ proposal to modernize the HCAHPS survey by permitting the use of web-based surveys. While the AHA shares CMS’ goal of improving sepsis care, we are concerned that the inclusion of the well-intentioned but flawed sepsis bundle measure in the HVBP may have too many negative unintended consequences. We instead urge CMS to focus its efforts on the development of a sepsis outcome measure. The AHA also continues to support COVID-19 vaccination for health care workers and communities. However, we recommend that CMS phase in the required reporting of “up to date” vaccination status with the anticipated shift to once-yearly COVID-19 vaccinations.

We appreciate your consideration of these issues. Our detailed comments are attached. Please contact me if you have questions or feel free to have a member of your team contact Shannon Wu, AHA senior associate director for policy, at (202) 626-2963 or swu@aha.org.



Stacey Hughes
Executive Vice President

Read the details below.