The Centers for Medicare & Medicaid Services Aug. 1 issued the final rule that would increase Medicare inpatient prospective payment system rates by a net 3.1% in fiscal year 2024, compared with FY 2023, for hospitals that are meaningful users of electronic health records and submit quality measure data.

This 3.1% payment update reflects a hospital market basket increase of 3.3% as well as a productivity cut of 0.2%. Overall, the agency will increase hospital payments by $2.2 billion compared to FY 2023, which also includes a $957 million decrease in disproportionate share hospital payments and a $364 million decrease in new medical technology payments.

In a statement shared with the media today, Ashley Thompson, AHA’s senior vice president for public policy analysis and development, said, “The AHA is deeply concerned with CMS’ woefully inadequate inpatient and long-term care hospital payment updates. 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. 

“Moreover, CMS finalized a cut in inpatient hospital disproportionate share hospital payments for hospitals that treat many of the most vulnerable patients of almost $1 billion. This staggering amount is based on CMS’ Office of the Actuary’s estimate that the rate of uninsured will decline from 9.2% in FY 2023 to 8.3% in FY 2024. 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 subsidies.

“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. 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.”

Among other provisions, the final rule will:
•    Change graduate medical education payments for Rural Emergency Hospitals to better support graduate medical training in rural areas.
•    Continue the low wage index hospital policy for FY 2024 and treat rural reclassified hospitals as geographically rural for the purposes of calculating the wage index.
•    Stop New COVID-19 Treatment Add-on Payments due to the program’s expiration on Sep. 30
•    Revise the data and information required under the physician self-referral law and reinstate program integrity restrictions previously removed in the 2021 outpatient prospective payment system final rule for physician-owned hospitals meeting “high Medicaid facilities” requirements.

CMS also finalized its proposal to limit how Medicaid 1115 demonstration days count for purposes of the Medicare DSH calculation. Specifically, the final policy will only count for purposes of the Medicare DSH calculation the days of patients who receive from the state’s Section 1115 Demonstration health insurance that covers inpatient hospital services; or premium assistance that covers 100% of the premium cost for a patient who buys health insurance that covers inpatient hospital services, provided that the patient is not also entitled to Medicare Part A. 

In addition, CMS adopted virtually all of the changes it proposed in its quality reporting and value programs. For the Hospital Value-based Purchasing program, CMS will modify two quality measures and adopt a new measure on sepsis care. The agency also finalized a new HVBP health equity scoring adjustment that will award hospitals bonus points based on a combination of their quality performance and their proportion of patients dually eligible for Medicare and Medicaid. 

For the Inpatient Quality Reporting program, CMS adopted three new measures while removing three other measures. CMS also modified three existing measures, including updating the COVID-19 vaccination among health care personnel measure to reflect the proportion of personnel who are “up-to-date” on COVID-19 vaccinations. Finally, for both the IQR and HVBP programs, CMS finalized multiple updates to the survey process for the Hospital Consumer Assessment of Healthcare Providers and Systems. This includes permitting hospitals to use web-based HCAHPS surveys, and requiring hospitals to administer the HCAHPS in Spanish to patients who prefer it. 

Provisions generally take effect Oct. 1. AHA members will receive a Special Bulletin with further details on the rule.

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