CMS issues hospital IPPS proposed rule for FY 2025 

The Centers for Medicare & Medicaid Services today issued a proposed rule that would increase Medicare inpatient prospective payment system rates by a net 2.6% in fiscal year 2025, compared with FY 2024, for hospitals that are meaningful users of electronic health records and submit quality measure data. 
 
This 2.6% payment update reflects a hospital market basket increase of 3.0% as well as a productivity cut of 0.4%. It would increase hospital payments by $2.9 billion, plus a proposed $560 million increase in disproportionate share hospital payments and proposed $94 million increase 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, “CMS’ proposed inpatient hospital payment update of 2.6% is woefully inadequate, especially following years of high inflation and rising costs for labor, drugs, and equipment. Many hospitals across the country, especially those in rural and underserved communities, continue to operate under unsustainable negative or break-even margins. We urge CMS to reconsider their policy in the final rule so that all hospitals can provide high-quality, around the clock, essential care to their communities.  
 
“The AHA has long supported flexible and widespread adoption of value-based and alternative payment models to deliver high quality care at lower costs. That said, we are very concerned that the agency has proposed a mandatory model for five clinical episodes which expands substantially on the current Comprehensive Care for Joint Replacement model and Bundled Payment for Care Improvement model– neither of which have yielded significant net savings. We continue to encourage CMS to ensure that episode-based payment models are voluntary. Many organizations are not of an adequate size or in a financial position to support the investments necessary to transition to mandatory bundled payment models. Requiring them to take on risk for large, diverse bundles may require more financial risk than they can bear.” 
 
Among other provisions, the proposed rule would: 
* Continue the low wage index hospital policy for FY 2025. 
* Establish a separate IPPS payment for establishing and maintaining access to essential medicines. 
* Establish a new mandatory CMS Innovation Center model that would provide bundled payment for certain surgical procedures. 
* Distribute new graduate medical education slots under section 4122 of the Consolidated Appropriations Act of 2023. 
* Seek public comments on the use of Medicare IPPS payments for maternity care by other payers. 
 
In addition, CMS proposes a number of changes to its quality reporting and value programs. CMS would add seven new measures to the inpatient quality reporting program that are largely focused on hospital patient safety-related practices and outcomes and would remove four IQR measures. CMS also proposes to modify the Hospital Consumer Assessment of Healthcare Providers and Systems survey, resulting in updates to the HCAHPS sub-measures used in the IQR and the Hospital Value-based Purchasing Program. CMS proposes to increase the number of mandatory electronic clinical quality measures (eCQMs) that hospitals must report for both the IQR and the Promoting Interoperability programs.   
 
Lastly, CMS proposes to modify and make permanent its Condition of Participation requiring hospitals and critical access hospitals to report certain data on acute respiratory illnesses. Beginning on Oct. 1, CMS would require hospitals and CAHs to report data once per week on confirmed infections of COVID-19, influenza and respiratory syntactical virus among hospitalized patients, hospital capacity and limited patient demographic information, including age. 
 
CMS will accept comments on the proposed rule through June 10. AHA members will receive a Special Bulletin with further details on the rule.