News: FY 2024 Hospital IPPS and LTCH PPS proposed rule released, focuses on patient safety and health equity

Earlier this week, CMS issued a proposed rule for the fiscal year (FY) 2024 Medicare hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) proposed rule (see the fact sheet here). While updating Medicare payments and policies for hospitals, the rule also would adopt hospital quality measures to promote safety and equity in the hospital setting, as well as reduce preventable harm, CMS stated in their accompanying press release.

“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. “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.”

Under the proposed rule, acute care hospitals that report quality data and are meaningful users of EHRs will see a net 2.8% increase in payments in FY 2024 (compared to 2023), an expected increase of $3.3 billion. On the other hand, the agency projects an overall decrease of 2.5%, or $59 million, in standard payments to long-term care hospitals in FY 2024 compared to 2023. CMS projects disproportionate share hospital payments and Medicare uncompensated care payments will decrease in fiscal 2024 by a combined $115 million.

Under this rule, hospitals may be subject to other payment adjustments under the IPPS, including:

• Payment reductions for excess readmissions under the Hospital Readmissions Reduction Program
• Payment reduction of 1% for the worst-performing quartile under the Hospital Acquired Condition Reduction Program
• Upward and downward adjustments under the Hospital Value-Based Purchasing Program

As part of their goal to more explicitly measure the impact of our policies on health equity, CMS has proposed adding 15 new health equity hospital categorizations for FY 2023 IPPS payment impacts. They’ve also proposed changing the severity designation of three ICD-10-CM diagnosis codes that describe homelessness from “non-complication or comorbidity” (non-CC) to “complication or comorbidity” (CC) to address the higher average resource costs of cases with these codes.

Editor’s note: To read the proposed rule fact sheet, click here. To read CMS’s press release, click here.