News: CMS releases the FY 2024 IPPS/LTCH PPS final rule, 3 SDOH codes now CCs

Yesterday, CMS released the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) final rule. In the associated fact sheet detailing all changes, the final rule updates show a general focus on promoting high-quality care and rewarding hospitals that deliver such care to underserved populations.

Notable changes include a higher severity level designation of three different social determinants of health (SDOH) codes describing homelessness, changes to the Hospital Inpatient Quality Reporting (IQR) Program, and a health equity adjustment in the scoring methodology for the Hospital Value-Based Purchasing (VBP) Program.

First, after a data analysis of claims data tracking the impact on resource use generated for hospitals, CMS finalized changes based on the higher average resource costs of cases with certain ICD-10-CM diagnosis codes in comparison to similar cases without these codes. CMS has changed the following codes from the severity designation of non-complication or comorbidity (Non-CC) to complication or comorbidity (CC):

• Z59.00, Homelessness unspecified
• Z59.01, Sheltered homelessness
• Z59.02, Unsheltered homelessness

In a news release, CMS stated, “This action is consistent with the Administration’s goal of advancing health equity for all, including members of historically underserved and under-resourced communities, as described in the President’s January 20, 2021, Executive Order 13985 on ‘Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.’ As SDOH diagnosis codes are increasingly added to billed claims, CMS plans to continue to analyze the effects of SDOH on severity of illness, complexity of services, and consumption of resources.”

The Hospital IQR program has also seen changes with this rule, with an increase in operating payment rates of 3.1%. “As part of CMS’ health equity goals, we are rewarding hospitals that deliver high-quality care to underserved populations and, for the first time, also recognizing the higher costs that hospitals incur when treating people experiencing homelessness,” said CMS Administrator Chiquita Brooks-LaSure in the release. “With these changes, CMS is laying the foundation for a health system that delivers higher quality, more equitable, and safer care for everyone.”

The changes implemented by the final rules go into effect on October 1, 2023.

Editor’s note: To access the IPPS/LTCH PPS final rule fact sheet released by CMS, click here.