AHA, others call inpatient payment in final rule inadequate

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Inpatient and long-term care hospitals get a 3.1% operating payment rate increase for 2024 in the final rule released Tuesday by the Centers for Medicare and Medicaid Services.

This reflects a projected hospital market basket update of 3.3%, reduced by a statutorily required productivity adjustment of a 0.2 percentage point. CMS expects payments in FY 2024 to increase by approximately 0.2% or $6 million.

WHAT'S THE IMPACT?

The American Hospital Association and others voiced concern that payment rates are not keeping pace with inflation and costs.

"The AHA is deeply concerned with CMS' woefully inadequate inpatient and long-term care hospital payment updates," said Ashley Thompson, AHA senior vice president of Public Policy Analysis and Development. "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."

Also, Thompson said, "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."

Thompson said the AHA is disappointed that CMS finalized its proposal to limit the inclusion of patient days for patients who are regarded as eligible for Medicaid benefits. Also, while CMS adopted some of the AHA's suggested improvements in its long-term care hospital outlier threshold calculation, it still finalized a figure that is 55% higher than it is currently. 

"Most long-term care hospitals cannot afford to absorb such financial losses," Thompson said. 

Dr. Bruce Siegel, president and CEO of America's Essential Hospitals, said, "Today's final rule for the fiscal year 2024 Inpatient Prospective Payment System will undermine the nation's essential hospitals and safety net care for low-income and marginalized patients with its harmful policies on disproportionate share hospital funding. We are disappointed the Centers for Medicare and Medicaid Services finalized an even deeper cut to DSH payments than initially proposed."

Siegel also voiced disappointment that CMS finalized a new policy to exclude uncompensated care pool days from the Medicare DSH calculation.

Soumi Saha, senior vice president of Government Affairs for Premier, said, "A universal truth in our country is that rising healthcare costs coupled with labor shortages and an aging population demands payment policies that ensure hospitals can focus on providing high-quality, patient-centered care. This inadequate update ensures that hospitals will instead focus on how they are going to keep their doors open. The chasm between a 3.1% payment update and reality, coupled with uncomfortably high inflation, is unsustainable and threatens the viability of the American healthcare system."

THE LARGER TREND

CMS said that the fiscal year 2024 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System final rule:

• updates Medicare payments and policies for hospitals as required by statute.
• adopts hospital quality measures to foster safety and equity, and reduce preventable harm in the hospital setting.
• recognizes homelessness as an indicator of increased resource utilization in the acute inpatient hospital setting. 

CMS is also finalizing proposals for the Hospital Inpatient Quality Reporting program and Medicare Promoting Interoperability Programs to adopt three electronic clinical quality measures beginning with the CY 2025 reporting period to foster safety and reduce preventable harm in the hospital setting.

To get paid under the IPPS, hospitals must participate in the Hospital Inpatient Quality Reporting Program and be meaningful electronic health record users, 

Also finalized is a rule on a health equity adjustment in the scoring methodology for the Hospital Value-Based Purchasing (VBP) Program, which rewards hospitals that serve higher proportions of dual-eligible patients for providing excellent care. 

The newly finalized scoring methodology allows the opportunity for hospitals to earn up to 10 bonus points, depending on their performance on existing quality measures and the proportion of dually eligible patients they treat. 

CMS is also finalizing a policy to recognize the higher costs that hospitals incur when treating people experiencing homelessness when hospitals report social determinants of health codes on claims, meaning that hospitals will generally receive higher payments when a patient is experiencing homelessness. 

In addition, CMS is finalizing the policy that allows rural emergency hospitals to be designated as graduate medical education training sites. 

Additionally, this final rule will codify the requirements, as specified in law, for the additional information that eligible facilities are required to submit when they apply for enrollment as a rural emergency hospital. The finalized policy is intended to increase access to essential healthcare services in rural communities and support the enrollment process for eligible facilities seeking the REH designation.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org