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April 12, 2024

CMS issues FY 2025 proposed Medicare inpatient and long-term care hospital payment rule

On April 10, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2025 proposed rule for the Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System. In a press release, CMS Administrator Chiquita Brooks-LaSure said, "CMS is proposing changes that will create a more equitable and resilient health care system," adding, "Our proposals around payment and quality focus on rewarding better outcomes and supporting hospitals in their efforts to reach underserved communities and meet their needs."

The rule proposes to increase FY 2025 acute care hospital operating payments by about 2.6%, compared with FY 2024. CMS estimates the overall impact of the rule would result in an increase of about $3.2 billion in payments to acute care hospitals paid under the IPPS in FY 2025. Medicare uncompensated care payments to disproportionate share hospitals would increase by about $560 million in FY 2025, and additional payments for inpatient cases involving new medical technologies would increase by $94 million. In the rule, CMS noted that the Consolidated Appropriations Act of 2024 extended additional payments for Medicare-Dependent Hospitals (MDHs) and the temporary change in payments for low-volume hospitals through December 31, 2024. CMS estimated if Congress does not act and allows the funding to expire, payments to those hospitals would decline by $0.4 billion in FY 2025.

CMS expects the LTCH standard payment rate to increase by 2.8% and LTCH PPS payments for discharges paid the LTCH standard payment rate to increase by approximately 1.2% or $26 million.

Throughout the rule, CMS proposes several ways to increase health equity and improve maternal health, an ongoing priority for the Biden administration. CMS also proposes updates to hospital quality and value-based payment programs, among other changes. In addition, CMS proposes a new mandatory CMS Innovation Center model, the Transforming Episode Accountability Model (TEAM), that would provide bundled payment for certain surgical procedures. CMS will accept public comments on the proposed rule through June 10.

Additional information is also available in the attached WCEY Alert.

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FY 2025 proposed Medicare inpatient and long-term care hospital payment rule

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