CMS recently released its proposed amendments for the fiscal year (FY) 2025 Medicare hospital inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS). This announcement not only sets the stage for potential shifts in reimbursement but also provides updates that could significantly impact inpatient & long-term care hospitals nationwide.
Key Developments
Inpatient Hospitals
Payment Rate Changes
- IPPS operating payment rates for acute care hospitals are projected to increase by 2.6%. This reflects a projected FY 2025 hospital market basket percentage increase of 3.0%, reduced by a 0.4 percentage point productivity adjustment. Overall, CMS anticipates a significant increase in hospital payments by $3.2 billion in FY 2025. The proposed increase in operating and capital IPPS payment rates will increase hospital payments in FY 2025 by approximately $2.9 billion, while Medicare uncompensated care payments to disproportionate share hospitals (DSH) will increase in FY 2025 by approximately $560 million.
Quality Reporting Program Changes
- CMS is proposing to adopt seven new quality measures, remove five existing quality measures, and modify one current electronic clinical quality measures (eCQMs). CMS is also proposing two changes to current policies related to data validation: an increase over two years in the total number of mandatory eCQMs reported by hospitals and cross-program modifications to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure.
Value-Based Purchasing Program Changes
- This program is funded by reducing participating hospitals’ base operating DRG payments each fiscal year by 2% and redistributing the entire amount back to the hospitals as value-based incentive payments. CMS is proposing to move up the start date for publicly displaying hospital performance on the Hospital Commitment to Health Equity measure to January 2026 or “as soon as feasible thereafter.”
Long-Term Care Hospitals
Payment Rate Changes
- LTCH standard payment rate is proposed to increase by 2.8% and LTCH PPS payments for discharges paid the LTCH standard payment rate is proposed to increase by approximately 1.2% or $26 million due primarily to a projected 1.3% decrease in high-cost outlier payments as a percentage of total LTCH PPS standard Federal payment rate payments. CMS is seeking comment on the proposed methodology used to determine the LTCH PPS outlier threshold for discharges paid the LTCH standard federal payment rate and an alternative methodology that would result in a lower outlier threshold.
Quality Reporting Program Changes
- LTCHs that do not meet reporting requirements for this program are subject to a two-percentage-point reduction in their Annual Payment Update. In the FY 2025 proposed rule, CMS is proposing to add four items, modify one item, and modify one administrative requirement for the LTCH Continuity Assessment Record and Evaluation (CARE) Data Set (LCDS), as well as two RFIs), for the LTCH QRP.
Concluding Thoughts
As hospitals prepare to navigate the complexities of FY 2025, an understanding of the proposed changes in payment rates is paramount. Stay tuned for further updates and let us know of any questions or how we can help you navigate these changes.