CMS Inpatient Payment Rule for 2024: Key Takeaways

Steph Weber

April 18, 2023

Centers for Medicare & Medicaid Services (CMS) released its annual update to the inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) PPS on April 10, with many changes centered around improving health equity and quality as well as alleviating rural clinician shortages.

"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," said CMS administrator Chiquita Brooks-LaSure in a statement.

Here are 14 things to know about the fiscal year (FY) 2024 proposal:

  1. New payment rate: Acute-care hospitals that report inpatient quality data and participate in the EHR Meaningful Use program will receive a 2.8% net increase in payment rates. The rate adjustment will send approximately $3.3 billion more funding to hospitals compared with 2023.

  2. LTCH payments: CMS projects that the LTCH standard payment rate will increase by 2.9%, whereas discharge payments will decrease by 2.5% or $59 million.

  3. Disproportionate share hospital payments: Medicare disproportionate share hospital payments and Medicare uncompensated care payments will decrease by about $115 million for FY 2024.

  4. Health equity categories: CMS proposes adding 15 new health equity hospital categorizations for IPPS payments to advance the goals of its Framework for Health Equity initiative.   

  5. Social determinants of health codes: To reflect increased resource utilization, the severity designation for the three International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) diagnosis codes describing homelessness will change from noncomplication or comorbidity to complication or comorbidity.

  6. Rural emergency hospitals: The proposed rule will allow designated rural emergency hospitals to serve as training sites and receive Medicare graduate medical education payments to address concerns over rural hospital closures.

  7. COVID treatment add-on payments: If the public health emergency ends in May, add-on payments for discharges involving eligible products like convalescent plasma and nirmatrelvir-ritonavir will expire on September 30.       

  8. Technology add-on payments: Requests for new technology add-on payments must include a complete, active US Food and Drug Administration (FDA) market authorization application. Beginning with FY 2025 applications, the FDA approval deadline will move from July 1 to May 1.

  9. Physician-owned hospitals: To receive Medicare payment for services referred by a physician owner or investor, the hospital must satisfy all requirements of the whole hospital exception or the rural provider exception to the Stark Law. In either case, a hospital may not increase the aggregate number of operating rooms, procedure rooms, or beds above the level it was licensed for on March 23, 2010, unless CMS grants an exception.

  10. Electronic clinical quality measures: The new rule will remove and modify several existing electronic clinical quality measures and add three new ones: hospital harm, pressure injury; hospital harm, acute kidney injury; and excessive radiation dose or inadequate image quality for diagnostic CT in adult inpatients.

  11. HCAHPS survey: Beginning January 1, 2025, modifications to the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey will extend the data collection period from 42 to 49 days, limit supplemental survey items to 12, and require an official Spanish translation for patients.

  12. Safety-net hospitals request for information: CMS seeks public input about the unique challenges faced by safety-net hospitals and potential solutions to ensure that uninsured, underinsured, and other vulnerable populations have access to essential services.

  13. LTCH quality reporting: CMS proposes several quality-measure updates, including a functional discharge score measure beginning in FY 2025 and reporting the percentage of patients current with US Centers for Disease Control and Prevention–recommended COVID vaccinations starting in FY 2026.

  14. Commenting period: CMS will accept comments on the proposed rule through June 9.

Steph Weber is a Midwest-based freelance journalist specializing in healthcare and law.

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