CMS to boost Medicare pay for inpatient, long-term care hospitals

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Inpatient hospitals will see a larger Medicare payment hike next fiscal year than first proposed, the Centers for Medicare and Medicaid Services announced Tuesday.

Acute care hospitals complying with quality reporting rules and electronic health record guidelines will get a 3.1% net increase in Medicare reimbursements in fiscal 2024 year under the hospital inpatient prospective payment system final rule. In April, CMS issued a proposed rule that would have boosted reimbursements 2.8%. CMS also set a 0.2% reimbursement increase for long-term care hospitals.

The final rule for inpatient hospitals reflects a 3.3% market basket increase and a negative 0.2 percentage point productivity adjustment. Hospitals that don’t submit required quality data could see penalties up to one-quarter of their reimbursements.

Hospital groups decried the rate hike as insufficient.

The [American Hospital Association] is deeply concerned with CMS’ woefully inadequate inpatient and long-term care hospital payment updates. 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,” AHA Senior Vice President for Public Policy Analysis and Development Ashley Thompson said in a news release.

“This final rule further strains the healthcare safety net in 2024 and threatens patient access to care,” Federation of American Hospitals President and CEO Chip Kahn said in a news release. “The cost of patient care continues to rise while the modest increase in the IPPS inflation update compared to the proposed rule falls far short. The CMS regulation issued today ignores the real-world inflationary challenges facing patient care from escalating labor costs, drug prices and expensive supply chain breakdowns.

CMS finalized a health equity adjustment that provides up to 10 bonus points to hospitals that serve higher proportions of patients who qualify for both Medicare and Medicaid. The final rule also raises payments to hospitals that treat homeless patients by finalizing changes to the severity designation of three diagnosis codes.

“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,” CMS Administrator Chiquita Brooks-LaSure said in a news release.

CMS also adopted new hospital quality measures to promote safety and quality and limit preventable harm in hospitals.

The agency added three electronic clinical quality measures to advance health equity to enable hospitals to better assess lower-stage pressure injuries for people with darker skin tones. CMS also updated a measure to report the number of employees who are up-to-date on COVID-19 vaccinations beginning with the fiscal 2025 payment determination for the hospital inpatient quality reporting program.

Rural emergency hospitals will also be able to serve as graduate medical education training sites under the final rule.

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