the American Association of Colleges of Osteopathic Medicine

This analysis was prepared by McDermott+ Consulting, on behalf of AACOM.

IPPS Proposed Rule:

On April 10, 2023, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2024 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) proposed rule. The proposed rule would update Medicare fee-for-service payment rates and policies for inpatient hospitals and LTCHs for fiscal year (FY) 2024.

We wanted to specifically flag that CMS has provided a clarification of the process for calculating the Indirect Medical Education (IME) resident-to-bed ratio in circumstances where there is a change in a hospital’s full-time equivalent (FTE) residents due to participation in a Graduate Medical Education (GME) affiliation agreement under which the hospital is sharing FTE cap slots with another hospital. CMS has proposed to clarify the specific Medicare cost report data that is used in the calculation. CMS believes that there will be no financial impact associated with this clarification.

Additionally, CMS has proposed to treat Rural Emergency Hospitals (REHs) in a manner similar to Critical Access Hospitals (CAHs) for purposes of determining GME payments. Specifically, REHs would have the option to either be treated as “Non-Provider” sites, such that another hospital could report the FTEs of residents training at the REH for Medicare payment purposes, or the REH could incur the costs of the resident training and be reimbursed by Medicare at 100% of the allowable costs. This change should be favorable to rural communities and REHs as it would provide for continued training of residents in rural areas for converting CAHs and offer the opportunity for additional rural training of residents that might not otherwise be viable without the proposed new rules.

Key Highlights:

CMS is proposing to treat hospitals that undergo urban-to-rural reclassification as rural for all wage index calculation purposes; these changes will cause disturbances in the wage index that will affect all hospitals. CMS is also proposing to continue the low wage index hospital policy that supplements wage index values for hospitals with a wage index value below the 25th percentile notwithstanding several federal district court cases that have ruled this policy unlawful.
With respect to quality reporting program changes, CMS is proposing to make health equity adjustments in the Hospital Value-Based Purchasing Program by providing incentives to hospitals to perform well on existing measures and to those who care for high proportions of underserved individuals, as defined by dual eligibility status. In addition, CMS is requesting comment on how to further address geriatric care in its quality reporting programs, including adopting new geriatric structural measures and seeking comments on the potential future establishment of a hospital designation to capture the quality and safety of patient-centered geriatric care.
Advancing health equity is a major theme throughout the proposed rule. Notably, CMS is proposing to increase the severity of the designation of homelessness from “non-complication or comorbidity” to “complication or comorbidity” as an indicator of increased resource utilization, which may result in higher payment for certain hospital stays. CMS is also proposing to provide incentives to hospitals in the Hospital Value-Based Purchasing Program to perform well on existing measures and to those who care for high proportions of those dually insured by Medicare and Medicaid.
The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is 2.8%, which reflects a projected hospital market basket update of 3.0% reduced by a projected 0.2 percentage point productivity adjustment.
CMS proposes to distribute roughly $6.87 billion in uncompensated care payment for FY 2024, a decrease of approximately $161 million from FY 2023, using the three most recent years of audited Worksheet S-10 data.
For FY 2024, CMS proposes to return to its historical practice of using the most recent available data to calculate Medicare Severity Diagnosis-Related Group (MS-DRG) relative weights. CMS proposes to continue delay of the non- complication or comorbidity (NonCC) subgroup criteria for FY 2024 and seeks feedback from stakeholders to inform application of the criteria for FY 2025 rulemaking.
CMS proposes to revise the criteria that applicants must meet in order to apply for new technology add-on payments (NTAP).
CMS solicits feedback on several requests for information (RFIs), including RFIs focused on safety net hospitals, health equity, and long-term care hospital quality reporting program.