CMS proposed a rule that updates payments for acute and long-term care hospitals and adopts certain quality measures.

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule for inpatient and long-term care hospitals to advance health equity and support underserved communities.

As required by statute, the fiscal year (FY) 2024 inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS) rule updates Medicare payments and policies for hospitals.

The rule would also adopt hospital quality measures to foster safety and equity and reduce preventable harm in the hospital setting.

CMS proposes recognizing homelessness as an indicator of increased resource utilization in the acute inpatient hospital setting, which may result in higher payment for certain hospital stays.

“CMS is helping to build a resilient health care system that promotes good outcomes, patient safety, equity, and accessibility for everyone,” said Chiquita Brooks-LaSure, CMS administrator. “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.”

For acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting program and are meaningful electronic health record users, the proposed increase in operating payment rates for FY 2024 is projected to be 2.8%.

It reflects an FY 2024 projected hospital market basket update of 3.0%, reduced by a projected 0.2 percentage point productivity adjustment.

For FY 2024, CMS expects the proposed increase in operating and capital IPPS payment rates would generally increase hospital payments by $3.3 billion.

For LTCHs, CMS proposes to increase the LTCH PPS standard Federal payment rate by 2.9%. CMS expects LTCH payments under the dual-rate payment system to decrease by 0.9%, or $24 million, primarily due to a projected decrease in high-cost outlier payments in FY 2024 compared to FY 2023.

“With this proposed rule, CMS is more accurately paying hospitals and recognizing for the first time that homelessness, as a social determinant of health, also impacts resource utilization,” said Meena Seshamani, MD, PhD, CMS deputy administrator. “Creating incentives for hospitals to provide excellent care for underserved populations lays the foundation for a health system that delivers higher-quality, more equitable, and safer care for everyone.”

CMS proposed making health equity adjustments in the Hospital Value-Based Purchasing Program by incentivizing hospitals to perform well on existing measures and those who care for high proportions of underserved individuals, as defined by dual eligibility status.

It builds on previous efforts to advance health equity through the finalized health equity adjustment in the Medicare Shared Savings Program and finalized Medicare Advantage and Part D Star Ratings Program policies.

CMS also proposed recognizing hospitals’ higher costs when treating people experiencing homelessness when hospitals report social determinants of health codes on claims. In addition, CMS is requesting comment on how to support safety-net hospitals further.

CMS also proposes that rural emergency hospitals be designated graduate medical education training sites. As a result, more medical residents would be able to train in rural settings, which can help address workforce shortages in these communities.

The proposed quality measures aim to foster safety and equity and reduce preventable harm in hospital settings. One quality measure is a proposal to measure the rate of patients and residents in long-term care hospitals who are up to date on their COVID-19 vaccinations and new, additional measures for screenings for cancer and social drivers of health.

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