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CMS has released its Inpatient Prospective Payment System (IPPS) rule, finalizing payment policies for the 2024 fiscal year. In it, the Agency continues its focus on the upstream challenges patients face, like homelessness. Patients experiencing homeless have longer average hospital stays, are exposed to more severe communicable diseases and harsh weather conditions, and can be disproportionately affected by behavioral health diagnoses. CMS’ FY 2024 IPPS rule marks the first time the Agency has provided increased payments to providers for a Social Determinants of Health (SDOH) diagnosis code.

CMS has released its Inpatient Prospective Payment System (IPPS) rule, finalizing payment policies for the 2024 fiscal year. In it, the Agency continues its focus on the upstream challenges patients face, like homelessness. Patients experiencing homeless have longer average hospital stays, are exposed to more severe communicable diseases and harsh weather conditions, and can be disproportionately affected by behavioral health diagnoses. CMS’ FY 2024 IPPS rule marks the first time the Agency has provided increased payments to providers for a Social Determinants of Health (SDOH) diagnosis code.

Since 2020, CMS has been reevaluating the severity levels of diagnosis codes, paying special attention to those that require higher levels of care and more resources. The subset of codes that describe the SDOH have been a major part of that work, given President Biden’s 2021 Executive Order on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.” These Z-codes, Z55-Z65, measure potential health hazards related to SDOH and psychosocial circumstances like housing stability, food insecurity and transportation access.

CMS has decided to recognize homelessness as an important factor impacting resource utilization in inpatient care, increasing reimbursement for corresponding Z-codes beginning in October 2023. The Agency is now considering comments encouraging that additional Z-codes be created, perhaps with a new claims form with separate and distinct fields for each SDOH diagnosis code. “[CMS] will examine these suggestions and determine if there are other diagnoses codes, including diagnosis codes that describe SDOH, that should also be considered […] and will provide more detail in future rulemaking.”

CMS also adopted a Health Equity Adjustment within its Value Based Purchasing (VBP) program that provides additional points to hospitals that serve a large proportion of dual eligible patients (those that qualify for Medicare and Medicaid) if they perform well in the program’s quality metrics.  While this adjustment is not significant, it reflects CMS’ goal of weaving health equity within all payment systems and better addressing social determinants of health.