The Centers for Medicare & Medicaid Services (CMS) released its annual Inpatient Prospective Payment System (IPPS) proposed rule for Fiscal Year (FY) 2025. The rule proposes to increase inpatient payments by 2.6% and adopt a new mandatory model for five clinical episodes. The rule also proposes to update hospitals’ infection prevention and antibiotic stewardship programs’ Medicare Conditions of Participation (CoPs) to extend a subset of the current COVID-19 and influenza data reporting requirements. AHPA will provide further details on the rule over the next few editions of the Policy Brief. CMS will accept comments on its proposal through June 10th.

Payment Update                 

The 2.6% payment update reflects a hospital market basket increase of 3.0% as well as a productivity cut of 0.4%. It would increase hospital payments by $2.9 billion, plus a proposed $560 million increase in disproportionate share hospital payments and $94 million increase in new medical technology payments.

Quality Reporting Programs

There are no changes in the Hospital-Acquired Condition (HAC) Reduction Program or in the Readmissions Reduction Program this year. However, CMS is proposing to adopt seven new measures in the Inpatient Quality Reporting (IQR) program:

  • Patient Safety Structural
  • Age Friendly Hospital
  • Catheter-Associated Urinary Tract Infection (CAUTI) Standardized Infection Ratio Stratified for Oncology Locations
  • Central Line-Associated Bloodstream Infection (CLABSI) Standardized Infection Ratio Stratified for Oncology Locations
  • Hospital Harm – Falls with Injury eCQM
  • Hospital Harm – Postoperative Respiratory Failure eCQM
  • Thirty-day Risk Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue)

The Agency is also considering removing five IQR measures:

  • Death Among Surgical Inpatients with Serious Treatable Complications (CMS PSI 04)
  • Hospital-level, Risk-Standardized Payment Associated (HLRSPA) with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI)
  • HLRSPA with a 30-Day Episode-of-Care for Heart Failure (HF)
  • HLRSPA with a 30-Day Episode-of-Care for Pneumonia (PN)
  • HLRSPA with a 30-Day Episode-of-Care for Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA)

CMS proposes to refine two existing IQR measures: the Global Malnutrition Composite Score (GMCS) eCQM and the HCAHPS Survey.

Value-Based Purchasing (VBP) Program

CMS is proposing to:

  • Modify the HCAHPS to align with the proposed changes in IQR;
  • Move up the start date for publicly displaying hospital performance on the Hospital Commitment to Health Equity measure to January 2026 or earlier depending on stakeholder feedback.

Essential Medicine Buffer Stock

Beginning in FY 2025, CMS proposes creating a separate payment under IPPS to account for the cost of establishing and maintaining buffer stocks of essential medicines, not the cost of drugs themselves. The payment would be provided as either a lump sum upon cost report settlement or through biweekly payments that would be reconciled upon cost report settlement.

This policy was proposed by CMS last year but the agency made a change — the payment would be available only to independent hospitals with fewer than 100 beds. Despite CMS previously stating its desire to make this a Condition of Participation (CoP), the agency is not proposing to make the maintenance of a buffer stock mandatory.

 Medicare Conditions of Participation Update

CMS proposes to modify and make permanent the requirement for hospitals and Critical Access Hospitals (CAHs) to report certain data on acute respiratory illnesses. Beginning on October 1st, hospitals and CAHs would be required to report data once per week on confirmed infections of COVID-19, influenza and respiratory syntactical virus among hospitalized patients; as well as hospital capacity and limited patient demographic information, including age.

Maternal Health Request for Information

CMS requests information on whether inpatient pregnancy and childbirth hospital resources differ between Medicare and non-Medicare patients. The rule also seeks feedback on the potential of using the Medicare’s CoPs to develop hospital requirements specific to obstetrical services.