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CMS Issues FY 2024 Hospital IPPS and LTCH PPS Proposed Rule

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Proposed Rule Highlights and Potential Implications

Additional Details

Proposed Payment Updates

  • IPPS: The proposed 2.8% payment increase for FY 2024 is estimated to boost hospital payments by $3.3 billion in FY 2024. However, CMS projects this will be partially offset by an estimated $115 million decrease in FY 2024 Medicare disproportionate share hospital (DSH) and Medicare uncompensated care payments. CMS also anticipates an additional $460 million decrease in payments for cases involving new medical technologies in FY 2024, as new technology add-on payments expire.
    • Hospitals with excess readmissions under the Hospital Readmission Reduction Program (HRRP) will continue to see additional reductions in payments. The lowest-performing quartile of hospitals under the Hospital-Acquired Condition (HAC) Reduction Program will also see a payment reduction of 1% in FY 2024. Upward and downward adjustments for hospital performance under the Hospital Value-Based Purchasing (VBP) Program will also continue to change payment levels for specific hospitals.
  • LTCH: For standard LTCH PPS payments (non–site neutral), CMS is proposing a 3.1% market basket update, reduced by a 0.2% productivity adjustment to result in a total update of 2.9%. However, when factoring in a projected 4.7% reduction in high-cost outlier payments as a percentage of total LTCH PPS standard payments, CMS estimates an overall decrease in aggregated payments for discharges paid the LTCH standard payment rate by 2.5%, or $59 million, in FY 2024.

Proposed Coding and Coverage Changes

  • NTAP Program: Within the NTAP program, CMS is proposing to require applicants for technologies that are not already FDA market authorized to have a complete and active market authorization application with the FDA at the time of NTAP submission. CMS is also proposing to move the FDA approval deadline from July 1 to May 1 beginning with applications in FY 2025. CMS believes this change will improve the completeness of NTAP applications submitted and ensure the agency is able to adequately analyze applications and the supporting data.
  • New COVID-19 Treatments Add-On Payment (NCTAP) Program: In response to the planned end of the public health emergency in May 2023, CMS is clarifying that the NCTAP will expire. Specifically, discharges involving eligible products would continue to be eligible for the add-on payment through September 30, 2023, and no NCTAP would be made beginning with discharges on or after October 1, 2023.
  • Social Determinants of Health (SDOH) Diagnosis Coding: IPPS payment is based on use of hospital resources in the treatment of a patient based on severity of illness, complexity of service, and/or resource consumption. Based on an analysis of resource use, CMS is proposing a change in the severity designation of the three ICD-10-CM diagnosis codes describing homelessness from non-complication or comorbidity (NonCC) to complication or comorbidity (CC) to acknowledge the higher average resource costs of these cases.

Proposed Quality Program Updates

  • Hospital Inpatient Quality Reporting (IQR) Program: CMS is proposing the adoption of three new measures, the removal of three existing measures, and modification to three existing measures.
    • CMS is proposing to add three measures to the list of electronic clinical quality measures (eCQMs) for which hospitals can self-select to meet the eCQM reporting requirement. These would begin with the CY 2025 reporting period and include: 1) Hospital Harm: Pressure Injury, 2) Hospital Harm: Acute Kidney Injury, and 3) Excessive Radiation Dose or Inadequate Image Quality for Diagnostic Computed Tomography (CT) in Adults.
    • CMS is proposing to remove the following three measures: 1) Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty, beginning with the FY 2030 payment determination, 2) Medicare Spending per Beneficiary (MSPB), beginning with the FY 2028 payment determination, and 3) Elective Delivery Prior to 39 Completed Weeks’ Gestation (also known as PC-01), beginning with the FY 2026 payment determination.
    • CMS is proposing to modify two measures beginning with the FY 2027 payment determination to include Medicare Advantage (MA) admissions: 1) Hybrid Hospital-Wide All-Cause Risk Standardized Mortality, and 2) Hybrid Hospital-Wide All-Cause Readmission. Finally, CMS is proposing to modify the COVID-19 Vaccination Among Healthcare Personnel (HCP) measure to require personnel to align with the CDC’s definition of “up to date” vaccination, including primary and secondary doses. This modification would begin with the FY 2025 payment determination (quarter 4 CY 2023 reporting period).
  • Hospital VBP Program: CMS is proposing several modifications to existing measures and the adoption of one new measure. CMS is also proposing to add a health equity scoring adjustment to the program.
    • CMS is proposing to add the following measure: Severe Sepsis and Septic Shock: Management Bundle measure in the Safety Domain. This would begin with the FY 2026 program year.
    • CMS is proposing to modify two measures: 1) MSPB Hospital measure, beginning with the FY 2028 program year (proposed changes include allowing readmissions to trigger new episodes), and 2) Hospital-Level Risk-Standardized Complication Rate Following Elective Primary Total Hip Arthroplasty and/or Total Knee Arthroplasty measure, beginning with the FY 2030 program year (proposed changes include the addition of mechanical complication ICD-10 codes).
    • In alignment with CMS’s continued focus on health equity, the agency is proposing to adopt a health equity scoring change to reward excellence of care for underserved populations through an adjustment that would be added to hospitals’ total performance score (TPS). This would be based on hospitals’ total performance in the VBP program and the proportion of individuals with equal eligibility status treated at the hospital.
  • Other Updates: CMS is also proposing additional minor updates, including modifications to programmatic language and definitions, to other IPPS programs such as the Promoting Interoperability Program, the HAC Reduction Program, and the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program. CMS is not proposing any changes to the HRRP.
  • Long-Term Care Hospital Quality Reporting Program (LTCH QRP): CMS is proposing the adoption of two new measures, an update to one measure, and the removal of two measures. CMS is also proposing that starting in FY 2026, the data completion thresholds for LCDS[1] data items be increased to require hospitals to report 100% of quality measure and assessment data on at least 90% of the assessments submitted (from the current requirement of 80%). LTCHs that do not meet this requirement will continue to be subject to a 2-percentage point reduction in their annual payment update. Finally, CMS is proposing to begin public reporting of the transfer of health information measures starting with the September 2024 Care Compare refresh.
    • CMS is proposing to add the following measures: 1) COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident-Level COVID-19 Vaccine) measure, beginning with FY 2026 program year, and 2) Functional Discharge Score (DC Function) measure, beginning with FY 2025 program year.
    • CMS is proposing to modify the COVID-19 Vaccination Coverage Among HCP measure, in alignment with the Hospital IQR and PCHQR Programs, beginning with the FY 2025 program year.
    • CMS is proposing to remove the following two measures beginning with the FY 2025 program year: 1) Application of Percent of LTCH Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function, and 2) Percent of LTCH Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function.

Other Proposed Changes

  • Physician-Owned Hospital Self-Referral Law: For hospitals to submit claims for services referred by a physician owner or investor, the hospital must satisfy exception requirements. Within these requirements, CMS is proposing a clarification regarding the hospitals that can apply for expansion exceptions and the data and information required. CMS is also proposing to reinstate program integrity restrictions for hospitals meeting criteria as “high Medicaid facilities.” These restrictions were previously removed in the CY 2021 OPPS/ASC final rule.
  • Rural Wage Index: CMS is proposing to treat rural reclassified hospitals the same as geographically rural hospitals for the purposes of calculating the rural wage index starting in FY 2024.
  • Requests for Information:
    • Safety Net Hospitals: CMS believes that safety net hospitals play a critical role in advancing health equity by providing access to the underinsured, uninsured, and those who may face other barriers to care. CMS is seeking public comment on the unique challenges faced by safety net hospitals, the patients they serve, and potential solutions to help these hospitals address these challenges.
    • IQR Program Measures: CMS is requesting input on the potential inclusion of two geriatric measures: the Geriatric Hospital and Geriatric Surgical Structural measures.

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Edited by: Matt Maslin


  • 1.

    The LTCH Continuity Assessment Record and Evaluation (CARE) Data Set (LCDS) is the assessment instrument LTCH providers use to collect patient assessment data in accordance with the LTCH QRP.