Proposed IPPS/LTCH Payment Update for FY2024


The agency proposes to strengthen the ties that bind payments to quality data reporting.

The Centers for Medicare & Medicaid Services (CMS) issued, April 10, the Inpatient Prospective Payment System/Long-Term Care Hospital (IPPS/LTCH) proposed rule for fiscal year (FY) 2024. If finalized as written, inpatient hospitals and LTCHs that do not successfully report quality data to CMS using certified electronic health record technology (CEHRT) could potentially lose revenue. Meanwhile, CMS’ agenda to promote health equity places more administrative burden on physicians and hospitals.

IPPS/LTCH Payment Update

CMS projects an increase in operating payment rates for FY 2024 of 2.8 percent for 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. This increase reflects a market basket update of 3.0 percent reduced by a projected -0.2 percentage point productivity adjustment. However, failure to submit quality data could result in a penalty of -0.75 percentage points and failure to use certified EHR technology could result in a penalty of -2.25 percentage points. All told, hospitals that do not submit quality data and are not meaningful EHR users face a downward payment update of -0.2 percent.

In a statement shared with the media, Ashley Thompson, American Hospital Association’s senior vice president for public policy analysis and development, called CMS’ proposal “woefully inadequate” and cautioned the payments are “simply unsustainable.”

CMS proposes to update the LTCH PPS standard federal payment rate by 2.9 percent, reduced by 2.0 percentage points for LTCHs that do not successfully submit quality data. Thus, LTCHs that fail to submit quality data for FY 2024 would receive an annual update of 0.9 percent.

Changes to Quality Reporting and Meaningful Use Requirements

Across the board, CMS is proposing numerous updates to its quality reporting programs: the Hospital IQR Program, the Medicare Promoting Interoperability Program, the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program, Hospital-Adjustment Condition Reduction Program, the Hospital Value-Based Purchasing (VBP) Program, and the LTCH QRP.

Of note, CMS is proposing to modify the COVID-19 Vaccination Among Healthcare Personnel (HCP) electronic clinical quality measure (eCQM) for the fourth quarter 2023 reporting period. The prior version of this measure reported on the primary vaccination series only, while the proposed measure update would report the cumulative number of HCP who are up to date with recommended COVID-19 vaccinations.

Beginning with the FY 2025 LTCH QRP, CMS proposes to update the COVID-19 Vaccination Coverage among HCP measure in alignment with the Hospital IQR and PCHQR Programs and adopt the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident level COVID-19 Vaccine) measure beginning in FY 2026.

Proposed Changes to Certain ICD-10-CM Code Severity

CMS is proposing to recognize homelessness as an indicator of increased resource utilization in the acute inpatient hospital setting, which may result in higher payment for certain hospital stays when hospitals report social determinants of health (SDOH) codes on claims. If finalized, CMS would change the severity designation of the three ICD-10-CM codes describing homelessness (Z59.00-Z59.02) from non-complication or comorbidity (NonCC) to complication or comorbidity (CC).

In the FY 2023 IPPS/LTCH PPS final rule, CMS finalized the adoption of the Screening for Social Drivers of Health measure and the Screen Positive Rate for Social Drivers of Health measure. Data collection for these measures is voluntary in 2023, but mandatory reporting begins in 2024.

Payment Add-on to End

If the PHE ends in May as planned, the New COVID-19 Treatments Add-on Payment (NCTAP) will end Sept. 30 — no NCTAP payment would be made beginning Oct. 1, 2023. CMS is also proposing changes to the NTAP program.

Likewise, the 20 percent increase to the weighting factor of the assigned diagnosis-related group (DRG) for an individual diagnosed with COVID-19 discharged during the COVID-19 (PHE) period will not be applicable for IPPS discharges occurring on or after May 12 (assuming the PHE ends May 11 as planned).