CMS Finalizes the FY 2024 Reimbursement Plan: Our Five Takeaways
Earlier this month, the Center for Medicare & Medicaid Services (CMS) announced the final ruling that will dictate reimbursement rates for FY 2024 which commences October 1, 2023. You can read the entire 2,145-page document, but we’ve pulled out our top five takeaways.
From the preliminary draft, the rate for inpatient reimbursement was bumped up, but more was needed to avoid controversy. Also, CMS made a significant enhancement around Graduate Medical Education reimbursements that could prove to be a game-changer.
Here are our five key takeaways:
1. Inpatient reimbursement rate bumped to 3.1%, up from 2.8% originally proposed.
The big news was that CMS increased the inpatient reimbursement rate for acute care hospitals from what was previously proposed. The final rate will be 3.1% which was higher than the original rate of 2.8% that was floated in the preliminary rules in April 2023. In real dollars, that amounts to another $2.2 billion that acute care hospitals will receive next year.
For long-term care hospitals (LTCH), the rate increased by 3.3% but the net amount in real dollars will be offset by a change in the threshold for high-cost outlier cases to $59,873, down from the proposed amount of more than $94,000.
2. Hospitals slam CMS for not keeping up with workforce costs and inflation.
The backlash was immediate from the American Hospital Association. The leading industry organization declared the 3.1% was “woefully inadequate.” The main point of contention was CMS’s estimate that uninsured patients will decrease from 9.2% to 8.3%, which is contradicted by HHS’s own estimates that 15 million will leave Medicare due to the end of the continuous enrollment provision.
Chip Kahn, President and CEO of the Federation of American Hospitals, stated that "This final rule further strains the health care safety net in 2024 and threatens patient access to care."
Beyond the contention around uninsured patients, the AHA cites “decades-high inflation and increased costs for labor, equipment, drugs, and supplies that hospitals across the country are experiencing” as evidence that more funding is needed.
3. GME Reimbursement is now available in rural hospitals.
An important development in this year’s plan is that CMS is providing reimbursement for graduate medical education (GME) in rural hospitals. This coincides with the new designation of Rural Emergency Hospitals (REHs) that were introduced to “address the growing concern over closures of rural hospitals.”
This shift will be a game-changer for smaller hospitals in sparsely populated areas so that they can supplement their medical team. In order to report on GME programs, REHs will have to conduct time studies and Time Study is able to support this requirement with minimal effort.
4. New designations designed to make a more equitable healthcare system.
The CMS Framework for Health Equity 2022–2032 introduced an initiative to level the playing field for healthcare services in underserved communities. This is the first of what promises to be structural changes to improve care for all. The new rules introduce 15 new health equity categorizations in order to collect and report data to measure the impact of equity initiatives.
CMS is also adding adjustments to Total Performance Scores (TPS) that will reward hospitals that provide excellent care to underserved populations. This will provide 10 additional points, which will increase the total scoring range from 0 to 110.
5. Add-on payments for COVID and new technology are sunsetting.
While expanding financial incentives to promote equity, other programs are also being dropped. Unsurprisingly, CMS is discontinuing add-on payments for COVID-19 treatment.
The New Technology Add-ons Program (NTAP) is designed to support innovation in healthcare technology, such as FDA-approved medical devices. While the program is not going away, some payments are expiring which will reduce payments by $364 million. The 11 technologies that will continue under NTAP are Intercept®, Rybrevant™, StrataGraft®, Hemolung Respiratory Assist System (RAS), aprevo® Intervertebral Body Fusion Device (TLIF indication), Livtencity™, Thoraflex Hybrid Device 800, ViviStim 135, GORE TAG Thoracic Branch Endoprosthesis 386, Cerament®, and iFuse Bedrock Granite Implant System
CMS will drop new technology add-on payments for several technologies next year, which the agency estimates will decrease pay by $364 million. CMS will also end new COVID-19 treatment add-on payments when the program expires on September 30.
For more information, visit these sources:
Final Rules for FY 2024, Center for Medicare & Medicaid Services, August 1, 2022.
News Release: New CMS Rule Promotes High-Quality Care and Rewards Hospitals that Deliver High-Quality Care to Underserved Populations, Center for Medicare & Medicaid Services, August 1, 2022.
Fact Sheet: FY 2024 Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) Final Rule — CMS-1785-F and CMS-1788-F Fact Sheet, Center for Medicare & Medicaid Services, August 1, 2022.
Dyrda, Laura, CMS to boost hospital pay 3.1% in 2024, AHA 'deeply concerned': 11 notes, Becker’s Hospital CFO Report, August 2, 2023.
Pifer, Rebecca, CMS finalizes 3.1% inpatient payment bump for hospitals, Healthcare Dive, August 2, 2023.
Thompson, Ashley, AHA Statement on FY 2024 Final IPPS & LTCH Payment Rule, American Hospital Association, August 1, 2023.
