CMS Issues FY 2024 Inpatient Prospective Payment System Final Rule (CMS-1785-F)

On August 1, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2024. Once these polices become final, they will cover inpatient hospital discharges on or after October 1, 2023. Highlights are described below:

  • CMS finalized to use the FY 2022 MedPAR file and the 2021 Medicare cost report data for rate setting, to return to their historical practice of using the most recent data available, without modification. In addition, CMS maintains the belief there will not be a significant difference in the number of COVID-19 hospitalizations in FY 2024 compared to FY 2022. 
  • A finalized increase in payment rates for acute care hospitals under IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) and demonstrate meaningful use of Electronic Health Record (EHR) program of approximately 3.1 percent.
  • Finalized code changes include 395 new ICD-10-CM codes and 78 new ICD-10-PCS codes. In addition, CMS finalized their proposal to delay application of the NonCC subgroup criteria to the 45 existing MS-DRGs with a three-way severity level split until 2025 or later.
  • W.L. Gore and Associates, Inc., submitted an application for new technology add-on payments (NTAP) for the GORE® TAG® Thoracic Branch Endoprosthesis (TBE) device for FY 2023. CMS approved this NTAP in the FY 2023 final rule. The maximum new payment for a case involving the GORE® TAG® TBE device would be $27,807 for FY 2023 (65% of the average cost of the technology). This device, among others, is finalized to continue under the NTAP for FY 2024.
  • CMS finalized the unadjusted national average hourly wage as $50.39 for FY 2024. This includes adjustment of the labor-related share for discharges occurring on or after October 1, 2023, of 67.6 percent, which was finalized in FY 2022. CMS is finalizing their proposal not to make any further changes to the labor-related share, therefore continuing to use 67.6 percent for the national standardized amounts for all IPPS hospitals (including those in Puerto Rico) that have a wage index value greater than 1.0000.
  • There are no changes to the Hospital Readmissions Reduction Program for FY 2024. CMS is referring readers to the FY 2023 final rule for the most recent changes to the program.
  • Finalized changes to the performance standards for the Hospital Value-Based Purchasing (VBP) program include updates and adoption of multiple measures starting in future FY program years beyond FY 2024. In addition, CMS finalized the proposal to modify the Total Performance Score (TPS) maximum to be at 110 to allow top-performing hospitals the opportunity to receive the additional health equity bonus points under the proposed health equity scoring change.
  • For hospitals excluded from IPPS payment, CMS finalized a 3.3 rate-of-increase percentage, an increase from the proposed percentage of 3.0 due to more recent data available for review to calculate the FY 2024 target amounts.

The complete IPPS proposed rule summary can be found on the GORE Coding Resource Center website under “Education – CMS Rules Updates”: https://gore.rccsclients.com/education/rules-updates/.