CMS Issues FY 2025 Inpatient Prospective Payment System Proposed Rule (CMS-1808-P)

On April 10, 2024, the Centers for Medicare & Medicaid Services (CMS) issued their proposed rule that updates Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2025. Once these polices become final, they will cover inpatient hospital discharges on or after October 1, 2024. Highlights are described below:

  • CMS is proposing to use the FY 2023 MedPAR file and the 2022 Medicare cost report data for ratesetting, to return to their historical practice of using the most recent data available. 
  • A proposed increase in payment rates of approximately 2.6 percent 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.
  • Proposed codes changes include 252 new ICD-10-CM codes and 41 new ICD-10-PCS codes. In addition, there are 12 MS-DRGs proposed to be added and 9 MS-DRGs proposed to be deleted.
  • W.L. Gore and Associates, Inc., submitted an application for a new technology add-on payment (NTAP)  for the GORE® EXCLUDER® Thoracoabdominal Branch Endoprosthesis (TAMBE Device) for FY 2025. According to the applicant, the TAMBE Device received premarket approval (PMA) from the FDA on January 12, 2024. If approved, the maximum new payment for a case involving the TAMBE Device would be $47,238.75 for FY 2025 (65% of the average cost of the technology).
  • CMS approved an NTAP for the GORE® TAG® Thoracic Branch Endoprosthesis (TBE) in the FY 2023 IPPS final rule. This device, among others, is proposed to continue under the NTAP for FY 2025.
  • CMS is proposing the unadjusted national average hourly wage is $54.80. This includes adjustment of the labor-related share for discharges occurring on or after October 1, 2024, of 67.6 percent. CMS is proposing 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 proposed changes to the Hospital Readmissions Reduction Program for FY 2025. CMS is referring readers to the FY 2023 final rule for the most recent changes to the program.
  • Proposed changes to the performance standards for the Hospital Value-Based Purchasing (VBP) program include modification and adoption of multiple measures starting in future FY program years beyond FY 2025. In addition, CMS is not proposing any changes to previously adopted quality measures for the Hospital VBP in the FY 2023 IPPS final rule for FY 2025.
  • CMS is not proposing any additions or deletions of any measures, including retention policies from the Hospital-Acquired Condition (HAC) Reduction Program.
  • CMS is proposing the creation and testing of the Transforming Episode Accountability Model (TEAM), which is a new mandatory alternative payment model. Through this process, TEAM would test whether financial accountability for these entire episodes of care would reduce Medicare costs, while maintaining or boosting the quality of care for Medicare beneficiaries.
  • For hospitals excluded from IPPS payment, CMS has proposed the rate-of-percentage of 3.0, which will be applied to the FY 2023 target amounts to calculate the FY 2024 target amounts. If more recent data becomes available for the FY 2024 IPPS final rule, CMS would use it to calculate the final IPPS operating market basket update for FY 2025.  

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/.