CMS on Aug. 1 released its Inpatient Prospective Payment System final rule, which will increase inpatient hospital payments by 2.9% in fiscal year 2025.
The 2.9% net pay bump is a marginal increase from the 2.6% increase CMS proposed in April, but the American Hospital Association argues the "inadequate" payment update does little to help the inpatient hospital sector when 40% of hospitals are still losing money.
"CMS' payment updates for hospitals will exacerbate the already unsustainable negative or breakeven margins many hospitals are already operating under as they care for their patients," Molly Smith, AHA group vice president for public policy, said in an Aug. 1 statement. "The AHA is deeply concerned about the impact these inadequate payments will have on patient access to care, especially in rural and underserved communities."
Six things to know:
1. The 2.9% payment update represents a hospital market basket increase of 3.4% and a productivity cut of 0.5%. CMS expects the rate adjustment to increase total hospital payments by $3.2 billion in 2025.
2. CMS also finalized many of its provisions in the Transforming Episode Accountability Model, including mandatory participation for IPPS hospitals in certain areas and a program term of five years beginning Jan. 1, 2026. The TEAM model will bundle payment to acute care hospitals for five types of surgical episodes:
- Lower extremity joint replacement
- Surgical hip/femur fracture treatment
- Spinal fusion
- Coronary artery bypass graft
- Major bowel procedure
3. The AHA has pushed back against mandatory participation in the TEAM model, arguing that it places too much risk on providers with too little opportunity for reward through shared savings.
"Not only is the model extremely similar to other bundled payment approaches that have failed to meet the statutory criteria for expansion as they have not reduced program costs or generated net savings, it puts at particular risk many hospitals that are not of an adequate size or in a position to support the investments necessary to succeed," Ms. Smith said.
4. CMS has also cemented various proposed changes to its quality reporting and value programs, including:
- Adding seven measures to the inpatient quality reporting program focused on hospital patient safety-related practices and outcomes while removing five other measures.
- Updating the Hospital Consumer Assessment of Healthcare Providers and Systems survey, resulting in changes to the sub-measures used in the IQR and the hospital value-based purchasing program.
- Increasing the number of mandatory electronic clinical quality measures that hospitals must report for both the IQR and the Promoting Interoperability programs.
5. The agency also finalized its proposal to implement a separate payment to small, independent hospitals for establishing and maintaining access to a buffer stock of essential medicines.
6. Beginning Nov. 1, CMS will require hospitals and critical access hospitals to report to the CDC certain data on acute respiratory illnesses, such as confirmed infections of COVID-19, influenza and respiratory syntactical virus among hospitalized patients, hospital capacity, and limited patient demographic information, including age.
Most provisions of the final rule take effect Oct. 1.
Click here to read the full 2,987-page final rule in the Federal Register.