2024 IPPS final rule finalizes DSH payments cuts and coding changes
CMS is moving ahead with most of its proposed changes, including cuts to disproportionate share hospital (DSH) payments, in the fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule. The rule, released August 1, provides updates on inpatient hospital reimbursement, ICD-10-CM/PCS coding and diagnosis-related group (DRG) changes, quality and reporting programs, and more.
Payment changes
CMS finalized a 3.1% payment increase for hospitals that meet quality and reporting requirements for FY 2024, up from the 2.8% CMS floated in the proposed rule. This represents an increase in inpatient hospital payments of $2.2 billion compared to FY 2023. However, DSH payments will decrease by $957 million and CMS is projecting payments for new medical technologies will decrease by $364 million.
The cut to DSH payments is based, in part, on an Office of the Actuary estimate that 8.5% of individuals will be uninsured in calendar year (CY) 2024, compared to 7.7% in CY 2023. However, this estimate is problematic, according to some industry groups. In an August 1 statement, the American Hospital Association called the cuts “inexplicable” in light of recent changes to Medicaid enrollment.
The national uninsured rate reached a record low in 2023, according to HHS. The agency attributed the milestone to the extension of enhanced Affordable Care Act subsidies under the Inflation Reduction Act, Medicaid continuous enrollment under the COVID-19 PHE, recent Medicaid expansions in several states, as well as enrollment outreach.
However, the COVID-19 PHE ended in May and Medicaid continuous enrollment was terminated March 31. States have taken various approaches to unwinding the continuous enrollment provision. Some states have seen high numbers of Medicaid-eligible individuals removed from the lists for administrative reasons, according to a June 12 letter to U.S. governors from HHS Secretary Xavier Becerra. Nearly 4 million individuals have been disenrolled from Medicaid as of August 8, according to KFF.
SDoH and health equity
CMS finalized its proposal to move three codes for homelessness from non-complication/comorbidity (nonCC) status to complication/comorbidity (CC) status. Starting October 1, ICD-10-CM codes Z59.00 (homelessness, unspecified), Z59.01 (sheltered homelessness), and Z59.02 (unsheltered homelessness) will be eligible for additional reimbursement. This change will recognize the increased use of hospital resources and greater costs these codes are associated with, according to CMS.
“I am delighted that CMS has designated homelessness (Z59.0x) as a CC,” says NAHRI Advisory Board member Ronald Hirsch, MD, FACP, CHCQM, CHRI, vice president of the regulations and education group at R1 RCM. “It is hoped that this will encourage providers to better document and code not only that social determinant of health but all SDoH factors. It is only when providers start reporting these codes that CMS will see the significant influence that food insecurity, poverty, lack of social support, and many others have on length of stay, need for post-acute care, and readmission rate.”
CMS also finalized its proposal to add 15 health equity categorizations under the Hospital Value-Based Purchasing Program.
NTAP changes
CMS finalized its proposal to change the FDA approval deadline for new technology add-on payment (NTAP) applications from July 1 to May 1. The new deadline goes into effect in 2025. The agency believes this will allow it to better process the growing volume of NTAP applications.
"Reading the final rule on this section was frustrating since it seemed like CMS had already made up its mind to finalize what it had proposed despite all of the stakeholder input it received. One impact of this change is that it narrows the window further a product to be eligible for a third year of NTAP," says Jugna Shah, MPH, CHRI, president of Nimitt Consulting Inc.
Due to the change, only those FDA products approved between April 1 and May 1 will have a newness period close to three years. According to the statute, NTAP is generally two to three years, and, in addition, CMS has never paid out its full allotment of NTAP in any year since the program started, Shah points out. With that in mind, it's not clear why the agency moved ahead with a policy that effectively closes the door on a third year of NTAP for many products, she adds.
"The worst thing about this policy is that it’s not likely to achieve the results CMS hopes it will, like reducing agency workload, but it will increase the likelihood that some products could get approved just days or weeks after the May 1 cut off," Shah says.
These products could be in a payment limbo, meaning hospitals that elect to provide the product will have to do so knowing there will be no separate NTAP payment for up to 17 months, Shah explains. This would result in hospitals being forced to rely on outlier payments, which, by definition, means the hospital has already lost money on the case
CMS approved 10 technologies for NTAP under the traditional pathway for and approved or conditionally approved 12 technologies for NTAP under the alternative pathway for FY 2024. See pages 2,042-2,043 of the final rule for tables listing the technologies and estimated payments.
MS-DGR changes delayed
CMS is delaying implementation of its proposal to expand its existing criteria to create a new CC or major CC (MCC) in a base MS-DRG, including expanding the criteria to nonCC subgroups for three-way severity level splits. The policy was finalized in the FY 2021 IPPS final rule, but implementation was delayed due to the COVID-19 PHE.
CMS did not act on numerous comments it received on specific MS-DRG technical and rate-setting issues. Although these issues may seem highly technical and in the weeds for many, they're at the crux of improving MS-DRG payment rates, Shah says.
Other policies
The final rule details changes to graduate medical education payments for rural emergency hospitals aimed at increasing graduate medical training in rural areas.
CMS also made numerous changes to the inpatient hospital quality reporting program. Three new measures will go into effect October 1 while three existing measures will be retired. Other measures were modified such as the COVID-19 vaccination coverage among healthcare personnel measure, which was updated to reflect the CDC’s current definition of up-to-date vaccination.
Provisions of the final rule generally go into effect October 1. Revenue integrity professionals should read the rule thoroughly, paying particular attention to sections that directly affect their organization, department, and job duties. Conduct analyses of potential positive or negative financial impacts. Reach out to colleagues in other departments, such as coding or CDI, to discuss changes and coordinate education efforts. Ensure all systems will be updated and functioning correctly. Review internal audit plans and update as necessary.
Editor’s note: To learn more about the 2024 IPPS final rule, sign up for the HCPro webinar “Unpack the 2024 IPPS Final Rule,” presented by Judith L. Kares, Esq., on September 27, 1-2 p.m. Eastern.