The proposed rule for inpatient hospitals and long-term care hospitals also includes a new mandatory model to improve health outcomes post-surgery and advance climate resiliency.
The Centers for Medicare & Medicaid Services (CMS) on Wednesday issued a proposed rule that updates Medicare payments and policies for inpatient hospitals and long-term care hospitals in fiscal year 2025.
CMS said the proposed Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) takes several approaches to improve the health of Medicare beneficiaries by addressing non-medical drivers of health, emergency preparedness, and maternal health. It builds on the White House’s work to support historically underserved and under-resourced communities and promote value-based care, CMS said in the announcement.
“Hospitals should be a place you go into and get the care you need, regardless of whether you’re struggling to afford your rent, the color of your skin, or what else is going on in the world around you,” said U.S. Department of Health and Human Services Secretary Xavier Becerra in the statement. “The Biden-Harris Administration is doing everything in its power to ensure hospitals have the prescription drugs and supplies they need so providers can focus on what they do best–helping our loved ones be healthy.”
Here is an overview of some of the proposals announced in the 1,902-page rule on Wednesday:
Rate increases: CMS projects operating payment rates of 2.6 percent in FY 2025 for acute care hospitals that receive payments under the IPPS, successfully participate in the Hospital Inpatient Quality Reporting program, and are “meaningful” electronic health record users. As a result of the proposed pay bump, CMS expects hospital payments to increase by $3.2 million. Long-term care hospitals can expect to see a 1.6 percent increase, or $41 million, in FY 2025.
Equity: In the 2024 IPPS final rule, CMS increases payments to hospitals when they care for individuals experiencing homelessness. For 2025, the agency wants to better account for the resources involved in furnishing care to individuals experiencing housing insecurity. Other proposals include adding social determinants of health (SDoH) data elements into LTCH quality reporting, requiring LTCHs to report elements on housing, food and utility stability, and access to transportation, all factors that influence the resources required for their care.
The agency also proposes new technology add-on payments to improve access to new gene therapy for sickle cell disease, which disproportionately impacts certain underserved populations. It also wants to add a separate payment to small independent hospitals, including many rural hospitals, which establish and maintain access to a buffer stock of essential medicines to foster a more reliable and resilient supply of these medicines to help safeguard and improve the care hospitals can provide.
Emergency preparedness: In the wake of the COVID-19 pandemic, CMS proposes to create a permanent streamlined data reporting structure for COVID-19, influenza, and respiratory syncytial virus (RSV), with additional reporting that organizations could activate in the event of an emergency. The agency also proposes a new attestation-based measure to assess whether hospitals demonstrate a structure, culture, and leadership commitment that prioritizes patient safety.
Innovative model: CMS proposes a mandatory model that will test whether episode-based payments for five common, costly procedures would reduce Medicare costs while preserving or enhancing the quality of care. The proposed Transforming Episode Accountability (TEAM) Model would offer incentives for the coordination between care providers during a surgery, as well as the services provided during the 30 days that follow, and require referral to primary care services to support continuity of care and drive positive long-term health outcomes. This model would complement other CMS value-based care initiatives by promoting collaboration with accountable care organizations.
“Before and after surgery, people on Medicare often experience fragmented care, especially following hospital discharge. This can lead to complications, prolonged recovery, unnecessary care, and even readmissions,” said Liz Fowler, CMS deputy administrator and director of the CMS Innovation Center, in the announcement. “By bundling all the costs of care for an episode, this proposed rule can incentivize care coordination, improve patient care transitions, and decrease the risk of an avoidable readmission.”
In addition, CMS said the model will support efforts to improve quality of care by bolstering the health system's climate resilience and sustainability. Individuals would be able to collect and voluntarily share greenhouse gas emissions data with CMS, and CMS would provide technical assistance to them to enhance organizational sustainability. Through the TEAM model, CMS would provide information to assist individuals in addressing threats to the health of individuals and the health care system presented by climate change.
Maternal health: To drive improvements in access to quality care during pregnancy, childbirth, and postpartum, CMS seeks feedback from the public on potential solutions that can be implemented through the hospital Conditions of Participation (CoPs). Solutions aim to address well-documented concerns regarding maternal morbidity, mortality, disparities, and maternity care access in the United States without exacerbating access to care issues. Poor maternal health access disproportionately affects non‑Hispanic Black Individuals, American Indian and Alaska Native individuals, low-income individuals, and individuals with disabilities. In 2021, the maternal mortality rate for non-Hispanic Black individuals was 69.9 deaths per 100,000 live births, 2.6 times the rate for non-Hispanic white individuals. Rates for Black women were significantly higher than rates for white and Hispanic individuals.
Specifically, CMS wants feedback on what the overarching requirements and structure should be for a possible future obstetrical services CoP as it relates to organization, standards of practice, staffing for obstetrical services, delivery of services for obstetrical units, staff training, and the use of maternal morbidity and mortality data. The agency also wants comments on how potential obstetrical services requirements could impact access to care and any potential unintended consequences of an obstetrical services CoP. The proposed rule also includes a request for information on the use of the Medicare IPPS payment rates for maternity care by other payers to inform CMS’ understanding of differences that may exist between the hospital resources required to provide inpatient pregnancy and childbirth services to Medicare patients as compared to non-Medicare patients.
The proposed rule is scheduled to be published in the Federal Register on May 2. For additional information, click here to read the CMS fact sheet.