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Navigating Changes in the CMS Proposed Rule for Fiscal Year 2025: What Infection Prevention Professionals Need to Know

On April 10, 2024, the Centers for Medicare & Medicaid Services (CMS) announced their proposed rule for the fiscal year 2025 Medicare hospital inpatient prospective payment system (IPPS) and long-term care hospital prospective payment system (LTCH PPS). This proposal outlines updates to the Medicare fee-for-service payment rates and policies applicable to inpatient hospitals and LTCHs. Complying with the legal requirement, CMS publishes such propositions yearly to ensure the currency of payment policies.

One of the major provisions discussed in the proposal is the way CMS pays acute care hospitals for inpatient stays under these two systems. They calculate payments based on the patient’s diagnosis, the provided treatment, and severity of the illness. Following certain adjustments, each hospital receives a single payment for each case, based on the payment classification assigned at discharge. The classification systems used are the Medicare Severity Diagnosis-Related Groups (MS-DRGs) for IPPS, and Medicare Severity Long-Term Care Diagnosis-Related Groups (MS-LTC-DRGs) for LTCH PPS.

The law also requires payment rates for IPPS hospitals to be reassessed annually to account for market changes. These changed rates take into consideration the prices of goods and services used by hospitals when treating Medicare patients. The index used for this process is known as the hospital ‘market basket’. Altered rates also reflect factors like the patient’s condition and the cost of hospital labor in the hospital’s geographic area.

Furthermore, the proposed rule focuses on expected changes in operating and capital IPPS payment rates for the fiscal year 2025. CMS predicts this will result in a $3.2 billion increment in hospital payments. More specifically, an estimated $2.9 billion increase in operating and capital IPPS rates and about $560 million in Medicare uncompensated care payments to disproportionate share hospitals.

In addition to payment rate changes for IPPS, changes are expected under the LTCH PPS as well. CMS anticipates a 2.8% increase in the LTCH standard payment rate primarily due to a projected 1.3% decrease in high-cost outlier payments. It is also proposed that a separate payment be introduced under the IPPS for small, independent hospitals to establish and maintain a supply of essential medicines. This initiative is designed to mitigate drug shortages which can come at increased risk, decreased quality of care and increased Medicare program costs.

Finally, the rule proposes changes to the procedures used to establish New Technology Add-on Payment (NTAP) for fiscal year 2025. Most notably, the NTAP percentage for a gene therapy that is indicated and used specifically for the treatment of sickle cell disease (SCD) is set to increase.


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