The Centers for Medicare & Medicaid Services released a proposed rule this week that would increase hospital payment rates by 2.6%. Hospital groups immediately came out against this plan, arguing that this payment update would threaten hospitals’ financial stability.
Under the proposed rule, hospitals that participate in CMS’s Hospital Inpatient Quality Reporting (IQR) program and are significant EHR users will receive a 2.6% increase in their inpatient payments for fiscal year 2025, which begins in October. .
This rate adjustment is based on a projected hospital market basket update of 3% for fiscal year 2025, which CMS says will be reduced by a productivity adjustment of 0.4 percentage points. The agency predicted the change will increase total hospital payments by $3.2 billion.
For long-term hospitals, CMS is proposing a 2.8% payment increase. This represents a payment increase of $41 million in the current fiscal year, CMS said.
Hospital groups don’t believe these suggestions are enough.
CMS’s proposed update to inpatient payments is “woefully inadequate,” especially given ongoing inflation and rising costs for hospitals, Ashley Thompson, senior vice president of public policy analysis and development at the American Hospital Association, said in a statement.
“Many hospitals across the country, particularly in rural and underserved communities, continue to operate at unsustainably negative or break-even margins. We urge CMS to reconsider their policies in the final rule so that all hospitals can provide high-quality primary care to their communities around the clock,” said Thompson.
Soumi Saha, senior vice president of government affairs at Premier, expressed similar sentiments to Thompson. In a statement, she said her organization is “deeply disappointed” that CMS is “once again proposing an update to hospital inpatient services that is woefully lacking given the current financial challenges hospitals continue to face.”
The proposed 2.6% payment increase will not be able to withstand the “harsh realities” of higher costs, widespread workforce shortages and an aging patient population, Saha added. If the proposed rule goes into effect, they say, the sustainability of the US healthcare system would be at risk.
“Payment policies should enable hospitals to provide exceptional, patient-centered care, but the proposed update falls short of that goal. CMS can course-correct by implementing more robust methodologies and incorporating new data sources to accurately determine hospitals’ true costs, including total labor costs,” Saha explained.
CMS is accepting comments on the proposed rule until June 10.
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