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FFY 2025 Medicare Inpatient Prospective Payment System proposed rule

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Key IPPS updates you need to know about 

On April 10, Centers for Medicare & Medicaid Services (CMS) released the federal fiscal year (FFY)  2025 Medicare Inpatient Prospective Payment System proposed rule. This rule proposes significant changes and updates to Medicare fee-for-service (FFS) payments and policies. 

Understanding these changes is crucial for healthcare professionals, state hospital associations and multi-state health systems. This blog aims to break down the key points and implications of this proposed rule to help you stay informed and prepared. 

Overview of the proposed rule 

The proposed rule includes regular updates to wage indexes and the market basket. Below are some policies being proposed. 

1. Data utilization for standard calculations 

CMS plans to use FFY 2023 Medicare Provider Analysis and Review (MedPAR) claims data and FFY 2022 Hospital Cost Reporting Information System (HCRIS) data for standard calculations. Using MedPAR and HCRIS data ensures that the most recent and accurate information is being used for payment determinations. 

2. Updating county delineations 

County and Core-Based Statistical Area (CBSA) delineations would be updated based on Office of Management and Budget (OMB) Bulletin No. 23-01. The proposed rule also includes numerous proposals on how hospitals in CBSA counties would apply for reclassifications and special rural statuses. This would affect wage indexes. 

3. Medicare Disproportionate Share Hospital payment policies 

Proposed Disproportionate Share Hospital (DSH) payment policies include determining hospital eligibility for DSH payments in FFY 2025 based on audited S-10 data from FFYs 2019, 2020 and 2021, and a $6.498 billion national uncompensated care pool.  

4. Distribution of additional Graduate Medical Education residency slots 

Additional Graduate Medical Education (GME) residency slots would be distributed in accordance with the Consolidated Appropriations Act of 2023. CMS has requested information regarding residency programs to ensure effective implementation. 

5. Implementation of the Transforming Episode Accountability Model  

Transforming Episode Accountability Model (TEAM), CMS’ proposed five-year mandatory model, aims to test whether financial accountability for five procedures can reduce Medicare expenditures while maintaining high-quality care for beneficiaries. 

6. Separate IPPS payment for essential medicines 

Small, independent hospitals that voluntarily establish and maintain a six-month buffer stock of one or more essential medicines are proposed to receive a separate IPPS payment. 

7. Updates to the Value-Based Purchasing Program 

Enhancements to the Value-Based Purchasing (VBP) Program are proposed to further incentivize hospitals to improve the quality of care they provide. 

8. Updates to the Hospital Inpatient Quality Reporting and Electronic Health Record incentive programs  

CMS suggested updates to the  Hospital Inpatient Quality Reporting (IQR) and Electronic Health Record (EHR) incentive programs, which have associated payment penalties for non-compliance. 

Proposed changes recap: Deadline for submitting comments 

By understanding and adapting to these proposed changes, healthcare professionals and organizations can better navigate the evolving landscape of Medicare payments and policies.  

Comments on the proposed rule were due to CMS by June 10. 

Need help analyzing the impact? 

DataGen offers Medicare fee-for-service policy analytics to help you understand the impact of these complex changes on your healthcare system.  Our inpatient proposed rule analyses allow your system to compare differences between CMS’ FFY 2024 final and FFY 2025 IPPS proposed rules for each provider, state and congressional district and nationally. 

Why choose DataGen? 

  • Expert analysis: DataGen analyzes major proposed and final rules across various healthcare settings, focusing on those impacting reimbursement. These settings include inpatient, outpatient, home health, skilled nursing facilities, long-term acute care hospitals, inpatient rehabilitation, inpatient psychiatric, hospice benefit and ambulatory surgical centers, with a focus on those that impact reimbursement. 

  • Informed decision-making: Our insights help providers educate key stakeholders and plan changes to payment and workflow. 

  • Trusted by many: Join the 47 state hospital associations and 10 multi-state health systems that use DataGen’s service. 

Streamline your impact analysis and make informed decisions with DataGen. Contact us today to set up a brief meeting. Let’s discuss how we can help keep you informed and prepared to ensure your system thrives amid regulatory changes. 

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