CMS Releases Hospital Inpatient Payment Proposed Rule for Fiscal Year 2024

On April 10th, the Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2024 Hospital Inpatient Prospective Payment System (IPPS) proposed rule. While physicians are subjected to payment reductions via the Medicare Physician Fee Schedule, hospitals continue to receive positive payment updates because of inflationary adjustments being built into their reimbursement formula. This year's IPPS proposed rule would implement a 2.8% increase to hospital inpatient payments in 2024.

MS-DRG Classifications

• General MS-DRG Classification Policy: CMS again delayed the application of the "NonCC subgroup" criteria, which leaves numerous MS-DRGs intact that would have otherwise been subject to the criteria. CMS has provided files to show the MS-DRG reorganization that would have been proposed had it allowed the finalized NonCC policies to take effect to prepare stakeholders for implementation in FY 2025.
• Surgical Ablation: Over the last two years, CMS has received requests related to concomitant surgical ablation. CMS previously declined to make any reassignments for these procedures but finalized reordering the surgical hierarchy of cardiac procedures (by moving CABG up the surgical hierarchy) to ensure that cases with multiple procedures performed are tracking to the MS-DRGs that are intended to reflect the more resource intensive of the multiple procedures. This year, CMS received a similar request to last year's asking for reconsideration of MS-DRG assignments. CMS believes there is enough data for sufficient analysis, and concluded that performing concomitant surgical ablations with aortic and mitral valve repairs and replacements indeed required greater hospital resources and thus, CMS is proposing "to create a new MS-DRG for cases reporting an aortic valve repair or replacement procedure, a mitral valve repair or replacement procedure, and another concomitant procedure" (i.e., MS-DRG 212 (Concomitant Aortic and Mitral Valve Procedures)). Also note that CMS made corresponding proposals related to these MS-DRGs as part of its revision of the Surgical Hierarchies.
• Cardiac Defibrillator Implants: CMS is altering a series of MS-DRGs to remove mapping for cardiac defibrillator implants based on diagnoses (prompted by the review of the shock diagnoses) and instead is creating a new structure of:
  • MS-DRG 275 (Cardiac Defibrillator Implant with Cardiac Catheterization and MCC)
  • MS-DRG 276 (Cardiac Defibrillator Implant with MCC)
  • MS-DRG 277 (Cardiac Defibrillator Implant without MCC)

Hospital Value-Based Purchasing (VBP) Program
CMS will resume regular scoring under the VBP Program beginning with FY 2024, as previously finalized in the FY 2023 IPPS final rule. The Hospital VBP Program adjusts Medicare payments to hospitals based on their Total Performance Score (TPS), which incorporates measures of both quality and cost.  Over the last few years, CMS was unable to calculate a TPS for hospitals due to the impact of COVID-19 on performance data. CMS' ability to now score hospitals under this program has important implications for physicians who practice in these hospitals. Under the Merit-Based Incentive Payment System (MIPS), a separate program through which CMS adjusts Medicare payments to physicians based on quality and cost performance, CMS has adopted a policy known as facility-based scoring, which allows "facility-based" physicians to automatically receive their hospital's Hospital VBP Program score in place of their own MIPS quality and cost category scores if the hospital's score is more favorable. Facility-based scoring under MIPS was on hold during the pandemic due to CMS' inability to score hospitals. However, with the resumption of hospital scoring, CMS will also resume "facility-based" scoring under MIPS for performance year 2023.

Additional information about MIPS physicians' "facility-based" scoring can be found here.