CMS Releases Hospital Inpatient Final Rule for Fiscal Year 2024

On August 1st, the Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2024 Hospital Inpatient Prospective Payment System (IPPS) final 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 final rule provides a 3.1% increase to hospital inpatient payments in 2024.  The policies in the IPPS final rule are generally effective at the beginning of the 2024 federal fiscal year, October 1, 2023.

MS-DRG Classifications

• General MS-DRG Classification Policy: CMS finalized its delayed application of the new "NonCC subgroup" criteria (i.e., no comorbidity or complication designation), which leaves numerous MS-DRGs intact that would otherwise have been subject to the criteria. CMS continues to contemplate implementation of these new designations for 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 intensiveness of the multiple procedures. This year, CMS received a similar request 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. To account for this, CMS is finalizing its policy "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)). 
  
  In the discussion of its policy to finalize the new MS-DRG as proposed, CMS stated, "[W]hile we agree that there are more cases reporting a single AVR or MVR procedure and another concomitant procedure than cases reporting concomitant aortic and mitral valve procedures, we do not agree with assigning cases reporting a single AVR or MVR procedure and another concomitant procedure for the treatment of atrial fibrillation to new proposed MS-DRG 212." In addition to disagreeing that these cases should be assigned to MS-DRG 212, CMS also failed to create a new MS-DRG specifically for these cases: "Further, the data do not support creating a new MS-DRG for cases reporting a single AVR or MVR procedure for the treatment of atrial fibrillation and instead suggest that cases reporting a single AVR or MVR procedure for the treatment of atrial fibrillation are suitably grouped to MS-DRGs 216, 217, 218, 219, 220, and 221 where they are currently assigned based on similarities in resource utilization compared to all cases in their respective MS-DRG."
• Cardiac Defibrillator Implants: CMS finalized as proposed a series of MS-DRGs to remove mapping for cardiac defibrillator implants based on diagnoses (prompted by the review of the shock diagnosis) and instead is creating a new structure of MS-DRGs for cardiac defibrillator implant with or without major complication (MCC):
  • 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
As a reminder, 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 is expected to resume facility-based scoring under MIPS for performance year 2023.  More information on facility-based scoring is available for download through CMS' 2023 Facility-Based Quick Start Guide.