CMS Issues FY 2025 IPPS Proposed Rule

A proposed rule from the Centers for Medicare & Medicaid Services (CMS) includes numerous policy and payment changes to Medicare’s Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2025, including a 2.6 percent increase in inpatient payment rates.

The April 10 proposed rule also includes provisions to:

• Increase Medicare disproportionate share hospital (DSH) payments for the first time in recent years, to an estimated $9.98 billion, including a $560 million increase to uncompensated care–based DSH payments.
• Continue a policy finalized effective FY 2024 to use three years of worksheet S-10 data from Medicare cost reports to allocate Medicare DSH uncompensated care payments.
• Continue CMS’ low-wage index policy for at least three more years and maintain a 5 percent cap on individual hospitals’ wage-index decreases.
• Finalize a process for the distribution of 200 new graduate medical education (GME) resident slots added by Congress in the Consolidated Appropriations Act (CAA), 2023, similar to the process used to distribute 1,000 new GME slots added by the CAA of 2021.
• Solicit feedback on potential changes to the definition of a “new” residency program that can qualify certain hospitals for additional residency slots.
• Implement a new, five-year, mandatory episode-based payment model starting in January 2026, called the Transforming Episode Accountability Model (TEAM), which would result in varying levels of upside reward and, in some cases, downside risk for participating hospitals in selected geographic regions for five high-expenditure, high-volume surgical procedures.
• Adopt flexibility for hospitals providing safety net care and participating in the TEAM demonstration. Such hospitals would be defined by their dually eligible or Part D Low-Income Subsidy (LIS) patient populations, using the CMS Innovation Center’s Strategy Refresh definition.
• Solicit feedback on the use of Medicare inpatient obstetric payment rates as a benchmark for Medicaid payments.
• Solicit feedback on adding an obstetric services condition of participation (CoP) and revise the CoP requirements for reporting of respiratory illnesses.
• Add seven measures, remove five measures, and revise one electronic clinical quality measure (eCQM) in the inpatient quality reporting program.
• Make technical changes to the hospital value-based payment program.
• Update social determinates of health diagnosis codes.
• Solicit feedback on measures of unplanned hospital visits.
• Revise the Medicare promoting interoperability program.

CMS will accept comments on the proposed rule through June 10. America’s Essential Hospitals is closely reviewing the proposed rule and evaluating issues of importance to its members. We encourage all members to review the proposed rule, give us feedback, and submit separate comments to CMS.

Follow these links to jump to a subsection:

• Payment Update
• Medicare DSH Payments
• GME Payments
• Wage Index Changes
• Separate Payment to Small Independent Hospitals for Costs Associated with Stocking Essential Medicines
• Transforming Episode Accountability Model
• Maternity Care Request for Information
• Obstetrical Services Conditions of Participation (CoP) Request for Information
• CoP Requirements for Hospitals and CAHs to Report Acute Respiratory Illnesses
• Hospital IQR Program
• Hospital Value-Based Purchasing (VBP) Program
• Hospital Readmissions Reduction and Hospital-Acquired Condition Reduction Programs
• Advancing Patient Safety and Outcomes Across Hospital Quality Programs — Request for Comment
• Social Determinants of Health Diagnosis (SDOH) Codes
• Medicare Promoting Interoperability Program

Payment Provisions

Payment Update

CMS proposed to increase IPPS rates for acute-care hospitals by 2.6 percent in FY 2025. The increase comes from an initial market basket update of 3 percent, less a 0.4 percentage point productivity adjustment. CMS estimated the 2.6 percent payment rate update, in addition to policy changes in the rule, will increase aggregate IPPS payments by $3.2 billion.

Hospitals that do not report required quality data or are not meaningful electronic health record (EHR) users would receive a lower payment update.

CMS proposed to use the most recently available data — FY 2023 claims and FY 2022 cost reports — to set IPPS payment rates and Medicare severity diagnosis related group (MS-DRG) weights.

Medicare DSH Payments

CMS estimated the “empirically justified” amount of Medicare DSH payments in FY 2025 will total $3.5 billion, or 25 percent of the amount hospitals would have received under the pre–Affordable Care Act (ACA) DSH methodology. The remaining amount, referred to as uncompensated care (UC) payments, is estimated at $6.5 billion — $560 million more than in FY 2024, due to an increase in the national uninsured rate (Factor 2 of the Medicare DSH formula). Specifically, CMS has estimated a national uninsured rate of 8.8 percent for calendar year (CY) 2025, increased only modestly from the estimated rate of 8.5 percent for CY 2024 and 7.7 percent for CY 2023. Total DSH payments, comprising both the empirically justified amount and the UC-based distributions, are an estimated $9.98 billion — $700 million more than FY 2024.

Medicare DSH payments for UC are distributed based on the amount of UC hospitals incur relative to each other (referred to as Factor 3). CMS proposed to continue using exclusively UC data from worksheet S-10 of the Medicare cost report in FY 2025 for measuring individual hospitals’ UC levels. CMS also proposed to continue its policy of using the most recent three years of S-10 data, from FY 2019 to FY 2021 cost reports, to calculate each hospital’s UC share in FY 2025. CMS has audited these three years of S-10 data, so the agency believes these data are reliable to use for the FY 2025 Medicare DSH methodology. However, it is unclear how the coverage and payment changes during the COVID-19 pandemic affected hospital UC reported on worksheet S-10 during those years.

CMS posted each hospital’s Factor 3 and projected UC-based payment in the DSH supplemental data file 10 and table 18 on the agency’s website, with the exception of new hospitals and hospitals subject to a trim of their reported insured charity care costs (discussed below). Hospitals have until June 10 to review the information and notify CMS of issues at Section3133DSH@cms.hhs.gov. When a final rule is published, CMS will update these Factor 3 values with more recent data.

Since FY 2021, CMS has reviewed cost reports of hospitals with a greater than 50 percent ratio of UC costs to total operating costs in any cost report year used to calculate Factor 3 to address the agency’s concern that the reported UC costs could potentially be aberrant. If the hospital’s S-10 data is unaudited, CMS has scaled such hospitals’ UC costs, which are used to determine their Factor 3, based on the ratio of UC costs to total costs from another available cost report. If the hospital’s S-10 data has been audited, CMS will consider its UC ratio valid and not apply a UC trim.

For the fourth consecutive year, CMS also proposed to trim the UC costs of hospitals with outlier values for insured charity care costs on line 23 of the S-10. Specifically, CMS will trim the insured charity care value of hospitals not projected to be eligible for DSH at the time of the IPPS rule and with unaudited FY 2019, 2020, or 2021 S-10 data. The agency will trim the insured charity care value of these hospitals if the reported value on any of these cost reports is greater than $7 million and the ratio of insured charity care to total UC costs is greater than 60 percent.

CMS also proposed to continue applying a cost-to-charge ratio (CCR) trim to hospitals with abnormally high CCRs (CCRs greater than three standard deviations above the national geometric mean). However, CMS would not apply a separate CCR trim to all-inclusive rate providers unless the hospital is subject to a trim by virtue of high UC costs.

For Indian Health Service (IHS) and Puerto Rico hospitals, CMS for the third year will use S-10 UC data to calculate Factor 3, just as it does for other hospitals. Until FY 2022, CMS had used a low-income insured days proxy in place of S-10 data. Due to technological and other challenges IHS and Puerto Rico hospitals face in reporting S-10 data, CMS expressed concern that using UC data from the S-10 initially would result in a significant decline in these hospitals’ UC-based DSH payments. To mitigate the effect of this change, CMS proposed to continue providing a permanent supplemental payment for these hospitals that equals the difference between what the hospital would have received under the previous low-income insured days methodology and the amount the hospital receives under the new methodology employing the S-10.

Other policies CMS proposed for the Factor 3 calculation include:

• Using discharge data from FYs 2021, 2022, and 2023 to determine a hospital’s average number of discharges in calculating a per-discharge amount for interim UC-based payments. In prior years, CMS adopted deviations from its typical use of the most recent three years of data to account for COVID-19.
• Continuing a process for hospitals to request that their Medicare administrative contractor (MAC) withhold a lower per-discharge DSH amount.
• Continuing its methodology for calculating UC payments for new hospitals (hospitals with CMS certification numbers established after Oct. 1, 2021).
• Continuing its policy of annualizing Medicaid days and UC data for all hospitals that do not have a cost reporting period equal to exactly one year.
• Continuing its policy of combining UC costs of hospitals that merged.

GME Payments

CMS proposed multiple policies impacting Medicare GME reimbursement. First, the agency proposed a methodology to distribute 200 new full-time equivalent (FTE) resident slots added by Congress in the CAA of 2023. Applications will be due March 31, 2025, and slots will take effect July 1, 2026. Half the slots must be used to support psychiatry-related residencies. CMS is proposing a process that mirrors the process being used by the agency to distribute the 1,000 new slots added by Congress under the CAA of 2021. To receive the 2023 CAA slots, hospitals must fall in at least one of four categories: (1) qualify as rural (whether located in a rural area or designated as rural); (2) train at a level in excess of their existing resident cap; (3) be located in one of 35 identified states (or Puerto Rico) that have new medical schools or branches; or (4) serve designated geographic health professional shortage areas (HPSAs). Priority will be given to applicants based on their population HPSA score, ensuring that new slots are targeted to providers serving underserved populations. Qualifying hospitals will be eligible for up to 1.0 FTE; if the number of applicants exceeds 200, hospitals will receive a pro-rated amount of less than 1.0 FTE.

CMS also proposed a modification to the process for distributing the 2021 CAA’s final 400 slots in rounds 4 and 5 (beginning July 1, 2026) to direct additional slots to Category 4 hospitals (those in HPSAs). Congress required that 10 percent of the 1,000 new slots be distributed to hospitals in each category; to date, CMS has determined that fewer slots have been distributed to Category 4 hospitals. In Rounds 1 through 3, slots have been prioritized based on the HPSA score associated with the program for which the hospital is applying. In Rounds 4 and 5, Category 4 hospitals will be given priority, regardless of the HPSA score of hospitals qualifying through other categories.

Next, CMS announced the closure of two teaching hospitals and the process for other teaching hospitals to apply to receive the closed hospitals’ residency slots. Other teaching hospitals may apply for 14.93 indirect medical education (IME) and direct graduate medical education (DGME) FTE slots of McLaren St. Luke’s Hospital, in Maumee, Ohio; and 67.54 IME FTE slots and 74 DGME FTE slots of South City Hospital, in St. Louis, Mo. Applications will be due July 9, 2024. Under the provision for redistribution of closed teaching hospitals’ slots, CMS will give preference to hospitals in the same or contiguous core-based statistical area as the closed teaching hospital, and then to hospitals in the same state. Hospitals should apply for these FTE slots through the Medicare Electronic Application Request Information System website.

Finally, CMS requested information to determine whether changes are needed to the definition of a “new” residency program for purposes of establishing new FTE caps at new teaching hospitals and rural hospitals. CMS noted in the proposed rule that defining the “newness” of programs has become more important as more hospitals have reclassified from urban to rural, rendering existing teaching hospitals eligible to receive new FTE slots for new programs. Historically, CMS has required that to be new, the “overwhelming majority” of the residents and staff (including the program director) of the program must be new, without setting a bright line test. CMS proposed in the FY 2025 rule that to be new, at least 90 percent of the individual resident trainees (not FTEs) in a program would need to be new, meaning not have previous training in the same specialty as the new program. CMS recognized that “small” programs might have difficulty meeting the proposed criteria and solicited comments on defining a small program as one accredited for 16 or fewer resident positions. CMS also requested information on whether a similar 90 percent requirement should be adopted to assess the newness of faculty; and whether faculty or program directors should be deemed “new” past a defined period after they stop teaching or directing a particular specialty. CMS also requested information on the commingling of residents in separately accredited programs in the same specialty and the reasons hospitals would sponsor more than one program in the same specialty, to evaluate how these arrangements should be considered in assessing the newness of a program.

Wage Index Changes

Hospital wage index values are used to adjust hospital payment rates for geographic variations in labor costs. CMS defines low–wage index hospitals as hospitals with a wage index in the bottom quartile of all wage index values nationally (equating to a wage index value below 0.8879).

In the FY 2020 IPPS final rule, CMS instituted a four-year policy to mitigate perceived disparities between high– and low–wage index hospitals. Under this policy, CMS increased the wage index values of hospitals in the lowest quartile of wage index values, offsetting the increased payments to these hospitals with a budget neutrality adjustment. Although this policy was initially finalized for four years, CMS proposed to extend it for at least three more years (through FY 2027) to allow for evaluation of the success of the program in increasing employee compensation absent the impacts of COVID-19.

For FY 2024, as in prior years, CMS proposed to increase the wage index value for low–wage index hospitals by half the difference between the hospital’s wage index and the 25th percentile value. CMS proposed to continue applying a budget neutrality adjustment to offset the increase in IPPS payments to low–wage index hospitals.

CMS noted in the proposed rule that its low–wage index policy has been the subject of litigation, including in Bridgeport Hospital, et al., v. Becerra, No. 1:20–cv–01574 (D.D.C.), No. 22-5249 (D.C. Cir.). The district court in Bridgeport overturned the policy, but CMS has appealed the decision to the D.C. Circuit, leaving the policy in effect pending the outcome of litigation.

Separate Payment to Small Independent Hospitals for Costs Associated with Stocking Essential Medicines

As a first step toward increasing hospitals’ ability to maintain a buffer stock of essential medicines, CMS proposed to establish a separate payment under the IPPS to small (100 or fewer beds), independent (non-chain) hospitals to cover Medicare’s share of the estimated costs of maintaining a six-month buffer stock of 86 essential medicines. Essential medicines are those listed in the Advanced Regenerative Manufacturing Institute’s Essential Medicines Supply Chain and Manufacturing Resilience Assessment, including any subsequent updates. Only hospitals with established buffer stock before the onset of an essential medicine shortage would be eligible for the separate payments. If finalized, the proposed essential medicine payments would take effect for cost reporting periods beginning on or after Oct. 1, 2024.

Quality Provisions

Transforming Episode Accountability Model

CMS has proposed to implement a new mandatory alternative payment model for acute care hospitals — the Transforming Episode Accountability Model (TEAM) — on Jan. 1, 2026, to test episode-based payment for five high-expenditure, high-volume surgical procedures. Hospitals in yet-to-be-determined geographic regions would be required to participate. CMS has identified Core-Based Statistical Areas (CBSAs) that are eligible for selection in Table X.A.-02 of the proposed rule. TEAM participants would continue to bill and receive initial payment under Medicare fee-for-service but would earn incentive payments or might owe repayments if actual spending in a performance year (PY) deviates from the regional target price of an episode. CMS proposed three tracks for participation, with varying levels of risk and different quality performance adjustments:

• Track 1 would be available only in PY 1 for all participants. Participants would have no downside risk and would be eligible for a payment increase of up to 10 percent if their spending falls below the savings target. The shared savings payment also would be adjusted by up to 10 percent based on the hospital’s quality performance, as measured by its Composite Quality Score (CQS). CMS seeks comments on whether hospitals providing safety net care should be permitted to remain in Track 1 for all PYs.
• Track 2 would involve more limited levels of upside and downside risk. It would be available in PYs 2 through 5 for only certain types of participants that care for the underserved or lack the financial capacity to invest in value-based care, including hospitals providing safety net care and rural hospitals. Track 2 participants would receive up to a 10 percent upward or downward adjustment, based on spending against the target price, with a CQS adjustment percentage of up to 10 percent for positive reconciliation amounts and up to 15 percent for negative reconciliation amounts (resulting in a lower repayment amount).
• Track 3 would involve the greatest levels of upside and downside risk and would be available in PYs 1 through 5. Track 3 participants would receive up to a 20 percent upward or downward adjustment, based on spending against the target price, with a CQS adjustment percentage of up to 10 percent.

CMS proposed to define safety net providers for purposes of participation in TEAM using the CMS Innovation Center’s Strategy Refresh definition, which uses dual eligibility or eligibility for Part D Low-Income Subsidies (LIS) as a proxy for low-income status. Specifically, a hospital would be considered a safety net provider if its patient mix of beneficiaries with dual eligibility or Part D LIS exceeds the 75th percentile. America’s Essential Hospitals is concerned the proposed definition does not fully capture hospitals at the core of the nation’s safety net, such as essential hospitals. As we have in a variety of other contexts, our comment letter will advocate for a broader safety net definition that would capture the extent to which a hospital disproportionately serves low-income and uninsured patients and the amount of uncompensated care it provides.

Within TEAM, CMS also proposed a voluntary Decarbonization and Resilience Initiative, through which TEAM participants could obtain technical assistance to reduce carbon emissions and voluntarily report on emissions. Reporting would establish a baseline understanding of hospital emissions and energy use and potential strategies for reducing emissions and increasing energy efficiency. CMS expects this climate initiative will further TEAM goals in improving the quality of care and patient outcomes while reducing health care costs.

Maternity Care Request for Information

CMS seeks to gather information on differences between the resources required to provide inpatient obstetrical services to Medicare patients, on which the IPPS MS-DRGs relative weights for those services are based, as compared with non-Medicare patients. To the extent required resources differ, CMS also seeks information regarding the extent to which non-Medicare payers, such as state Medicaid programs, might be using the IPPS MS-DRG relative weights to determine payment for inpatient obstetrical services and the effect, if any, that the use of those relative weights by those payers might have on maternal health outcomes.

Obstetrical Services Conditions of Participation (CoP) Request for Information

CMS requested information to use as the agency plans to propose a targeted obstetrical services CoP to establish baseline requirements for obstetrical care within participating facilities in the CY 2025 Outpatient Prospective Payment System (OPPS)/ Ambulatory Surgical Center (ASC) proposed rule.

Specifically, CMS seeks public comment on potential solutions that could reduce the rates of maternal mortality and reduce disparities in maternal mortality and morbidity and that can be implemented through the hospital CoPs. CMS stated that it is necessary to develop a standard by which obstetrics care delivery is performed to address well-documented concerns regarding maternal morbidity, mortality, and maternity care access in the United States. The goal would be to ensure that any policy change to obstetrical services improves maternal health care outcomes and addresses preventable disparities in care but does not exacerbate access to care issues.

CoP Requirements for Hospitals and CAHs to Report Acute Respiratory Illnesses

CMS proposed to revise the hospital and Critical Access Hospital (CAH) infection prevention and control and antibiotic stewardship programs CoPs to extend a modified form of the current COVID-19 and influenza reporting requirements that will include data for respiratory syncytial virus (RSV) and reduce the frequency of reporting for hospitals and CAHs.

Specifically, CMS proposed to replace the COVID-19 and Seasonal Influenza reporting standards for hospitals and CAHs with a new standard. This new standard would require that, beginning Oct. 1, 2024, hospitals and CAHs electronically report information about COVID-19, influenza, and RSV in a standardized format and frequency specified by the Department of Health and Human Services.

Hospital IQR Program

CMS proposed to add seven measures, remove five measures, and revise one electronic clinical quality measure (eCQM) in the IQR program. The seven measures the agency proposed to add include two new eCQMs, one claims-based measure, two structural measures, and two health care–associated infection measures:

• Patient Safety Structural measure, beginning with the CY 2025 reporting period/FY 2027 payment determination
• Age Friendly Hospital measure, beginning with the CY 2025 reporting period/FY 2027 payment
• Catheter-Associated Urinary Tract Infection (CAUTI) Standardized Infection Ratio Stratified for Oncology Locations measure, beginning with the CY 2026 reporting period/FY 2028 payment determination
• Central Line–Associated Bloodstream Infection (CLABSI) Standardized Infection Ratio Stratified for Oncology Locations measure, beginning with the CY 2026 reporting period/FY 2028 payment determination
• Hospital Harm — Falls with Injury eCQM, beginning with the CY 2026 reporting period/FY 2028 payment determination
• Hospital Harm — Postoperative Respiratory Failure eCQM, beginning with the CY 2026 reporting period/FY 2028 payment determination
• Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) measure, beginning with the July 1, 2023–June 30, 2025 reporting period/FY 2027 payment determination

CMS proposed the removal of five measures in the IQR program, including four episode-based measures:

• Death Among Surgical Inpatients with Serious Treatable Complications (CMS PSI 04) measure, beginning with the July 1, 2023–June 30, 2025 reporting period/FY 2027 payment determination
• Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Acute Myocardial Infarction (AMI) measure, beginning with the July 1, 2021–June 30, 2024 reporting period/ FY 2026 payment determination
• Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Heart Failure (HF) measure, beginning with the July 1, 2021–June 30, 2024 reporting period/FY 2026 payment determination
• Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Pneumonia (PN) measure, beginning with the July 1, 2021 – June 30, 2024 reporting period/FY 2026 payment determination
• Hospital-level, Risk-Standardized Payment Associated with a 30-Day Episode-of-Care for Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) measure, beginning with the April 1, 2021 – March 31, 2024 reporting period/FY 2026 payment determination.

CMS proposed to modify two measures. For the Global Malnutrition Composite Score (GMCS) eCQM, the agency proposed expanding the applicable population from hospitalized adults 65 or older to hospitalized adults 18 or older. The modified GMCS eCQM would broaden the measure to assess hospitalized adults 18 years and older who received care appropriate to their level of malnutrition risk and malnutrition diagnosis, if properly identified.  CMS also proposed to modify the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey measure beginning with the CY 2025 reporting period/FY 2027 payment determination.

Hospital Value-Based Purchasing (VBP) Program

CMS is proposing to adopt the updated version of the HCAHPS measure for use in the Hospital VBP Program, beginning in FY 2030. The proposed updated HCAHPS survey would result in a survey with 32 questions that make up a total of 11 submeasures, with seven of those being multiquestion submeasures and the other four being single questions.

The proposed updated version of the HCAHPS measure includes three new submeasures: the multiitem “Care Coordination” submeasure, the multiitem “Restfulness of Hospital Environment” submeasure, and the “Information About Symptoms” single-item submeasure. The updated HCAHPS measure also would remove the existing “Care Transition” submeasure and modify the existing “Responsiveness of Hospital Staff” submeasure.

The proposed dimensions in the Person and Community Engagement Domain in the Hospital VBP Program beginning with the FY 2030 program year are:

• Communication with Nurses
• Communication with Doctors
• Responsiveness of Hospital Staff
• Communication about Medicines
• Cleanliness and Information About Symptoms
• Discharge Information
• Overall Rating of Hospital
• Care Coordination
• Restfulness of Hospital Environment

The proposed adoption of the updated version of the HCAHPS measure would not result in changes to the survey administration, the data submission and reporting requirements, or the data collection protocols.

CMS also proposed to modify the scoring of the HCAHPS survey for the FY 2027 through FY 2029 program years, while the proposed updates to the survey would be publicly reported under the Hospital IQR Program. Scoring would be modified to only score hospitals on the six Hospital VBP Program dimensions of the HCAHPS survey, which would remain unchanged from the current version.

The six dimensions would be:

• Communication with Nurses
• Communication with Doctors
• Communication about Medicines
• Discharge Information
• Cleanliness and Quietness
• Overall Rating

CMS proposed to exclude the “Responsiveness of Hospital Staff” and “Care Transition” dimensions from scoring in the Hospital VBP Program’s HCAHPS measure in the Person and Community Engagement domain for the FY 2027 through FY 2029 program years.

Additionally, CMS proposed to adopt a new scoring methodology, beginning with the FY 2030 program year. The final element of the scoring formula, which would remain unchanged from the current formula in the Hospital VBP Program, would be the sum of the HCAHPS Base Score and the HCAHPS Consistency Points Score for a total score that ranges from 0 to 100 points, as before. In the FY 2015 IPPS/Long Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) final rule (79 FR 50065) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49565), CMS adopted a similar scoring methodology when the Care Transition dimension was added to the Person and Community Engagement domain in the Hospital VBP Program.

Hospital Readmissions Reduction and Hospital-Acquired Condition Reduction Programs

CMS did not propose changes to the Hospital Readmissions Reduction Program or Hospital-Acquired Condition Reduction Program. The agency noted that all previously finalized policies for these programs continue to apply, and it referred readers to the FY 2024 IPPS for information on these policies.

Advancing Patient Safety and Outcomes Across Hospital Quality Programs — Request for Comment

CMS requested comments on ways to build on current measures in several quality reporting programs that account for unplanned patient hospital visits to encourage hospitals to improve discharge processes. Current measures include three Excess Days in Acute Care (EDAC) measures currently in the Hospital IQR Program and the Hospital Visits After Hospital Outpatient Surgery measure. CMS said these measures do not comprehensively capture unplanned patient returns to inpatient or outpatient care after discharge. The EDAC measures currently in the Hospital IQR Program only cover patients with a primary discharge of acute myocardial infarction, heart failure, or pneumonia. Meanwhile, the Hospital Visits After Hospital Outpatient Surgery measure only covers patients discharged from outpatient surgeries. Further, because both the Hospital IQR and Hospital OQR programs are quality reporting programs, a hospital’s performance on these measures is not tied to payment incentives.

CMS invited public comment on how these programs could further encourage hospitals to improve discharge processes, such as by introducing measures currently in quality reporting programs into value-based purchasing to link outcomes to payment incentives. CMS is specifically interested in input on adopting measures that better represent the variety of outcomes of interest to patients, including unplanned returns to the emergency department and receipt of observation services within 30 days of a patient’s discharge from an inpatient stay.

Social Determinants of Health Diagnosis (SDOH) Codes

CMS proposed to change the severity level designation for SDOH diagnosis codes describing inadequate housing and housing instability from non-complication or comorbidity (NonCC) to complication or comorbidity (CC). The diagnosis codes include:

• 10 (Inadequate housing, unspecified)
• 11 (Inadequate housing environmental temperature)
• 12 (Inadequate housing utilities)
• 19 (Other inadequate housing)
• 811 (Housing instability, housed, with risk of homelessness)
• 812 (Housing instability, housed, homelessness in past 12 months)
• 819 (Housing instability, housed unspecified)

CMS analyzed claims data from FY 2023 Medicare Provider Analysis and Review (MedPAR) files for inadequate housing and housing instability codes NonCC and reviewed their methods. The data suggests that when these Z codes are reported as a secondary diagnosis, the resources involved in caring for a patient experiencing inadequate housing and housing instability support increasing the severity level from a NonCC to a CC. CMS proposed to make this change for FY 2025.

 Medicare Promoting Interoperability Program

In the FY 2023 IPPS/LTCH PPS final rule, CMS finalized the requirement for eligible hospitals and CAHs to report the Antimicrobial Use and Resistance (AUR) Surveillance measure with a modification to begin reporting with the EHR reporting period in CY 2024 (87 FR 49337). Under the AUR Surveillance measure, eligible hospitals and CAHs report two kinds of data to the Centers for Disease Control and Prevention (CDC) National Healthcare Safety Network (NHSN): Antimicrobial Use (AU) data and Antimicrobial Resistance (AR) data (87 FR 49335).

CMS proposed to separate the AUR Surveillance measure into two measures, beginning with the EHR reporting period in CY 2025:

• AU Surveillance measure: The eligible hospital or CAH is actively engaged with CDC’s NHSN to submit AU data for the selected EHR reporting period and receives a report from NHSN indicating its successful submission of AU data for the selected EHR reporting period.
• AR Surveillance measure: The eligible hospital or CAH is actively engaged with CDC’s NHSN to submit AR data for the selected EHR reporting period and receives a report from NHSN indicating its successful submission of AR data for the selected EHR reporting period.

Under both the proposed AU Surveillance and AR Surveillance measures, eligible hospitals and CAHs would be required to report data to CDC’s NHSN. Under the proposals, eligible hospitals and CAHs would be required to report a “yes” response or claim an exclusion, separately, to receive credit for reporting the AU Surveillance measure and the AR Surveillance measure.

For both measures, we propose that eligible hospitals and CAHs be required to use technology certified by the Office of the National Coordinator for Health Information Technology Certification Program for Health Information Technology certification criterion at 45 CFR 170.315(f)(6), “Transmission to public health agencies — antimicrobial use and resistance reporting,” as they are for the AUR Surveillance measure.

Questions?

Contact Director of Policy Rob Nelb at rnelb@essentialhospitals.org or 202-585-0127.