FFY 2024 IPPS Proposed Rule – Market Basket Rates

On April 10, the Centers for Medicare & Medicaid Services (CMS) published the FFY 2024 IPPS Proposed Rule (effective for discharges on or after October 1, 2023).” Toyon is pleased to provide our summary of:  Topic 1 – FFY 2024 IPPS Proposed Rule – Market Basket Rates.

National Medicare IPPS Estimates 
CMS estimates hospitals will receive an overall change of $2.8 billion in IPPS payments, as compared to FFY 2023. CMS estimates the $2.8 billion increase in payments as follows: 
  • + $3.2 billion net increase in operating and capital payments, including a $24 million increase to Long Term Care Hospital (LTCH) rates and $170 million reduction to UC DSH.   
  •  – $466 million net decrease in payments related to changes in new technology payments. 
Proposed Market Basket Adjustment 
Toyon’s Take 
Toyon recommends providers submit comments to CMS requesting that the 2.8% market basket be increased to reflect a more current and accurate depiction of increased hospital costs. Over the past three years, the average increase to hospital cost was 4.4%, with the largest increase of 8.9% resulting from COVID-19 (FFY 2019 to FFY 2020)2. Toyon recommends providers request a market basket of at least 4.4% to account for the lingering impacts of COVID-19, including but not limited to, the inflation of healthcare expenses, rising insurance premiums and needed investments in patient care and capital to ensure continued access to quality care in our communities.   
In MedPAC’s March 2023 Report to Congress, MedPAC anticipates that CMS’s 2024 update to hospital payment rates plus 1 percent would generally be adequate to maintain FFS beneficiaries’ access to hospital inpatient and outpatient care and keep IPPS and OPPS payment rates close to the cost of delivering high-quality care efficiently. MedPAC also notes this update “may not be sufficient to ensure financial viability of some Medicare safety-net hospitals with a poor payer mix.” Please see section titled, “Request for Information on Safety-Net Hospitals” for more information on MedPACs proposal of a Medicare Safety-Net Index (MSNI). 
For the FFY 2023 IPPS Final Rule, CMS finalized the market basket at 4.10% after initially proposing a 3.10% update. CMS’s increase was a result of using updated “price proxies” forecasted by IHS Global Inc. In FFY 2024, CMS proposes to update the market basket in the Final Rule “if more recent data subsequently become available (for example, a more recent estimate of the market basket update).”  
For more information, please contact Fred Fisher at fred.fisher@toyonassociates.com
1Recommend including a footnote that the MACRA D&C restoration ended in FFY 2023.
2 Toyon analysis of hospital cost from FFY 2019 through FFY 2021 cost reports per HCRIS.   
Comments are due to CMS by Friday, June 9 via https://www.regulations.gov/ (see instructions under the “submit a comment” tab and reference file code “CMS-1785-P”). Toyon will share our comment letter in the coming weeks. 
Toyon Associates Healthcare Finance


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