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Category: IPPS

Transmittal 18 New Cost Reporting Instructions – Section VII. Other Notable Changes and Clarifications

Other notable changes and clarifications in Transmittal 18 include, but are not limited to, the following: 
  • Identification of providers purchasing greater than 50% of its professional services from an unrelated organization located outside the main hospital’s local area labor market (WS S-2 Line 123) 
  • New Worksheet A lines for CAR T-cells (line 78) and Medicare-enrolled opioid treatment program (line 102) 
  • Clarification of Non-Chargeable Drugs Charged to Patients (WS A Line 73) 
  • Sequestration calculation in the cost report settlement schedules during and after the Protecting Medicare and American Farmers from Sequester Cuts Act of 2021 (PAMA). 
  • Information collection for the Community Health Access and Rural Transformation (CHART) model  
  • Renal Dialysis costs for pediatrics and Maintenance AKI (WS I series) 
  • End Stage Renal Disease (ESRD) payment information (WS I-5 Part III) 
  • Extension of the relaxed low volume adjustment requirements and Medicare Dependent Hospital (MDH) status through December 23, 2024, in accordance with sections 4101 and 4102 of the Consolidated Appropriates Act, 2023.
  • Recording of permanent adjustments to the TEFRA target amount per discharge 
  • MAC Outlier Reconciliation at Tentative Settlement (Worksheet E-5) 
Toyon’s take: Although the new Worksheet S-2 question on purchased services outside a hospital’s local labor market area seems informational on the surface, this information may be used for reimbursement purposes going forward. Per the OMB response to initial comments, the data collected is to “obtain a more recent estimate of the proportion of legal, accounting and auditing, engineering, and management consulting services that meet our definition of labor-related services.” The OMB also notes “the requested information ultimately impacts the labor-related share of the wage index for IPPS hospitals, as well as the labor-related share for inpatient rehabilitation facility, inpatient psychiatric facility, and long-term care hospitals.”   
For further information, please contact Robert Howey at 888.514.9312 or
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FFY 2024 IPPS Proposed Rule

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). Comments are due to CMS by Friday, June 9 via (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 is pleased to provide our summary of the IPPS Proposed Rule, focused on areas directly impacting Medicare cost reporting and reimbursement for acute care hospitals. On Toyon’s website below, the topics are broken down in the following sections:
Contents – Breakdown of the FFY 2024 IPPS Proposed Rule 
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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
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 (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. 
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