The Centers for Medicare and Medicaid Services must compensate for inflation, rising costs, labor shortages and other pressures facing hospitals when it finalizes inpatient reimbursements for fiscal 2024, industry groups and health systems argued in comments on a draft regulation published in April.
CMS proposed a 2.8% payment update for the coming fiscal year, which prompted immediate objections from organizations such as the American Hospital Association that the agency underrated the headwinds confronting the industry. The Hospital Inpatient Prospective Payment System final rule is expected next month.
“We urge CMS to revisit their assumptions, recognize these challenges and, at a minimum, accurately reflect changes to inflation and input costs in the market basket update,” the Chicago-based nonprofit Catholic health system CommonSpirit Health wrote in a comment letter to the agency.
The Federation of American Hospitals likewise criticized the market basket update, contending it does not account for escalating costs such as rising drug, equipment, and supply prices and higher labor expenses related to the proliferation of temporary travel nurses. America's Essential Hospitals wrote that labor costs for its safety-net hospital members rose 37% from 2019 to 2022.
The American Hospital Association and the Federation request that CMS make up for previous market basket forecasts that underestimated cost trends. The trade groups' recommendation would result in a 5.8% reimbursement increase in fiscal 2024. Hospitals also lamented that CMS did not consider the impact of Medicaid redeterminations, and the ensuing increase in the number of uninsured people will have on their finances.
America's Essential Hospitals pleaded with CMS to offer additional support to safety-net facilities by establishing special payment policies for hospitals that "disproportionately serve marginalized patients." Although the Federation does not advocate for that regulatory change, the for-profit hospitals trade association noted that disproportionate share payments have diminished in recent years, increasing the burden on hospitals that care for low-income or uninsured patients.
The proposed rule included updates to hospital quality reporting that prompted industry concerns. For example, hospital groups requested that reporting on staff COVID-19 vaccinations be voluntary until the Food and Drug Administration and the Centers for Disease Control and Prevention finalize the vaccine schedule. America's Essential Hospitals went further by recommending that these data not be shared with the public.
The AHA and the Federation wrote in support of CMS' proposal to increase restrictions on physician-owned hospitals.