GNYHA Comments on FY 2025 Medicare Hospital Inpatient Proposed Rule

June 17, 2024

GNYHA recently submitted comments to the Centers for Medicare & Medicaid Services (CMS) on the fiscal year (FY) 2025 inpatient prospective payment system (IPPS) proposed rule. GNYHA addressed CMS’s market basket update, the newly proposed Transforming Episode Accountability Model (TEAM), graduate medical education proposals, and the proposed continuation of the low wage policy index.

CMS proposed a 2.6% increase in the productivity-adjusted market basket index, which GNYHA argued is insufficient to cover increases in hospital input prices and labor costs in the post-public health emergency economy. GNYHA recommended that CMS implement a one-time adjustment of 4.6% to account for extraordinary forecast error over the past three years, increasing the FY 2025 market basket update to 7.2%.

CMS also proposed TEAM, a new five-year episode payment model for fee-for-service beneficiaries who undergo high-expenditure, high-volume surgical procedures that fall under five-episode categories: Coronary Artery Bypass Grafting, Lower Extremity Joint Replacement, Surgical Hip and Femur Fracture Treatment, Spinal Fusion, and Major Bowel Procedure. The model would begin January 1, 2026, and be mandatory for acute care hospitals in a defined set of core-based statistical areas. GNYHA urged CMS to not finalize the TEAM model and provided several recommendations, including implementing the program as voluntary, making upfront investments available to safety net hospital participants, and refining the target price methodology if finalized.

CMS proposed a methodology for distributing 200 new Medicare-reimbursable residency slots (100 of which are to be distributed to psychiatry or psychiatry subspecialty training programs) awarded by the Consolidated Appropriations Act, 2023. The proposed methodology would allocate the 200 slots among all qualifying applicants so that each receives an equal share up to 1.00 full-time equivalent. CMS would then distribute the remaining slots based on the health professional shortage area (HPSA) score associated with the applying hospital’s program. GNYHA recommended that CMS abandon HPSA prioritization and instead prioritize making applications more “whole” by awarding as many of the slots that is commensurate with the hospital’s planned expansion of existing residency programs or the establishment of new programs. CMS also proposed that for a residency program to be considered new, at least 90% of the residents in the program must not have had previous training in the same specialty as the new program. GNYHA supported this proposal but argued that potential restrictions of faculty and program directors would incentivize inexperience.

CMS also proposed to continue its low wage index policy for its sixth year in FY 2025, with the intention of collecting more data to determine the policy’s efficacy in increasing the wage indices of hospitals in the bottom quartile of wage indices nationally. GNYHA opposed the continuation of the low wage index policy for several reasons, including its open-ended timeframe, lack of formal evaluation process, and existing evidence that the policy has not been effective in raising wages. If this policy continues, GNYHA recommended that CMS forego the budget neutrality adjustment.

GNYHA also commented on the following IPPS proposals: requirements to report respiratory illnesses, changes in the severity designation of social determinants of health codes, a new add-on payment for buffer stock of essential medicines, various quality proposals, and potential future obstetrical services Condition of Participation standards.