CMS receives backlash from Provider Groups over Inadequate Inpatient Care Pay Update

Hospital groups are expressing their disdain for CMS’ payment update for inpatient providers, claiming that it is “woefully inadequate.” This proposal has sparked fierce opposition from provider groups who feel that it will leave many hospitals struggling financially. In this article, we will take a closer look at the payment update and how it will impact hospitals.

CMS recently announced that it would increase payment rates for acute care hospitals by 2.8% reimbursed under the 2024 Inpatient Prospective Payment System. However, hospitals would only receive this increase if they exhibit meaningful use of electronic health records and are successful in participating in the Hospital Inpatient Quality Reporting program. This condition has not gone down well with hospital groups who have labeled it as unfair and “woefully inadequate”.

This would amount to a hospital market basket percentage increase of 3% (minus a 0.2 percentage-point productivity adjustment), or an increase in hospital payments of about $3.3 billion next year. Read ACR announcement here. 

Provider groups argue that this condition is an unrealistic way to incentivize hospitals to participate in these initiatives, especially since these are already standard practices. Furthermore, they say that it will leave many hospitals in a difficult financial position as they struggle to implement these changes. The criteria set out by CMS would deprive hospitals of much-needed financial assistance during this turbulent period, further compounding the financial strain created by the Covid-19 pandemic.

The proposed increase in payment rates amounts to a hospital market basket percentage increase of 3%, with a 0.2 percentage-point productivity adjustment. This adjustment potentially reduces the proposed increase in hospital payments to about $3.3 billion next year. Hospital groups argue that the increase is insufficient and will not allow hospitals to meet the cost of providing quality care to their patients.

One of the significant issues raised by this proposal is that it could widen the disparity in payment between urban and rural hospitals. Rural providers often face financial challenges due to their smaller size and limited resources. The condition imposed by CMS could prevent many rural hospitals from qualifying for the increase, leading to an even greater financial burden.

The recent payment update announcement by CMS may have been intended to incentivize hospitals to meet quality reporting criteria, but it has instead created a backlash from provider groups who feel that it is too onerous. Hospital groups argue that funding has never been more critical to hospitals’ survival, especially with the Covid-19 pandemic affecting their finances. The proposed increase in payment rates may be insufficient to cover the cost of healthcare provision by hospitals, ultimately leading to adverse patient outcomes. One thing is for sure; this payment update is not the end of the discussion; provider groups will continue to advocate for fair reimbursement rates.