FY 2024 IPPS/LTCH Final Rule Summary

On August 1, 2023, CMS released its final rule describing federal fiscal year (FY) 2024 policies and rates for Medicare’s inpatient prospective payment system (IPPS) and the long-term care hospital (LTCH) prospective payment system (PPS). The final rule was published in the Federal Register on August 28, 2023. The payment rates and policies described in the IPPS/LTCH final rule (CMS-1785-F) affect Medicare’s operating and capital payments for short-term acute care hospital inpatient services and services provided in LTCHs paid under their respective prospective payment systems. The rule also sets forth rate-of-increase limits for inpatient services provided by certain “IPPS- Exempt” providers, such as cancer and children’s hospitals, and religious nonmedical health care institutions, which are paid based on reasonable costs. Unless otherwise specified, finalized policies will be effective October 1, 2023. CMS is also finalizing a policy it made in a separate proposed rule regarding how the Medicare disproportionate share adjustment is determined. The change relates to the counting of days associated with individuals eligible for certain Medicaid benefits provided by section 1115 demonstrations in the Medicaid fraction of a hospital’s disproportionate patient percentage.