FY 2025 IPPS/LTCH PPS Proposed Rule Summary

On April 10, 2024, CMS released a proposed rule describing federal fiscal year (FY) 2025 policies and rates for Medicare’s inpatient prospective payment system (IPPS) and the long-term care hospital (LTCH) prospective payment system. The proposed rule will be published in the Federal Register on May 2, 2024. The public comment period on the rule will end on June 10, 2024. The payment rates and policies described in the IPPS/LTCH proposed rule 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 proposed 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, policies will be effective October 1, 2024. CMS is also proposing a mandatory model, the Transforming Episode Accountability Model, to test whether episode-based payments for five common, costly procedures would reduce Medicare expenditures while preserving or enhancing the quality of care. Other proposals in the rule include a requirement to report respiratory syncytial virus; a payment subsidy for small independent hospitals to maintain a buffer stock of essential medicines; and a comment solicitation on a maternal health standard to be included in Medicare’s Conditions of Participation.