Medicare Hospital Payment and Policy Updates
Summary
This final rule revises the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals; makes changes relating to Medicare graduate medical education (GME) for teaching hospitals; updates the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs); updates and makes changes to requirements for certain quality programs; and makes other policy- related changes. We are also finalizing the provisions of the interim final action with comment period regarding the changes to the FY 2025 IPPS rates due to the court decision in Bridgeport Hosp. v. Becerra. Lastly, it finalizes certain updates to the ONC Health Information Technology (IT) Certification Program.
Compliance Requirements
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Hospitals must submit data on measures selected by the Secretary for a fiscal year to receive the full annual percentage increase.; Eligible hospitals must successfully demonstrate meaningful use of CEHRT for an EHR reporting period for a payment adjustment year.; CAHs that do not successfully demonstrate meaningful use of CEHRT for an EHR reporting period for a cost reporting period shall be paid 100 percent of reasonable costs rather than 101 percent of reasonable costs.; LTCHs must submit data on quality measures in the form, manner, and at a time, specified by the Secretary.; PPS-exempt cancer hospitals must submit data in accordance with section 1866(k)(2) of the Act with respect to such fiscal year.
Market Impacts
Discontinuation of the low wage index hospital policy and removal of the related budget neutrality adjustment, impacting hospitals with low wage index values.; Update to the IPPS labor-related share to 66.0 percent from 67.6 percent, reflecting changes in cost category weights.; Refinement of all six readmission measures to add Medicare Advantage patient cohort data and reduction of the applicable period from 3-years to 2-years.; Finalization of updates to the Transforming Episode Accountability Model (TEAM), modifying policies affecting participation of new hospitals and quality measure assessment.; Finalization of certain updates to the ONC Health Information Technology (IT) Certification Program, including revisions to the Security Risk Analysis measure and addition of an optional bonus measure for reporting data to a public health agency using TEFCA.
Validated Company Impacts
Acadia Healthcare Company, Inc.
Acadia Healthcare operates behavioral health facilities and addiction treatment centers, which are not acute care hospitals, long-term care hospitals, or PPS-exempt cancer hospitals targeted by this Medicare IPPS rule. The company's psychiatric hospitals and specialty treatment facilities fall outside the scope of inpatient prospective payment systems for acute and long-term care hospitals. The rule directly addresses the company's third risk factor 'Medicare and Medicaid Reimbursement Risks' by updating payment systems and rates for acute care hospitals, which could significantly impact revenue. Additionally, the quality reporting requirements and health IT certification updates align with operational and regulatory compliance risks.
BrightSpring Health Services, Inc.
BrightSpring Health Services operates primarily in home and community-based health services, pharmacy solutions, and behavioral health services, which are outside the scope of this IPPS rule that specifically targets acute care hospitals, long-term care hospitals, and PPS-exempt cancer hospitals. The company's business model focuses on outpatient and community care rather than inpatient hospital services, resulting in minimal operational alignment with this Medicare hospital payment regulation. The rule directly addresses multiple key risk factors identified by the company, particularly changes in Medicare reimbursement rates and regulatory compliance requirements. The company's dependence on government healthcare programs and identified regulatory compliance risks align perfectly with the rule's focus on Medicare payment systems, quality reporting, and health IT certification requirements.
Encompass Health Corp
Encompass Health Corp operates hospitals and provides patient care services, directly aligning with the IPPS rule's focus on acute care hospitals and long-term care hospitals. The company's hospital operations would be subject to Medicare payment systems, quality reporting requirements, and EHR meaningful use standards specified in the rule. The federal rule focuses on hospital payment systems, quality reporting, and health IT requirements for healthcare providers, while the company's disclosed risks are primarily financial (debt payments, tax complexity) and operational (capital expenditures) with no mention of healthcare operations or regulatory compliance in the medical sector. There is minimal overlap as the rule addresses healthcare-specific regulatory compliance that doesn't align with the company's general financial and operational risk profile.
HCA Healthcare, Inc.
HCA Healthcare operates acute care hospitals across multiple states, directly falling under the IPPS regulations for Medicare reimbursement. The company's core business model of hospital ownership and healthcare service provision aligns perfectly with the rule's requirements for quality reporting, EHR meaningful use, and payment system compliance. The rule's requirements for quality reporting, meaningful EHR use, and staffing-related payment adjustments directly align with the company's operational risks around staffing shortages and physician recruitment/retention. The regulatory compliance requirements also match the company's identified regulatory compliance risk category, indicating significant overlap.
Option Care Health, Inc.
Option Care Health operates as a home and alternate site infusion services provider, not as a hospital or acute care facility subject to Medicare inpatient prospective payment systems. The company's business model focuses on clinical management of infusion therapy and care coordination outside of hospital settings, which falls outside the scope of IPPS, LTCH, and hospital quality program requirements. The rule directly addresses the company's dependency on third-party payer reimbursement rates and healthcare regulatory changes risks, as it modifies Medicare payment systems, quality reporting requirements, and compliance obligations that could significantly impact hospital revenue and operational costs. The cybersecurity threats risk also aligns with the rule's updates to Health IT certification requirements including security risk analysis measures.
Surgery Partners, Inc.
Surgery Partners operates surgical facilities and provides related healthcare services, but the federal rule specifically targets acute care hospitals, long-term care hospitals, critical access hospitals, and PPS-exempt cancer hospitals for Medicare payment systems and quality reporting requirements. Surgery Partners' surgical facilities are typically ambulatory surgery centers or outpatient facilities that do not fall under the inpatient prospective payment systems or the specific hospital classifications addressed by this rule. The rule directly impacts multiple core risk factors identified by the company, particularly revenue concentration through Medicare reimbursement rate changes and healthcare regulations through new compliance requirements for quality reporting and EHR meaningful use. The company's dependence on patient service revenues and regulatory compliance concerns align strongly with the rule's financial and operational impacts on hospitals.
TENET HEALTHCARE CORP
Tenet Healthcare Corp operates acute care hospitals and long-term care facilities that are directly subject to IPPS payment systems, quality reporting requirements, and EHR meaningful use mandates under this Medicare rule. As a major hospital operator, their core revenue streams and operational compliance are fundamentally governed by these exact regulatory provisions. The rule primarily addresses hospital payment systems, quality reporting, and health IT certification requirements, which do not align with the company's cybersecurity-focused risk profile. While the rule includes minor health IT certification updates, these are not central to the company's identified cybersecurity threats, incident management, or oversight risks.
UNIVERSAL HEALTH SERVICES INC
Universal Health Services operates acute care hospitals in the United States, which are directly subject to IPPS payment systems, quality reporting requirements, and EHR meaningful use mandates under this rule. The company's acute care segment aligns strongly with the core regulatory scope affecting Medicare-participating hospitals. The rule directly addresses multiple core risk factors in the company's profile, particularly regulatory compliance risks (13 identified) and operational risks (21 identified) related to healthcare laws, quality reporting requirements, and technology implementation. The company's specific concerns about changes in healthcare regulations, hospital-based physician expenses, and cybersecurity threats align strongly with the rule's focus on Medicare payment systems, quality programs, and health IT certification requirements.