AHA Statement on FY 2025 Proposed IPPS & LTCH Payment Rule

CMS’ proposed inpatient hospital payment update of 2.6% is woefully inadequate, especially following years of high inflation and rising costs for labor, drugs, and equipment. Many hospitals across the country, especially those in rural and underserved communities, continue to operate under unsustainable negative or break-even margins. We urge CMS to reconsider their policy in the final rule so that all hospitals can provide high-quality, around the clock, essential care to their communities. 

The AHA has long supported flexible and widespread adoption of value-based and alternative payment models to deliver high quality care at lower costs. That said, we are very concerned that the agency has proposed a mandatory model for five clinical episodes which expands substantially on the current Comprehensive Care for Joint Replacement model and Bundled Payment for Care Improvement model– neither of which have yielded significant net savings. We continue to encourage CMS to ensure that episode-based payment models are voluntary. Many organizations are not of an adequate size or in a financial position to support the investments necessary to transition to mandatory bundled payment models. Requiring them to take on risk for large, diverse bundles may require more financial risk than they can bear. 

In addition, we are disappointed that CMS has proposed to increase the long-term care hospital outlier threshold, once again, by an extraordinary amount.  Expecting LTCHs to absorb an additional $31,048 loss per patient would greatly exacerbate the resource challenges these hospitals face. Long-term care hospitals care for complex patients who require extended hospitalization – a population they provide care for already at a considerable financial loss. As such, we continue to call on CMS to modernize its high-cost outlier policy to ensure access to these essential services for some of Medicare’s most severely ill beneficiaries. Any loss of access would affect not only long-term care hospitals and patients, but also would have ripple effects across the care continuum, such as placing additional burdens on short-term acute care hospitals and their intensive care units (ICUs).

Ashley Thompson
Senior Vice President, Public Policy Analysis and Development
American Hospital Association

April 10, 2024