Medical Billing Trends: The Center for Medicare & Medicaid Services (CMS) Reimbursement Proposal for FY 2024
 Revenue Cycle Management

Medical Billing Trends: The Center for Medicare & Medicaid Services (CMS) Reimbursement Proposal for FY 2024

Janet Scott
Janet Scott
July 19, 2023
Last updated on:

July 19, 2023


Read time: 4 mins

In keeping with the practice of updating Medicare payment policies for IPPS hospitals and LTCHs on an annual basis, the CMS has unveiled a proposed rule for fiscal year (FY) 2024. The proposed rule for 2024 introduces changes to payment rates under both IPPS (Inpatient Prospective Payment System) and LTCH PPS (Long-Term Care Hospital Prospective Payment System) along with changes to Social Determinants of Health Diagnosis (SDOH) Codes, New COVID-19 Treatments Add-on Payment (NCTAP) etc.

This blog delves into the key changes as introduced in the proposal.

IPPS offers predetermined payment rates based on diagnosis-related groups(DRS)
Image 1 - IPPS offers predetermined payment rates based on diagnosis-related groups(DRS)

Proposed Rules for FY 2024

Increase in Payment Rates under IPPS

  • The proposed increase for general acute care hospitals under IPPS, participating in the Hospital Inpatient Quality Reporting (IQR) and EHR use, stands at 2.8%
  • The increase applies to hospitals in the Hospital IQR program and effective meaningful EHR use.
  • Such a proposal looks forward to incentivizing quality reporting and EHR utilization for fair reimbursement.
  • The payment adjustments incentivize better patient outcomes and care quality.
  • CMS aligns payment with performance for patient safety and efficiency priorities.
  • The proposed change to increase hospital payments by $3.3 billion in FY 2024.
  • Medicare DSH and uncompensated care payments are projected to decrease by $115 million in FY 2024.

Inpatient quality reporting (IQR) Program 

The IQR Program is a CMS initiative that requires participating hospitals to report data on various quality measures related to patient care.

Payment Adjustment Under Inpatient Prospective Payment System (IPPS):

  • Payment reduction for readmissions under the Hospital Readmissions Reduction Program (HRRP).
  • 1% reduction for hospitals in the worst-performing quartile under the Hospital Acquired Condition (HAC) Reduction Program.
  • Hospitals are subject to upward or downward payment adjustments based on performance under the Hospital Value-Based Purchasing (VBP) Program.

CMS Initiatives
Image 2 - CMS Initiatives

Changes to Payment Rates under LTCH PPS

  • CMS projects a 2.9% increment in the standard payment rate for LTCHs in FY 2024.
  • LTCH PPS payments for standard rate discharges to go down by 2.5% or $59 million.
  • Reduction attributed to a projected 4.7% decrease in high-cost outlier payments as a percentage of total LTCH PPS standard Federal payments.
Long-Term Care Hospitals
Image 3 - Long-Term Care Hospitals

Changes to the New COVID-19 Treatments Add-on Payment (NCTAP)

  • CMS introduced NCTAP during the PHE.
  • NCTAP supports eligible discharges, ensuring continued treatment support.
  • To minimize payment disruptions post-PHE, NCTAP extended until PHE's fiscal year-end.
  • If PHE ends in May 2023, NCTAP eligibility till September 30, 2023 (end of FY 2023).
  • NCTAP expires after FY 2023; no payments from FY 2024 (starting October 1, 2023, discharges).

The New COVID-19 Treatments Add-on Payment (NCTAP)
Established by CMS in response to the COVID-19 Public Health Emergency (PHE), this policy provides additional payments for eligible discharges involving new COVID-19 treatments. The policy aims to mitigate potential financial disincentives for hospitals to provide these treatments and support continued patient access during the PHE.

Public Health Emergency (PHE)
It refers to a situation declared by the government or health authorities, in which there is an impending threat to public health due to infectious diseases, natural disasters, or other health-related emergencies.


The new proposed rules by the CMS for FY 2024 hold significant implications for the healthcare industry. The proposed increment in payment rates for healthcare organizations under IPPS will enhance the quality of care, reporting, use of EHRs and ensure equitable reimbursement. At Invensis, we closely monitor these proposed rules and align these with our medical billing services to help practices meet CMS’s vision for FY 2024.

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