Skip to main content

Fiscal Year 2024: New IPPS Provisions Kick in This Week

October 5, 2023

It must seem strange to many that there is a variance in what is deemed to be the start of a new year depending on whether you’re talking about the normative “calendar year” or the governmental fiscal year. It’s just a bit cumbersome to have two different yearly reboots. However, we must point out that other cultures endure something very similar. While all the nations of the world generally acknowledge Jan 1 as the official beginning of a new year, some ethnic or religious groups will additionally celebrate their “traditional” new-year’s day—which may occur in the spring or fall, rather than winter.

So, there are those around the world who do, in fact, have to keep up with two yearly beginning dates. This would be true of those whose corporate or government positions require them to observe a fiscal year. Hospital administrators would certainly be included among this group. As such, we present this alert as a reminder that your new year begins this week! On Monday, October 1, the 2024 Inpatient Prospective Payment System (IPPS) rules, applicable to acute care hospitals, launched and will remain in effect until Sep 30, 2024.  

Again, as a reminder, the main rule changes starting this week relative to the inpatient setting are briefly summarized below.

Payment Rates

The increase in operating payment rates for general acute care hospitals that are paid under the IPPS is 3.1 percent.

Payment Adjustments

Hospitals may be subject to payment adjustments under the IPPS, including:

  • Payment reductions based on various quality reporting programs.
  • Payment reductions for excess readmissions under the Hospital Readmissions Reduction Program.
  • Payment reduction (one percent) for the worst-performing quartile under the Hospital Acquired Condition Reduction Program.
  • Upward and downward adjustments under the Hospital Value-Based Purchasing (VBP) Program.

Low Wage Index Hospitals

CMS will continue temporary policies finalized in the FY 2020 IPPS final rule to address wage index disparities affecting low-wage index hospitals, which includes many rural hospitals.

GME Payments

The new rules include changes to GME payments for training in the new Medicare provider type, the rural emergency hospital (REH) to address the growing concern over closures of rural hospitals. These changes help support graduate medical training in rural areas by allowing these rural hospitals to serve as training sites for Medicare GME payment purposes after they become REHs.

Social Heath Determinants Codes

The Centers for Medicare and Medicaid Services (CMS) finalized a change to the severity designation of the three ICD-10-CM diagnosis codes describing homelessness (e.g., unspecified, sheltered, and unsheltered) from non-complication or comorbidity (NonCC) to complication or comorbidity (CC), based on the higher average resource costs of cases with these diagnosis codes compared to similar cases without these codes.

Wage Index

The new rules finalize the proposal to treat rural reclassified hospitals the same as geographically rural hospitals for purposes of calculating the wage index. Specifically, CMS will include hospitals with §412.103 reclassification along with geographically rural hospitals in rural wage index calculations beginning with FY 2024.

Physician Hospitals

For a hospital to submit claims and receive Medicare payment for services referred by a physician owner or investor (or a physician whose family member is an owner or investor), the hospital must satisfy all of the requirements of either the whole hospital exception or the rural provider exception to the physician self-referral law, commonly referred to as the “Stark Law.” To use the rural provider exception or the whole hospital exception, a hospital may not increase the aggregate number of operating rooms, procedure rooms, and beds above that for which the hospital was licensed on March 23, 2010, with certain exceptions noted in the rule.

Quality Reporting

The Hospital IQR Program is a pay-for-reporting quality program that reduces payment to hospitals that fail to meet program requirements. Hospitals that fail to submit quality data or to meet all Hospital IQR Program requirements are subject to a one-fourth reduction in their Annual Payment Update under the IPPS.

Hospital-Acquired Condition Reduction Program

The HAC Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by reducing Medicare fee-for-service (FFS) payment by one percent for applicable hospitals that rank in the worst performing quartile on the measures of hospital-acquired conditions. For the full treatment of these and many other changes found in the 2024 FY IPPS rule, please go to

With best wishes,

Chris Martin
Senior Vice President—BPO

Get the Latest RCM News Delivered

Receive practical tips on medical billing and breaking news on RCM in your inbox.

Get in Touch