FY 2025 IPPS/LTCH PPS Final Rule Summary

On August 1, 2024, CMS released its final rule describing federal fiscal year (FY) 2025 policies and rates for Medicare’s hospital inpatient prospective payment system (IPPS) and the long-term care hospital (LTCH) prospective payment system (PPS). The final rule was published in the Federal Register on August 28, 2024. The payment rates and policies described in the IPPS/LTCH final rule (CMS-1808-F) 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 final 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 adopting 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 policies in the rule include a requirement to report respiratory syncytial virus and a payment subsidy for small independent hospitals to maintain a buffer stock of essential medicines. CMS makes many data files available to support analysis of the final rule. These data files are generally available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/fy-2025-ipps-final-rule-home-page. Numbered tables that were historically included in the IPPS/LTCH rule are now only available on the CMS website at this hyperlink.