AHA Statement on FY 2025 Final IPPS & LTCH Payment Rule

Molly Smith
Group Vice President for Public Policy
American Hospital Association

August 1, 2024

CMS' payment updates for hospitals will exacerbate the already unsustainable negative or break-even margins many hospitals are already operating under as they care for their patients. The AHA is deeply concerned about the impact these inadequate payments will have on patient access to care, especially in rural and underserved communities.

We are troubled that the final long-term care hospital outlier threshold is nearly 30% higher than it is currently. Since FY 2021, this figure has increased by more than 180%, which forces these hospitals to absorb hundreds of thousands of dollars in additional losses when caring for the sickest patients. This increase will create serious access issues for patients and put additional burden back on acute-care hospitals and other providers that do not specialize in caring for this unique patient population.

In addition, while the AHA has long supported widespread adoption of meaningful value-based and alternative payment models to deliver high quality care at lower costs, the rule's mandatory bundled payment model for five different surgical episodes will not advance these objectives. Not only is the model extremely similar to other bundled payment approaches that have failed to meet the statutory criteria for expansion as they have not reduced program costs or generated net savings, it puts at particular risk many hospitals that are not of an adequate size or in a position to support the investments necessary to succeed.

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