AHA comments on CMS’ FY 2025 IPPS low wage policy

The AHA commented today on the Centers for Medicare & Medicaid Services' hospital inpatient prospective payment system interim final action on revising the Medicare wage index values for fiscal year 2025. CMS is removing the low wage index policy and its related budget neutrality factor for FY 2025, following a July ruling by the U.S. Court of Appeals for the D.C. Circuit that determined CMS lacked authority to adopt the policy for FY 2020 and that it must be vacated. CMS has not indicated if and how it would address payments made to hospitals under the policy for FYs 2020-2024. The AHA urged CMS not to seek a revocation of the funds hospitals received under the policy during that period.

"The AHA has long stated that while we appreciated CMS' recognition of the wage index's shortcomings, the agency should not have implemented this policy by penalizing all hospitals, especially when Medicare already pays far less than the cost of providing care," AHA wrote. "These funds supported low-wage hospitals during the COVID-19 pandemic and increased payments by roughly $300 million for the first year of policy. This included helping nearly 800 rural hospitals when rural hospital closures hit an all-time high, with 19 hospitals closing in 2020 and two additional closures in 2021."