Proposed Medicare Inpatient Rule Includes 2.8 Percent Rate Increase

April 20, 2023

The Centers for Medicare & Medicaid Services (CMS) April 10 issued its hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) PPS proposed rule for fiscal year (FY) 2024. WSHA is preparing a detailed summary of the proposed rule and hospital-specific impact analyses, which will be sent within the next few weeks to hospital chief financial officers and finance staff. CMS will accept comments on the proposed rule through June 9. WSHA plans to submit comments and share its draft with member hospitals in advance of the comment deadline.

  • The rule proposes a net 2.8% rate increase for inpatient PPS payments in FY 2024. This 2.8% payment update reflects a hospital market basket increase of 3.0% as well as a productivity cut of 0.2%. WSHA plans to comment that payment update fails to account for the record-high inflation and persistent labor, supply and drug costs hospitals are experiencing.
  • The rule also reflects a proposed $115 million decrease in disproportionate share hospital payments and a proposed $460 million decrease in new technology add-on payments.
  • The proposed rule continues the low volume hospital and Medicare dependent hospital adjustments through FY 2024.
  • The rule also requests information on how CMS can better identify and support safety-net providers including use of the Medicare Payment Advisory Commission’s safety-net index or other types of area-level indices such as the Area Deprivation Index. CMS seeks comments on how safety-net hospitals should be defined, what are the challenges they face, and what new approaches or modifications to existing approaches could be implemented to address those challenges. (Andrew Busz,


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