2025 Medicare IPPS rate impact analysis

On August 1, 2024, the Centers for Medicare and Medicaid Services (CMS) issued the fiscal year (FY) 2025 Medicare inpatient prospective payment system (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Final Rule — CMS 1808-F. This final rule affects inpatient discharges from Oct. 1, 2024, through Sept. 30, 2025. Medicare published a 2.9% increase in operating payments for hospitals that submit quality data and that are “meaningful electronic health record users.” However, due to primarily wage index-related changes, the reimbursement change year-over-year varies significantly between hospitals.

This rule impacts key areas of reimbursement, including:

• Operating payments
• MS-DRG weights
• Wage index
• Medicare disproportionate share (DSH)
• Medical education
• Quality programs and the data you must report

Wondering how the final rule affects your hospital?

Our proprietary hospital-specific analysis will help you understand the scope of these changes and what they mean for you. Simply input your provider numbers in the adjacent form, and our reimbursement experts will send you a complimentary rate impact forecast tailored to your hospital.

Our reimbursement team has analyzed the various changes within the final rule and compiled hospital-specific computations. Areas with the greatest impact are the wage index, inpatient quality, and value-based care risk.

You can find more information about the impact of the FY 2025 hospital IPPS final rule by viewing session one of our annual Healthcare Summit, Navigating changes to Medicare Regulations, on demand.

If you have any questions related to the IPPS final rule and how it impacts your organization, please contact any of our industry experts below:

• Chris Walski
• Sue Marr
• Tammy Schaeffer