KHA submitted a comment letter June 9 on the Centers for Medicare & Medicaid Services (CMS) proposed rule for the hospital inpatient prospective payment system (IPPS). The letter explains how the proposed increase of 2.4% for hospitals and the 3.2% hospital market basket update, minus a 0.8% statutorily required productivity adjustment, is inadequate to offset rising costs. Hospitals continue to face rising costs in the aftermath of cyberattacks; economy-wide inflation; rapid and sustained growth in labor costs; record drug costs; and unnecessary administrative costs from commercial insurers and managed Medicaid and Medicare plans. Additionally, hospitals subsidize vital service lines, including behavioral health, women’s health, and others that generally have negative profit margins but are crucial to communities, and hospitals also subsidize critical professional services, including radiology, anesthesia, emergency medicine, pathology, and others that are also necessary in order for hospitals to provide the required/necessary services for their communities.
Additionally, the letter explains the negative impacts that will result from the proposals relating to disproportionate share hospital (DSH) payments, low volume adjustments, and Medicare-dependent hospitals. KHA requested that CMS evaluate whether hospitals with discharge volumes above 200 continue to experience the financial vulnerabilities that the low-volume adjustment was designed to address and work with Congress to ensure that financially vulnerable rural hospitals do not lose access to these critical payment protections. Even if re-authorized, the current policy could materially narrow the number of hospitals that qualify for the low volume adjustment and reduce support for rural hospitals that remain essential access points for their communities.
KHA also requested additional clarification regarding the new Inpatient Quality Reporting (IQR) measure: “Excess Days in Acute Care After Hospitalization for Diabetes” beginning with the fiscal year (FY) 2029 payment determination. There is a lack of clarification outlining what will constitute “excess days” as opposed to an appropriate length of stay for diabetic persons in acute care, and upon what criteria that determination will be made. Applying a broad-stroke limitation on the length of stay for a patient with diabetes may present unique challenges for individuals who are also managing such ancillary disease processes, and can lead to further complications that may have been prevented with treatment that was provided within an adequate timeframe.
CMS will review all comments received regarding the IPPS proposed rule and is expected to release the final rule in August 2026.
