Last week, FAH sent comments to CMS on changes made in the interim final rule that modified the wage index included in the FY 2025 Inpatient Prospective Payment System final rule.  

On September 30, CMS released an interim final rule with a comment removing its policy of providing a wage index adjustment for hospitals in the lowest quartile of hospital wage indexes. The change, which went into effect on October 1, was CMS’ response to a legal challenge to the policy of increasing wage indexes for these hospitals in a budget-neutral manner. The legal decision in Bridgeport v Becerra was in favor of the plaintiff hospitals that were hurt by the lower budget neutrality adjustment used to pay for the low wage policy. CMS proposed to continue to apply a 5 percent cap on drops in hospital wage index values from FY 2024 to FY 2025 – including for hospitals losing more than 5 percent in payments because of the reversal of the low wage policy. Low-wage hospitals, often rural, will see their wage index reduced compared to the final rule published on August 1, 2024.

FAH’s letter supported the new money approach for applying the 5 percent cap on wage index reductions due to the loss of the low wage policy. The letter also urged CMS not to propose future recoupment from hospitals that received the low wage index adjustment in FYs 2020 through 2024. The letter challenges CMS’ legal authority to apply such a recoupment and highlights the financial hardship this would create for low-wage index hospitals.

Read the letter here.