CMS proposes 2.6% increase in Medicare hospital payment rates for CY 2025; AHA criticizes increase as inadequate, citing challenges in hospital operations and workforce investments

The Centers for Medicare & Medicaid Services July 10 issued a proposed rule that would increase Medicare hospital outpatient prospective payment system rates by a net 2.6% in calendar year 2025 compared to 2024. This includes a proposed 3.0% market basket update, offset by a 0.4 percentage point cut for productivity. 

In a statement shared with the media, Ashley Thompson, AHA senior vice president of public policy analysis and development, said, "CMS has yet again proposed an inadequate update to hospital payments. This proposed increase for outpatient hospital services of only 2.6% comes despite the fact that many hospitals across the country continue to operate on negative or very thin margins that make providing care and investing in their workforce very challenging. Hospitals’ and health systems’ ability to continue caring for patients and providing essential services for their communities may be in jeopardy, and we urge CMS to provide additional support in the final rule.  

In addition, CMS proposes to adopt three measures related to health equity for the outpatient, ambulatory surgical center and rural emergency hospital quality reporting programs and to extend voluntary reporting of data for two hybrid measures in the Inpatient Quality Reporting Program.

CMS also proposes several changes to payment for drugs. Among these are proposals that would provide separate payment for diagnostic radiopharmaceuticals with per-day costs above a threshold of $630, exclude certain qualifying cell and gene therapies from packaging under the comprehensive ambulatory payment classification policy, and pay for HIV pre-exposure prophylaxis in hospital outpatient departments.

The agency also proposes new conditions of participation for hospitals and critical access hospitals focused on obstetrical services and maternal care. Among other policies, CMS would require hospitals and CAHs with obstetrical care units to adopt certain processes for the organization, staffing and delivery of obstetrical care services and to incorporate maternal and obstetrical care into their quality assessment and performance improvement programs. CMS also proposes to require hospital emergency services to have protocols for addressing obstetrical emergencies, complications and immediate post-delivery care. Lastly, the agency proposes to require hospitals to have written policies and procedures for transferring patients under their care, including transfers both within and outside of the hospital.

“The AHA fully shares CMS’ goals of improving maternal health outcomes and reducing inequities in maternal care,” Thompson said, “However, we are deeply concerned by CMS’ continued and excessive use of Conditions of Participation to drive its policy agenda. We believe a less punitive and more collaborative and flexible approach is far superior. We will carefully review CMS’ proposals to determine whether they are feasible, sufficiently flexible for the wide variety of hospitals to which they would apply and do not inadvertently exacerbate maternal care access challenges.”

CMS will accept comments on the proposed rule through Sept. 9