CMS gives hospitals a slight pay bump, which some say aren't enough to cover inflation

Illustration: Lazaro Gamio/Axios

Hospitals are in line for a 2.8% pay increase, or $3.3 billion in additional funding in fiscal year 2024, under a proposed inpatient payment rule Medicare administrators released on Monday.

Why it matters: Hospital margins are finally starting to stabilize after what many called the worst year financially in 2022.

Yes, but: Payments to offset the costs of charity care for low-income patients will decrease by $115 million.

• The Centers for Medicare and Medicaid Services heard hospital groups' request for exploring additional payments to safety-net hospitals, however, and has asked for public comment on the matter.
• Hospital groups said the increase will hardly address inflation.
• "It fails to recognize today's headwinds that will strain the health safety net in 2024, which will further threaten patients' access to care as hospitals are forced to reduce services or in some cases, especially rural areas, close completely," Chip Kahn, CEO of Federation of American Hospitals, said in a news release.

The intrigue: CMS is targeting equity initiatives and measures to evaluate hospitals in the future.

• Administrators are proposing changes to how they score hospitals, including 15 new equity categorizations that would include more data collection.
• The agency is additionally proposing an increased reimbursement for providers treating patients experiencing homelessness, as a way to address one of the major social determinants of health.

• The new rule also clarifies that hospitals won't receive add-on payments for new COVID-19 treatments beginning in fiscal year 2024, as long as the public health emergency ends in May as currently planned.

Our thought bubble: The proposed rule also indicates where the Biden administration stands on physician-owned hospitals.

• While some lawmakers and academics want to make it easier for these hospitals to expand, CMS proposes reinstating program integrity requirements and clarifying the agency's discretion over whether or not to approve a hospital's expansion request.

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