CMS Proposes Modest Payment Increases in Medicare Inpatient Prospective Payment System (IPPS) Rule for FY 2025

The Centers for Medicare & Medicaid Services (CMS) has released its proposed IPPS rule for FY 2025, which proposes modest increases in the annual payment update (a 2.6% increase) and Medicare disproportionate share hospital (DSH) payments (estimated to be $9.98 billion in FY 2025, up from $9.28 billion). CMS also announces several opportunities for additional graduate medical education (GME) resident slots, including the distribution of 200 new slots required by Congress in the Consolidated Appropriations Act of 2023 (half of which must support psychiatry related residencies) and the redistribution of slots from two closed hospitals. CMS also proposes a new five-year, mandatory episode-based payment demonstration, generally involving two-sided risk, beginning in January 2026.