Hospitals to Receive Increased Payments for Addressing Homelessness

The Centers for Medicare and Medicaid Services (CMS) have recently introduced significant changes through their fiscal year (FY) 2024 Inpatient Prospective Payment System (IPPS) final rule. These changes, aimed at promoting high-quality care and equitable healthcare access, particularly for underserved populations, are poised to have a positive impact on hospitals. One noteworthy shift is the adjustment in severity level designation for certain social determinants of health (SDOH) codes, specifically those related to homelessness.

We will look into the 5 key takeaways from CMS's decision and the implications for hospitals and the healthcare industry at large: 

1. CMS's Emphasis on Health Equity : CMS's focus on health equity is evident in its efforts to reward hospitals that prioritize high-quality care for historically underserved and under-resourced communities. As part of this approach, CMS has modified severity designations for specific SDOH codes related to homelessness, recognizing the higher resource costs associated with these cases. 

2. Revised Severity Designation : Three SDOH codes associated with homelessness have been reclassified from "non-complication or comorbidity" to "complication or comorbidity." These codes are as follows: 

   1. Z59.00 - Unspecified Homelessness 

   2. Z59.01 - Sheltered Homelessness 

   3. Z59.02 - Unsheltered Homelessness 

1. Increased Reimbursement Rates : CMS's decision to elevate the severity level designation of these SDOH codes stems from a comprehensive data analysis of claims. The analysis demonstrated that cases with these ICD-10-CM diagnosis codes incur higher average resource costs compared to similar cases without such codes. This shift in reimbursement rates is a strategic move to incentivize hospitals to address homelessness and its associated challenges more effectively. 

2. Capturing SDOH Data : While over 80% of hospitals are currently collecting data on social determinants of health, only half of them are doing so regularly. The increased reimbursement rates aligned with SDOH codes serve as an additional motivator for healthcare institutions to place a stronger emphasis on capturing and utilizing SDOH data, driving improvements in patient care and outcomes. 

3. Future Implications  : As CMS continues to prioritize health equity and the incorporation of SDOH codes into billed claims, hospitals will witness a gradual shift in their reimbursement landscape. The updated reimbursement rates acknowledge the complexities and resource demands of addressing homelessness, encouraging hospitals to adopt more comprehensive approaches to patient care. 

CMS's decision to elevate the severity level designation for SDOH codes related to homelessness reflects a commitment to advancing health equity and high-quality care for all patients, regardless of their socioeconomic backgrounds. By incentivizing hospitals to prioritize cases involving homelessness, CMS is paving the way for a more equitable, safer, and higher quality healthcare system. As the healthcare industry evolves, hospitals that proactively address social determinants of health are well-positioned to make meaningful contributions to the well-being of their communities.

Disclaimer: The information provided in this post is based on the available data as of the date of publication and is subject to change as new information becomes available. It is recommended to consult official CMS sources and healthcare professionals for the most accurate information. 

Reference: Medicare Program: Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long Term Care Hospital Prospective Payment System and Policy Changes, etc.