On Aug. 2, the Centers for Medicare & Medicaid Services (CMS) issued the final rule for the fiscal year (FY) 2022 Medicare hospital inpatient prospective payment system (IPPS).
The increase in operating payment rates for hospitals paid under the IPPS that report required quality measures and meet meaningful use criteria is approximately 2.5%. As a result of all policy changes included in the final rule, CMS estimates that payments to hospitals for inpatient services will increase by $2.3 billion in FY 2022. Key highlights of the final rule include:
- Medicare Disproportionate Share Hospital Payments: CMS will distribute roughly $7.2 billion in uncompensated care payments for FY 2022, a decrease of approximately $1.1 billion from FY 2021. CMS will use a single year of data on uncompensated care costs from Worksheet S-10 of hospitals’ FY 2018 cost reports to distribute these funds.
- Market-Based MS-DRG Relative Weights: CMS finalizes its proposal to repeal the collection of market-based rate information on the Medicare cost report and the related market-based Medicare Severity Diagnosis Related Group (MS-DRGs) relative weight methodology.
- Wage Index: CMS will continue policies finalized in the FY 2020 IPPS/long-term care hospital prospective payment system final rule to address wage-index disparities affecting low wage index hospitals.
- New Technology Add-On Payment (NTAP): CMS finalizes an extension of the NTAP for 13 technologies that would have otherwise been discontinued beginning in FY 2022 due to the COVID-19 public health emergency (PHE).
- New COVID-19 Treatments Add-on Payment (NCTAP): CMS extends the NCTAP for eligible COVID-19 products through the end of the fiscal year in which the PHE ends. The final rule does not discontinue the NCTAP for discharges on or after Oct. 1, 2021, for a product approved new treatments add-on payment (NTAP) beginning FY 2022. Instead, hospitals will be eligible to receive both NCTAP and the NTAP, through the end of the fiscal year in which the PHE ends. In this situation, the NTAP will reduce the amount of the NCTAP.
- Inpatient Quality Reporting (IQR) Program: CMS adopts five new measures, including a measure to assess the percentage of health care personnel vaccinated for COVID-19 with reporting required beginning Oct. 1. CMS also removes three existing measures and finalizes changes to the existing EHR certification requirements.
- Promoting Interoperability Program: CMS will maintain the current reporting period of any continuous 90-day period for calendar year (CY) 2023 and finalizes its proposal to increase the reporting period to any continuous 180-day period for CY 2024. CMS adopts several additional changes to the program, including increasing the minimum required score to be considered a meaningful user from 50 to 60 points, expanding reporting within the Public Health and Clinical Data Exchange Objective, new attestation-based measures, and additional eCQMs to align with the IQR program.
- Hospital Readmissions Reduction Program: CMS will suppress the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate following Pneumonia Hospitalization measure (NQF #0506) beginning with the FFY 2023 program year and modify the remaining five condition-specific readmission measures to exclude COVID-19-diagnosed patients from the measure denominators beginning with the FFY 2023 program year.
- Hospital-Acquired Conditions: CMS will suppress the third and fourth quarters of calendar year 2020 CDC National Healthcare Safety Network Healthcare-Associated Infection and Patient Safety and Adverse Events Composite (CMS PSI 90) data from performance calculations for the FFY 2022 and 2023 program years.
- Hospital Value Based Purchasing (HVBP): CMS will suppress multiple measures in the HVBP program for the FFY 2022 program year. For FFY 2022, adopts a special scoring methodology under which it will award all hospitals a value-based payment amount for each discharge that is equal to the amount withheld. For the FFY 2023 program year, CMS will suppress the Pneumonia 30-Day Mortality Rate measure due to the impact of COVID-19.
Given the volume of comments received by the agency on certain proposals, final rules related to organ acquisition costs, as well as direct graduate medical education and indirect medical education costs, will be addressed in a subsequent rule.
Additional information is available in a CMS fact sheet.