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CMS Issues FFY 2022 Inpatient Prospective Payment System Proposed Rule

For CEOs, CFOs, government relations executives, finance & reimbursement staff, patient safety staff, health information technology staff

The Centers for Medicare & Medicaid Services (CMS) has issued its federal fiscal year (FFY) 2022 inpatient prospective payment system (IPPS) proposed rule. Comments on the proposed rule are due to CMS by 2 p.m. (PT) on June 28.   

CMS proposes to increase payment rates for hospitals paid under the IPPS that successfully participate in the hospital inpatient quality reporting program and meaningful electronic health record (EHR) users by approximately 2.8% in fiscal year 2022 compared to FFY 2021. This reflects a projected hospital market basket update of 2.5%, reduced by a 0.2 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by legislation. Based on all changes in the proposed rule, CMS estimates hospitals payments will increase by $2.5 billion. 

Key highlights of the proposed rule include:  

  • Medicare Disproportionate Share Hospital Payments: CMS proposes to distribute roughly $7.6 billion in uncompensated care payments for FFY 2022, a decrease of approximately $660 million from FFY 2021. 
  • Market-Based Weights: CMS proposes to repeal the collection of Medicare Advantage negotiated rate information on the Medicare cost report and the market-based Medicare Severity-Diagnosis Related Group relative weight methodology as finalized in the FFY 2021 IPPS final rule.  
  • Wage Index: CMS proposes to continue policies finalized in the FFY 2020 IPPS final rule to increase the wage index for hospitals with a wage index value below the 25th percentile and apply a reduction to the standardized payment amount for all hospitals to ensure budget neutrality.  
  • New Residency Slots – Indirect Medical Education/Graduate Medical Education (GME): CMS proposes policies to implement the Consolidated Appropriations Act, which requires the distribution of an additional 1,000 new Medicare-funded medical residency positions to train physicians. CMS proposes to phase in the new positions at no more than 200 slots per year beginning in FFY 2023. CMS estimates that this additional funding will total approximately $1.8 billion from FFY 2023 through FFY 2031. CMS proposes to prioritize applications from qualifying hospitals that serve geographic areas and underserved populations with the greatest need. 
  • Rural GME: CMS proposes to implement the Promoting Rural Hospital GME Funding Opportunity, which allows rural training hospitals participating in an accredited rural training track to receive a GME cap increase. 
  • New Technology: CMS proposes to extend new technology add-on payments for 14 technologies that otherwise would be discontinued in FFY 2022 due to the COVID-19 public health emergency (PHE).  
  • New COVID-19 Treatments Add-on Payment (NCTAP): CMS proposes to extend the NCTAP for eligible products through the end of the fiscal year in which the COVID-19 PHE ends. CMS also proposes to discontinue NCTAP for discharges on or after Oct. 1, 2021, for a product that is approved for new-technology add-on payments beginning in FFY 2022. 
  • Inpatient Quality Reporting (IQR) Program: CMS proposes to adopt five new measures — including two new electronic clinical quality measures (eCQM), remove five existing measures, and make changes to the existing EHR certification requirements along with other administrative updates. CMS is also requesting comment on the potential future adoption of a COVID-19 mortality measure and patient-reported outcome measure following elective primary total hip and/or knee arthroplasty. 
  • Promoting Interoperability Program: CMS proposes to maintain the current reporting period of any continuous 90-day period for calendar year (CY) 2023 and increase the reporting period to any continuous 180-day period for CY 2024. CMS proposes several 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 proposes to suppress the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) 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 proposes to 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 proposes to suppress multiple measures in the HVBP program. Instead of calculating a performance score based on a limited measures set, CMS proposes to award all hospitals a value based payment amount for each discharge that is equal to the amount withheld. CMS also proposes to calculate measure rates for all measures and to publicly report those rates where feasible and appropriately caveated. 

Additional information is available in a CMS fact sheet.