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  • Washington Highlights

    AAMC Comments on the FY 2023 IPPS Proposed Rule


    Mary Mullaney, Director, Hospital Payment Policies
    Phoebe Ramsey, Director, Physician Payment & Quality
    Brad Cunningham, Sr. Regulatory Analyst, Graduate Medical Education
    For Media Inquiries

    The AAMC submitted comments in response to the Centers for Medicare & Medicaid Services (CMS) Fiscal Year (FY) 2023 Inpatient Prospective Payment System (IPPS) proposed rule. Below are highlights of the AAMC’s June 16 comment letter.

    Graduate Medical Education (GME) Proposals

    Payment for direct graduate medical education costs: On May 17, 2021 in the case Milton S. Hershey Medical Center, et al. v. Becerra, the United States District Court for the District of Columbia struck down the CMS-adjusted weighted, full-time equivalent (FTE) count calculation method for the direct graduate medical education (DGME) payment. The CMS did not appeal and said it would address the decision through rulemaking. In the proposed rule, the agency proposed a new calculation method in which, when a hospital’s weighted FTE count is greater than its 1996 cap, the hospital would adjust the weighted FTE count to the 1996 cap. A hospital with a weighted FTE count that does not exceed its 1996 cap would use the weighted FTE count. The CMS also proposed to make the change retroactive to Oct. 1, 2001. The AAMC supported the CMS’ proposed changes to the calculation for the adjusted weighted DGME count.

    Proposal to allow Medicare GME affiliation agreements within certain rural track FTE limitations: For the first time, the CMS proposed to allow hospitals that establish an Accreditation Council for Graduate Medical Education (ACGME) separately accredited, 1-2 family medicine program before Oct. 1 to create Rural Track Medicare GME Affiliation Agreements. The AAMC supported this proposal and encouraged the agency to engage in future rulemaking that would allow rural track programs established under the Consolidated Appropriations Act, 2021, to also engage in affiliation agreements after the five-year cap building window.

    Payment Proposals

    Market basket update and ratesetting: The AAMC’s letter stated that the association does not believe that the data used to calculate the update accounts for significantly higher growth in labor and supply costs hospitals have experienced as a result of the COVID-19 public health emergency. The association asked the CMS to increase the market basket update under the “exceptions and adjustments” authority to account for increased labor and supply costs. The AAMC supported the agency’s proposal to blend COVID-19 and non-COVID-19 cases for FY 2023 rate setting.

    Outlier fixed-loss threshold: The CMS’ calculation of the proposed outlier fixed-loss threshold for FY 2023 is dramatically increased as compared with previous years. The AAMC expressed that the FY 2023 fixed-loss threshold is considerably higher due to a concentration of high-cost COVID-19-related cases used in the baseline calculation. The letter asked the CMS to consider removing COVID-19 cases from the fixed-loss outlier threshold calculation.

    Disproportionate share hospital and uncompensated care payments: AAMC’s letter asked the CMS to account for the potential of high rates of uninsurance due to Medicaid redeterminations and the expiration of enhanced Marketplace subsidies when the public health emergency ends in Factor 2.

    Medicaid fraction: The CMS proposed a new definition for Medicaid beneficiaries that can be included in the Medicaid fraction. The AAMC’s letter asked the agency to include all Medicaid beneficiaries covered under an 1115 demonstration waiver in the Medicaid fraction.

    Wage index: The AAMC supported the CMS’ proposal to continue the low-wage index policy. The letter also asked the agency to consider the impact of the COVID-19 public health emergency on the wage index.

    COVID-19 and seasonal influenza reporting: The AAMC’s letter asked the CMS to not finalize the proposal to require continued COVID-19 and seasonal influenza reporting as a hospital condition of participation.

    Payment adjustment for N95 masks: The AAMC expressed its support for the CMS’ goal of maintaining a robust global supply chain for hospital supplies, including N95 masks.  However, the AAMC questioned whether the Medicare program is the best vehicle to address supply chain issues. The letter called on the agency to continue stakeholder engagement to ensure that Medicare is the proper program to incentivize the purchase of wholly domestically made N95 masks.

    Quality Proposals

    Social determinants of health diagnosis codes (Z codes): The AAMC’s comments encouraged the CMS to further explore tying the Z59.0 code (homelessness) to payment by reclassifying it to a complication or comorbidity code for purposes of Medicare severity diagnosis-related grouping and encourage involvement of stakeholders to determine the best way to proceed.

    Climate change impacts on health equity: In response to a request for information regarding climate change, the AAMC’s comment letter suggested that the CMS commit broadly to a collaborative approach to developing innovative solutions to address the health care sector’s role in climate change.

    Measuring disparities: The AAMC comments in response to several requests for information regarding Medicare measurement of health disparities through quality metrics encouraged the agency to (1) focus on development of the Within Hospital Method to measure inequities, (2) prioritize process and access measures, (3) carefully evaluate the precise health-related social needs and social risk factors to evaluate inequities, and (4) focus primarily on how to use inequities measurement to inform providers and interventions.

    Measure suppressions and technical changes to address impacts of COVID-19 in the pay-for-performance quality programs: The AAMC’s letter supported proposals to suppress certain quality measures in the Hospital Value-Based Purchasing Program and Hospital-Acquired Condition Reduction program in response to the COVID-19 public health emergency. Additionally, the association’s comments suggested that the CMS consider additional changes to proposed risk adjustment changes for certain measures when assessing history of COVID-19.

    Adoption of new measures for the Inpatient Quality Reporting (IQR) Program: The AAMC’s comments urged the CMS to consider the burden of adopting ten new measures in the IQR Program in a single year and to prioritize those measures that are most meaningful to hospitals and patients.

    Promoting Interoperability (PI) Program: The AAMC’s letter suggested that in proposing significant changes to the PI Program’s scoring, the CMS balance increasing emphasis on public health reporting through the proposed scoring changes with the need for greater investment in public health departments to better support improvements to electronic health record reporting and data exchange.