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  • Washington Highlights

    CMS Proposes Hospital Payment and Quality Changes in FY 2022 IPPS Proposed Rule


    Phoebe Ramsey, Director, Physician Payment & Quality
    Andrew Amari, Hospital Policy and Regulatory Specialist

    The Centers for Medicare and Medicaid Services (CMS) released the Fiscal Year (FY) 2022 Inpatient Prospective Payment System (IPPS) proposed rule on April 27. The AAMC will provide comments to CMS, which are due by June 28. In addition to the hospital payment and quality provisions detailed below, the rule contains several graduate medical education (GME) proposals that implement three sections of the Consolidated Appropriations Act, 2021 (Secs. 126, 127, and 131, P.L. 116-260), including the distribution of new Medicare-supported graduate medical education slots [refer to related story].

    The proposed rule includes the following key points addressing hospital payment and quality:

    Payment Proposals:

    • IPPS Payment Update. Increase operating payment rates in FY 2022 by approximately 2.8% (approximately $3.4 billion increase to hospital payments) for hospitals that both successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record users. The update reflects the projected hospital market basket update of 2.5%, reduced by a 0.2 percentage point productivity adjustment, and increased by a statutorily required 0.5 percentage point adjustment.
    • Uncompensated Care Payments (UCPs). Distribute approximately $7.6 billion in UCPs to disproportionate share hospitals in FY 2022, a decrease of roughly $660 million from FY 2021. The estimate reflects CMS Office of the Actuary’s projections that incorporate the estimated impact of the COVID-19 pandemic. Use a single year of data from FY 2018 on uncompensated care costs to distribute UCP funds.
    • COVID-19 Add-On Payment. Extend the New COVID-19 Treatments Add-on Payment for MS-DRG payments to help offset the additional costs of COVID -19 treatments through the fiscal year in which the public health emergency ends.
    • Chimeric Antigen Receptor (CAR) T-cell Therapy. Rename Pre-MDC MS-DRG 018 to “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” to reflect reporting of non-CAR T-cell therapies and other immunotherapies that would be assigned to this MS-DRG. Lists new procedure codes to be reclassified as non-O.R. procedures affecting MS-DRG 018.
    • Reporting of Median Payer-Specific Negotiated Charges. Repeal requirement that hospitals report on their Medicare cost reports the median payer-specific negotiated charge that it has negotiated with all its Medicare Advantage organizations, by MS-DRG, for cost reporting periods ending on or after Jan. 1, 2021. 
    • MS-DRG Relative Weight Methodology. Repeal the market-based MS-DRG relative weight methodology that was adopted in last year’s IPPS final rule to be effective for FY 2024. Continue using the existing cost-based MS-DRG relative weight methodology to set Medicare payment rates for inpatient stays for FY 2024 and subsequent FYs.
    • New Technology Add-on Payment (NTAP). Continue NTAP for nine technologies in FY 2022. Extend NTAP for 14 technology that otherwise would be discontinued in FY 2022. 
    • Imputed Floor Wage Index Policy for All-Urban States. Implement Section 9831 of the American Rescue Plan Act of 2021 that establishes a minimum area wage index for hospitals in all-urban states. Reinstate the imputed floor wage index policy for all-urban states effective for discharges on or after Oct. 1, 2022 (FY 2022) with no expiration date.
    • Organ Acquisition Payment Policy. Revise and codify the Medicare usable organ counting policy to count only organs transplanted into Medicare beneficiaries to more accurately record and pay for Medicare’s share of organ acquisition costs.
    • Rural Reclassification. Amend current regulations through an interim final rule with comment period to allow hospitals with a rural redesignation to reclassify through the Medicare Geographic Classification Review Board using the rural reclassified area as the geographic area in which the hospital is located.

    Quality Provisions:

    • Addressing the Impact of COVID-19 Public Health Emergency (PHE) on Pay-for-Performance (P4P) Programs. Adopt a cross-program measure suppression policy for the duration of the COVID-19 PHE and apply the proposal to certain measures included in the P4P Programs impacted by COVID-19. Furthermore, based on the proposed measure suppressions for FYs 2022 and 2023, CMS proposes changes to the scoring and payment impacts for certain FYs, including applying a neutral payment adjustment for hospitals under the Value-Based Purchasing (VBP) Program, changing the reporting periods to not include 2020 data for assessing performance under the Hospital-Acquired Condition Reduction Program, and not including the pneumonia readmission measure and excluding COVID-19 patients from other readmissions measures for determining scoring and penalties under the Hospital Readmissions Reduction Program (HRRP).
    • Other Changes to P4P Programs. Remove the PSI-90 measure from the VBP beginning with FY 2023 and seek comments on possible future standardized data collection of additional social factors to incorporate in stratification under the HRRP.
    • Hospital Inpatient Quality Reporting (IQR) Program. Adopt five new measures, including a new COVID-19 Vaccination Coverage Among Health Care Personnel that would begin with October 2021 reporting, removing five measures, and seek comment on two future potential measures, including a mortality measure for patients admitted with COVID-19.
    • Medicare Promoting Interoperability Program (“Meaningful Use”). Amend requirements for attestations and measures used for scoring under an increased minimum required score (from 50 points to 60 points out of 100 available points) in order to be considered a meaningful user of certified EHR technology (CEHRT). Additionally, require hospitals to use CEHRT that is consistent with the 2015 Edition Cures Update, beginning with CY 2023 reporting.
    • RFI Closing the Health Equity Gap in Hospital Quality Reporting Programs. Seek feedback on ways to attain health equity for all patients, including enhancing confidential hospital-specific reports that stratify results on other social risk factors, ways to improve demographic data collection, and the potential creation of a hospital equity score.
    • RFI Advancing to Digital Quality Measurement and the Use of Fast Healthcare Interoperability Resources in Hospital Quality Programs. Request comments regarding the modernization of the quality measurement enterprise to digital quality measurement.

    Other Provisions:

    • Medicare Shared Savings Program. Amend program rules to allow accountable care organizations currently participating in the BASIC track’s glide path the opportunity to maintain their current level of participation for performance year 2022.