Regulatory Advisory: Hospital Inpatient PPS Proposed Rule for FY 2022

May 20, 2021

At a Glance

At Issue

The Centers for Medicare & Medicaid Services (CMS) April 27 issued its hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) PPS proposed rule for fiscal year (FY) 2022. The rule affects inpatient PPS hospitals, critical access hospitals (CAHs), LTCHs and PPS-exempt cancer hospitals. A summary of the proposals related to inpatient PPS hospitals, CAHs and PPS-exempt cancer hospitals is attached. Look for a separate AHA advisory on the LTCH PPS-related proposals soon. Comments on the proposed rule are due to CMS by June 28. The final rule will be published on or around Aug. 1 and take effect Oct. 1.

AHA Take

We applaud CMS’ proposal to repeal the requirement that hospitals and health systems disclose privately negotiated contract terms with payers on the Medicare cost report. We have long said that privately negotiated rates take into account any number of unique circumstances between a private payer and a hospital and their disclosure will not further CMS' goal of paying market rates that reflect the cost of delivering care. We once again urge the agency to focus on transparency efforts that help patients access their specific financial information based on their coverage and care.

What You Can Do

  • Participate in an AHA members-only webinar May 24 at 1:30 ET to share your questions about and feedback on this regulation for AHA’s comment letter to CMS. To register for this 60-minute webinar, visit here.
  • Share this advisory with your senior management team and ask your chief financial officer to examine the impact of the proposed payment changes on your Medicare revenue for FY 2022. Hospitals may assess the impact of these provisions on their organizations by using AHA’s calculators on readmissions, value-based purchasing and Medicare DSH:
  • Verify CMS’ table listing the factor used to calculate uncompensated care payments for Medicare Disproportionate Share Hospitals (DSH). Hospitals have until June 28 to review this table and notify CMS in writing of any inaccuracies.
  • Verify that you have attested to meaningful use. Attestation status can be determined through CMS’ website.
  • If applicable, apply for low-volume hospital status by written request to your Medicare Administrative Contractor (MAC) by Sept. 1 in order to receive the low-volume adjustment beginning Oct. 1.
  • Share this advisory with your billing, medical records, quality improvement and compliance departments, as well as your clinical leadership team – including the quality improvement committee and infection control officer – to apprise them of the proposals around the diagnosis-related groups and quality measurement requirements.
  • Submit comments to CMS with your specific concerns by June 28 at The final rule will be published on or around Aug.1 and take effect Oct. 1.

Further Questions

Please contact Shannon Wu, AHA senior associate director of policy, at 202-626-2963 or if you have further questions.

Hospital Inpatient PPS Proposed Rule for FY 2022

Table of Contents

Inpatient PPS Payment Update

“Market-based” MS-DRG Data Collection and Weight Calculation

Disproportionate Share Hospital (DSH) Payment Changes

Chimeric Antigen T-Cell (CAR-T) Therapy

New Technology Add-on Payments (NTAPs)

New COVID-19 Treatments Add-on Payments (NCTAPs)

Area Wage Index Modifications

Graduate Medical Education (GME)

Organ Acquisition Payment

Medicaid Enrollment of Medicare Providers

Counting Days Associated with Section 1115 Demonstration Projects in the Medicaid raction

Rural Provisions

Key Coding and MS-DRG Changes

Medicare Shared Savings Program

Promoting Interoperability Programs

Hospital Quality Reporting and Value Programs

Next Steps

Further Questions

Click on the PDF link below to read the full Regulatory Advisory.

Key Takeaways

CMS proposes to:

  • Increase inpatient PPS payments by 2.8% in FY 2022.
  • Repeal the requirement to report the median payer-specific negotiated rates for inpatient services, by Medicare Severity-Diagnosis-related Group (MS-DRG), for Medicare Advantage organizations.
  • Use data from Worksheet S-10 in the FY 2018 cost report to determine the distribution of FY 2022 DSH uncompensated care payments.
  • Extend New COVID-19 Treatments Add-on Payments for eligible COVID-19 products through the end of the fiscal year in which the public health emergency (PHE) ends.
  • Implement changes to the GME program and related payments, as required in the Consolidated Appropriations Act, 2021.
  • Modify the Promoting Interoperability Program, including by requiring a 180-day reporting period for CY 2024 and increasing the minimum required score to be considered a meaningful EHR user.
  • Modify the Promoting Interoperability Program, including by requiring a 180-day reporting period for CY 2024 and increasing the minimum required score to be considered a meaningful EHR user.
  • Suppress certain measures in hospital quality reporting and value programs, applying neutral payment adjustments under hospital value-based purchasing (VBP) for FY 2022, to account for the impact of the COVID-19 PHE.
  • Add five new measures for the inpatient quality reporting (IQR) program.