CMS issues hospital IPPS final rule for FY 2022

The Centers for Medicare & Medicaid Services late today issued a final rule that increases Medicare inpatient prospective payment system rates by a net 2.5% in fiscal year 2022, compared to FY 2021, for hospitals that are meaningful users of electronic health records and submit quality measure data. In addition, the rule repeals the requirement to report certain payer-negotiated rates and makes changes to quality measurement and value programs.

CMS finalized its repeal of the requirement that hospitals report their median payer-specific negotiated rates for inpatient services, by Medicare Severity-Diagnosis Related Group, for Medicare Advantage organizations. It also repealed the market-based MS-DRG relative weight methodology CMS had planned to implement in FY 2024; instead, CMS will continue using its existing cost-based methodology.

The agency also finalized its proposal that the New COVID-19 Treatments Add-on Payment be extended for eligible COVID-19 products through the end of the fiscal year in which the public health emergency (PHE) ends. Hospitals will be eligible to receive both NCTAP and the traditional new technology add-on payment for qualifying patient stays through the end of the fiscal year in which the PHE ends.

In addition, CMS finalized its proposal to use FY 2019 data, rather than data from FY 2020, in approximating expected FY 2022 inpatient hospital utilization for weight-setting purposes.

The agency did not discuss its proposed policies related to payments for direct graduate medical education and indirect medical education and organ acquisitions in this rule. Instead, it stated that it would address them in future rulemaking.

Finally, CMS adopted a number of changes to its quality reporting and value programs in response to the COVID-19 pandemic. Beginning on Oct. 1, hospitals must report a new inpatient quality reporting program measure reflecting the proportion of their health care personnel vaccinated for COVID-19. In addition, to account for the impact of the COVID-19 PHE on quality performance, CMS finalized a measure suppression policy under which CMS can “suppress” (i.e., not use) measure data it believes have been affected by COVID-19 in calculating hospital performance. For FY 2022, CMS will suppress most hospital value-based purchasing program measures. As a result, hospitals will receive neutral payment adjustments under the VBP for FY 2022. In addition, CMS will exclude performance data from 2020 in calculating Hospital Acquired Condition Reduction Program performance for FYs 2022 and 2023. Lastly, for the FY 2023 Hospital Readmissions Reduction Program, CMS will suppress the pneumonia readmissions measure, and exclude COVID-19-diagnosed patients from the remaining five measures.

In a statement shared with the media today, AHA said it "appreciates CMS listening to our concerns by repealing the requirement that hospitals and health systems disclose privately negotiated contract terms with payers on the Medicare cost report. This policy was originally adopted for the stated purpose of better aligning fee-for-service Medicare payments with market rates. However, privately negotiated rates take into account a number of unique circumstances between a private payer and a hospital and are not an appropriate benchmark for fee-for-service Medicare payments.

"In addition, we appreciate that CMS is continuing to review comments on its organ acquisition proposed policies. We continue to urge the agency to engage with stakeholders, including providers, in developing any modifications. We also appreciate that CMS is continuing to review comments on proposed changes related to Medicare-funded residency slots and we look forward to working with them to develop a workable policy to help ease current physician shortages and strengthen the health care delivery system.

"Further, we are pleased that the agency recognizes that the COVID-19 pandemic has resulted in non-representative performance in its hospital quality measurement and value programs, requiring temporary policy adjustments. We also thank CMS for extending the add-on payment for new COVID-19 treatments through the year in which the current public health emergency ends. This will help ensure hospitals and health systems have the resources to treat COVID-19 patients.

"Lastly, the AHA strongly supports COVID-19 vaccinations of both health care workers and the communities they serve. We have worked closely with the hospital field and the federal government to encourage vaccination to help protect both our patients and health care workforce from the virus. While CMS’s new quality measure on the rate of health care personnel COVID-19 vaccination likely needs further refinement to ensure it accurately reflects hospitals’ progress in vaccinating their workforce, we will work with CMS, CDC and hospitals to facilitate the reporting of the measure starting on October 1."