AHA to CMS: Proposed inpatient, LTCH payment updates ‘woefully inadequate’

Commenting today on the proposed rule for the inpatient prospective payment system for fiscal year 2023, AHA today urged the Centers for Medicare & Medicaid Services to adjust the market basket update to account for the unprecedented inflationary environment hospitals and health systems are experiencing, and eliminate the productivity cut.

“When historical data vastly underestimate future inflation, the market basket becomes inadequate,” AHA wrote. “Similarly, when data incorrectly predict gains in productivity, the productivity adjustment is substantially overstated. This is essentially what occurred in the forecasting of the FY 2022 and 2023 market basket and productivity adjustments.”

AHA also urged the agency to update its estimates of the Medicare Disproportionate Share Hospital amount to more accurately reflect discharge volume and the uninsured rate; and consider additional temporary changes to help mitigate the dramatic increase in the high-cost outlier threshold.

The association voiced support for provisions related to the full-time equivalent cap calculation in the graduate medical education program and the cap on area wage index decreases, as well as proposals to recognize the ongoing impact of the COVID-19 pandemic on quality programs and advance health equity.

AHA urges similar changes to proposed LTCH provisions

In a separate letter commenting on the proposed rule’s long-term care hospital PPS provisions, AHA similarly urged the agency to adjust the market basket update to account for the unprecedented inflationary environment hospitals and health systems are experiencing; eliminate the productivity cut; and consider additional temporary changes to help mitigate the dramatic increase in the high-cost outlier threshold.
“We are concerned that CMS is proposing policies and payment adjustment that do not take into account the current the COVID-19 public health emergency and its atypical market forces and pandemic-driven aberrations affecting the utilization and cost of providing LTCH services,” AHA wrote.

Report finds proposed rule likely to underpay hospitals significantly

Along with the comment letters, AHA shared with CMS a new report by FTI Consulting assessing the adequacy of the proposed rule’s payment updates, which found that “reliance on lagging indicators of hospital costs to determine prospective market basket and productivity adjustments in this highly dynamic and uncertain health care environment would likely result in significant underpayments to acute care hospitals in FY 2023.”