Health Law Daily IPPS final rule for FY 2022 increases hospital payments by $2.3B
Tuesday, August 3, 2021

IPPS final rule for FY 2022 increases hospital payments by $2.3B

By Sheila Lynch-Afryl, J.D., M.A.

CMS extended an add-on for new COVID-19 treatments and updated requirements for the Promoting Interoperability Program.

Payments to hospitals will increase $2.3 billion in fiscal year (FY) 2022, according to an advance release of the FY 2022 hospital inpatient prospective payment system (IPPS) final rule, which will be published in the Federal Register August 13, 2021. CMS expects payments to long-term care hospitals (LTCHs) to increase by 1.1 percent, or $42 million, in FY 2022. The final rule also updated requirements for hospitals participating in the Medicare Promoting Interoperability Program.

IPPS payment update. The FY 2022 2.5 percent update for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record users is based on a market basket increase of 2.7 percent, less a .7 percentage point productivity adjustment pursuant to section 3401(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) and increased by a .5 percent adjustment required by legislation. CMS also rebased and revised the market basket index to reflect a 2018 base year. The agency used FY 2019 data for FY 2022 rate-setting in circumstances where the FY 2020 data was significantly impacted by the COVID-19 public health emergency (PHE).

In addition, CMS did the following: (1) updated its estimates of the three factors used to determine uncompensated care payments for FY 2022; (2) finalized its implementation of section 9831 of the American Rescue Plan Act of 2021 (P.L. 117-2), which permanently established the imputed floor wage index policy; and (3) finalized the regulations implemented in a May 10 interim final rule (86 FR 24735), which allowed 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.

The final rule repealed: (1) the requirement that a hospital report on its cost report the median payer-specific negotiated charge that the hospital negotiated with all of its Medicare Advantage organization payers, by Medicare severity diagnosis-related group (MS-DRG), for cost reporting periods ending on or after January 1, 2021, and (2) the market-based MS-DRG relative weight methodology adopted for calculating the MS-DRG relative weights effective in FY 2024. "Repeal of this data collection and payment policy does not dilute CMS’s commitment to hospital price transparency," CMS stated in a fact sheet.

COVID-19 add-on. CMS previously established a New COVID-19 Treatments Add-on Payment for discharges occurring between November 2, 2020 and the end of the COVID-19 PHE. In the final rule, CMS determined that the payment will remain available for the remainder of the fiscal year in which the PHE ends.

New technology add-on. CMS approved new technology add-on payments for 19 technologies for FY 2022, including nine under the alternative pathway for new medical devices that are part of the FDA Breakthrough Devices Program and two approved under the alternative pathway for products that received FDA Qualified Infectious Disease Product designation. CMS will continue the add-on payment for the 23 technologies already receiving it.

MSSP. An accountable care organization (ACO) may elect to remain in the same level of the BASIC track's glide path in which it participated during performance year (PY) 2021 before the automatic advancement for PY 2022. For PY 2023, an ACO that elects this option will be automatically advanced to the level of the BASIC track's glide path in which it would have participated during PY 2023 if it had advanced automatically to the required level for PY 2022.

Quality/value programs. Due to the impact of the COVID-19 PHE on measure data used in Medicare value-based purchasing programs, CMS suppressed several measures in the Hospital Value-Based Purchasing (VBP), Hospital-Acquired Condition (HAC) Reduction, and Hospital Readmissions Reduction programs. As a result of these measure suppressions CMS implemented a special scoring methodology for the Hospital VBP Program for FY 2022. For the IQR program, CMS adopted five new measures and removed three measures.

LTCHs. For discharges paid the standard LTCH payment rate, LTCH PPS payments for FY 2022 are expected to increase by .9 percent, and payments for discharges paid the site neutral payment rate are expected to increase by 3 percent. CMS approximated that discharges paid the site neutral payment rate will represent 10 percent of all LTCH PPS payments in FY 2022.

MainStory: TopStory NewsStory ReimbursementNews ACONews BillingNews CharityNews CMSNews CostReportNews Covid19 DSHNews DrugBiologicNews EHRNews HITNews HealthReformNews IPPSNews LTCHNews PartANews PartCNews QualityNews FedTracker HealthCare

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