The FY 2022 IPPS proposed rule seeks to close health care equity gaps and updates payment rates for inpatient and long-term care hospitals.
The fiscal year (FY) 2022 inpatient prospective payment system (IPPS) proposed rule highlights key Biden Administration key priorities, including closing health care equity gaps and providing greater accessibility to care. The proposed rule looks to fund medical residency positions in hospitals serving rural and underserved communities to address workforce shortages. The proposed rule additionally provides annual updates to Medicare payment policies and rates for inpatient hospital and long-term care hospital (LTCH) operating and capital-related costs (Proposed rule, 86 FR 25070, May 10, 2021).
Payment updates. CMS proposed to increase by 2.8 percent operating payment rates for general acute care hospitals successfully participating in the Hospital Inpatient Quality Reporting (IQR) Program and that are meaningful users of electronic health records (HER). This includes a projected hospital market basket update of 2.5 percent reduced by a 0.2 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by legislation. The proposed increase in operating payment rates—in addition to increases in capital payments, payments for new medical technologies, and increases in payments due to the implementation of the imputed floor, among others—is projected to increase hospital payments for FY 2022 by $3.4 billion or 2.8 percent. CMS also projects that Medicare DSH payments and Medicare uncompensated care payments will decrease by approximately $0.9 billion. CMS estimates that, overall, hospital payments will increase by $2.5 billion.
CMS noted that, ordinarily, the best available full year of data to approximate the FY 2022 inpatient hospital utilization would be data from FY 2020. However, because the FY 2020 data reflects changes in utilization due to the COVID-19 pandemic, paired with the rapid increase in vaccinations, CMS predicts a significantly lower risk of COVID-19 infections and hospitalizations in FY 2022 than in FY 2020. Thus, CMS proposed to use FY 2019 data from before the pandemic to approximate the expected FY 2022 inpatient hospital utilization. CMS also seeks comment on the use of FY 2020 data as an alternative to consider.
Health equity gaps. The proposed rule seeks to close gaps in health equity by distributing to qualifying hospitals, including those serving rural and underserved areas, an additional 1,000 new Medicare-funded medical residency positions to train physicians. Priority will be given to hospitals serving geographic areas and underserved populations with the greatest need. The slots will be phased in at no more than 200 slots per year beginning in FY 2023. The funding will total approximately $1.8 billion from FY 2023 through FY 2031. CMS also proposed to implement section 127 of the Consolidated Appropriations Act, 2021, (CAA) which allows rural training hospitals participating in an accredited rural training track (RTT) to receive a GME cap increase. It also proposed to implement section 131 of the CAA, which will restore the ability of hospitals to receive Medicare funding for residents in a new training program.
Additionally, CMS is seeking stakeholder input on ideas to revise several related CMS programs to make reporting of health disparities based on social risk factors and race and ethnicity more comprehensive and actionable for hospitals, providers, and patients.
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