HomeLatest NewsFederal NewsCMS Issues Hospital IPPS and LTCH PPS Final Rules for FY 2022

CMS Issues Hospital IPPS and LTCH PPS Final Rules for FY 2022

The Centers for Medicare & Medicaid Services (CMS) 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 It also repealed the market-based MS-DRG relative weight methodology CMS had planned to implement in FY 2024; instead, CMS will continue using its existing cost-based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.

CMS also issued its fiscal year 2022 final rule for the long-term care hospital prospective payment system. CMS estimates that the rule will increase net LTCH payments by 1.1% ($42 million) in FY 2022, relative to the current year. Also, as proposed, the rule uses FY 2019, pre-COVID-19 claims data to calculate the FY 2022 weights and rates. In addition, the agency finalized its proposal to adopt one new quality measure that assesses the percentage of health care personnel who are vaccinated against COVID-19, among other updates to the quality reporting program.

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