IPPS Final Rule Bumps Hospital Reimbursement, COVID-19 Rates

CMS has finalized an approximate $2.3 billion increase in hospital payments next year, including a 2.5 percent bump for hospital reimbursement rates under Medicare’s Inpatient Prospective Payment System (IPPS).

Just released, the IPPS final rule for fiscal year (FY) 2022 will increase hospital reimbursement rates starting October 1, 2021, alongside payments to hospitals diagnosing and treat COVID-19.

The final rule authorizes additional payments for diagnostics and therapies for COVID-19 during the public health emergency (PHE), which is expected to last through this year. CMS stated that the additional payments are meant to “mitigate potential financial disincentives for hospitals to provide new COVID-19 treatments and to minimize any potential payment disruption immediately following the end of the PHE.”

“How Medicare pays for hospital care and evaluates quality, are integral pieces of achieving and addressing gaps in health equity and strengthening our health care system for a more sustainable future,” CMS Administrator Chiquita Brooks-LaSure said in an announcement. “CMS is moving forward to incorporate what we have learned from the COVID-19 pandemic in order to improve quality and increase transparency so that patients are positioned to make informed decisions about their care.”

In addition, CMS is aiming to improve quality measurement and data evaluations through the FY 2021 IPPS final rule, Brooks-LaSure said.

The agency finalized a proposal to rebase and revise the IPPS operating market basket and IPPS capital market basket to reflect a 2018 base year. The final rule will also rebase and revise the national-labor related and nonlabor-related shares, which will impact hospital reimbursement rates.

CMS also used FY 2019 data, which reflected pre-pandemic inpatient hospital utilization, to determine rate increases for the upcoming fiscal year, the final rule stated. This will impact the use of the new technology add-on payment, so CMS decided to extend the new payments for 13 technologies for another year.

To further improve data collection and standardization, CMS also finalized a Maternal Morbidity measure to the hospital quality reporting program, as well as a measure requiring hospitals to report COVID-19 vaccination rates among workers. The measures are part of CMS’ goal of improving health equity, which also included a request for feedback on how to advance equity through quality reporting.

“Standardization of equity data to improve hospital data collection is just one more way CMS will lead the national conversation on improving health equity,” said Brooks-LaSure. “CMS will use these comments and innovate on quality measures to help identify health equity data. We’re also measuring hospital initiatives to improve maternal health outcomes as we work to reduce disparities in maternal morbidity.”

Other policies finalized in the FY 2022 IPPS rule included:

• Distribution of $7.2 billion in uncompensated care payments
• Repeal of the requirement that hospitals report on the Medicare cost report the median payer-specific negotiated charge for all Medicare Advantage payers
• Repeal of the market-based DRG relative weight methodology going into effect in FY 2024
• Addition of two quality measures (Hospital Harm-Severe Hypoglycemia eCQM (NQF #3503e) and Hospital Harm-Severe Hyperglycemia eCQM (NQF #3533e)) to the hospital quality reporting program
• Changes to the Promoting Interoperability Program
• Implementation of a measure suppression policy in certain value-based purchasing programs, including the Hospital Readmissions Reduction Program

To view the complete final rule, click here.