AHA’s Recommendations for Inpatient Medicare Reimbursement in FY22

The American Hospital Association (AHA) released comments on CMS’s FY 2022 Inpatient Prospective Payment System (IPPS) proposed rule, which would increase inpatient Medicare reimbursement rates by $2.5 billion. The proposed rule also aims to improve health equity and add 1,000 additional physician residency slots. CMS requested that organizations submit comments for consideration by June 28th.

The IPPS proposed rule seeks to revise payment and quality data reporting methods, enhance the physician workforce in underserved areas, and prepare the healthcare industry for future public health threats.

In a letter to CMS containing comments on the proposed IPPS rule, AHA expressed its support for several of the proposed changes and addressed concerns with others. Specifically, AHA announced its support for “market-based” MS-DRG data collection and weight calculation, which rules that hospitals “would no longer be required to report, by MS-DRG, the median payer-specific negotiated charge for Medicare Advantage (MA) organizations.”

In addition, AHA expressed support for CMS’s proposal of repealing the requirement that dictates that the median payer-specific negotiated charge be used to calculate new MS-DRG relative weights.

Under the IPPS proposed rule, CMS also suggests a measure suppression policy in the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program that will allow CMS to prevent the use of measure data if it determines that extenuating circumstances due to COVID-19 have impacted the measure significantly.

This initiative would support value-based programs and advancements in health equity. While the AHA applauded these efforts in its letter, it also expressed concerns about new measures regarding the inpatient quality reporting program, urging CMS to reconsider.

Under the proposed updates to the organ acquisition payment policies, CMS proposed changes that would impact organ procurement organizations (OPOs), donor community hospitals, and transplant hospitals. CMS wants to encourage more accurate Medicare payments by collecting data from OPOs and transplant hospitals to ensure reasonable costs. But AHA strongly disagrees.

“The AHA is concerned with CMS’ proposals related to Medicare usable organs and organ acquisition payments. Specifically, organ tracking capabilities simply do not exist to the degree necessary to obtain the information CMS would require,” AHA stated in its letter to CMS.

“As such, if enacted, this proposed policy could severely limit patient access to organ transplantations. Thus, we strongly urge CMS to withdraw its proposal and instead engage with stakeholders in developing any modifications to organ acquisition payment methodologies.”

CMS also proposed changes to the Consolidated Appropriations Act of 2021, which impacted Medicare Direct Graduate Medical Education (DGME) and indirect medical education (IME) payments. CMS recommended prioritizing rural and underserved areas in the distribution of 1,000 additional Medicare-funded residency positions across qualifying hospitals. But the limitations of CMS’s proposal presents concerns for the AHA.

“The AHA is very concerned about CMS’ proposed method to award a maximum of one full-time equivalent (FTE) residency slot per hospital per year and its proposal to prioritize slot distribution by health professional shortage area (HPSA) scores,” the AHA letter stated.

“Such a limitation is unworkable and unproductive and such a prioritization method reflects neither statutory intent nor the reality of teaching hospital service areas.”

Instead, the AHA recommends that CMS implement an alternative, streamlined method for prioritization of FTE slots that ensures equity for all parties.

“Hospitals are often the backbone of rural communities – but the COVID-19 pandemic has hit rural hospitals hard, and too many are struggling to stay afloat,” said HHS Secretary Xavier Becerra in a statement announcing the proposed rule in April.

“This rule will give hospitals more relief and additional tools to care for COVID-19 patients and it will also bolster the health care workforce in rural and underserved communities. The Biden Administration is committed to expanding health equity in communities across the country, especially in rural America.”