CMS recently released its Fiscal Year (FY) 2022 Medicare Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTACH) proposed rule. Along with the annual payment updates, CMS put forth a number of other proposals, from extension of the New COVID-19 Treatments Add-on Payment to elimination of a recently passed price transparency reporting requirement. CMS is accepting comments on the proposed rule until June 28, 2021. A high-level summary follows below.
- Changes to Hospital Payment Rates under the IPPS
For FY 2022, CMS is proposing a 2.8% increase in operating payment rates for hospitals paid under the IPPS which successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users. Hospitals may be subject to other payment adjustments under the IPPS (e.g., reductions for excess admissions, reductions for the worst-performing quartile under the Hospital-Acquired Condition Reduction Program, upward and downward adjustments under the Hospital Value-Based Purchasing Program).
CMS projects that Medicare disproportionate share payments (DSH) and Medicare uncompensated care payments will decrease in FY 2022 by approximately $0.9 billion compared to FY 2021. The overall increase in payments to hospitals is estimated at $2.5 billion.
When setting inpatient payment rates, CMS typically uses the best available data. The best available full year of data to estimate FY 2022 inpatient hospital utilization would be the data from FY 2020. However, due to changes in inpatient hospital utilization for FY 2020 largely the result of COVID-19, CMS is proposing to use FY 2019 data to approximate FY 2022 inpatient hospital utilization.
- Changes to Payment Rates under the LTACH PPS
For FY 2022, CMS is proposing to establish an annual market basket update to the LTACH PPS standard federal payment rate of 2.2%. Based on the FY 2019 LTACH cases used for analysis in the proposed rule, approximately 75% of LTACH cases will meet the patient-level criteria for exclusion from the site neutral payment rate in FY 2022; consequently, they will be paid based on the LTACH PPS standard federal payment rate. CMS estimates that payment for standard federal payment rate cases in FY 2022 will increase by approximately $41 million (taking into consideration the 2.2% annual update to the standard federal payment rate and the projected 0.8% decrease in high cost outlier payments). CMS further estimates that aggregate LTACH PPS payments for site neutral payment rate cases will increase by approximately $11 million due to increased costs and various proposed updates to the IPPS rates.
- Extension of New COVID-19 Treatments Add-on Payment
In response to COVID-19, CMS established the New COVID-19 Treatments Add-on Payment (NCTAP) under the IPPS for COVID-19 cases that meet certain criteria. For drugs and biological products that become available and are authorized for emergency use or approved by the Food and Drug Administration (FDA) for the treatment of COVID-19 in the inpatient setting, CMS reasoned that it is appropriate to increase the current IPPS payment amounts to mitigate any potential financial disincentives for hospitals to provide new COVID-19 treatments during the public health emergency. The NCTAP was effective for discharges occurring on or after November 2, 2020, and until the end of the public health emergency.
CMS is proposing to extend the NCTAP for certain eligible products through the end of the fiscal year in which the public health emergency ends, and to discontinue the NCTAP for discharges on or after October 1, 2021, for a product that is approved for new technology add-on payments beginning FY 2022.
- One-Year Extension of New Technology Add-on Payment
Because CMS decided to use FY 2019 instead of FY 2020 data for FY 2022 IPPS rate setting, CMS is proposing a one-year extension of new technology add-on payments for 14 technologies for which such payment would otherwise be discontinued beginning in FY 2022.
- Elimination of Requirement to Report Median Payer-Specific Negotiated Charges on Medicare Cost Report
CMS is proposing to repeal the requirement that a hospital report on the Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its Medicare Advantage organization payers, by MS-DRG, for cost reporting periods ending on or after January 1, 2021. In repealing this reporting requirement, CMS estimates a reduction of 63,780 annual burden hours for hospitals, which equals a reduction of $4,315,993 across all hospitals.
CMS is also proposing to repeal the market-based MS-DRG relative weight methodology adopted for calculating MS-DRG relative weights effective in FY 2024, and to continue using the existing cost-based methodology for calculating the MS-DRG relative weights for FY 2024 and subsequent years.
- Proposals for Implementation of Consolidated Appropriations Act Sections on Medical Residents
The Consolidated Appropriations Act of 2021 (CAA) contained three provisions affecting Medicare direct Graduate Medical Education (GME) and Indirect Medical Education (IME) payments to teaching hospitals (see notes below on Sections 126, 127, and 131, respectively). CMS is proposing various rules to implement the provisions of the CAA. For example, with respect to Section 126, CMS proposes to prioritize applications from qualifying hospitals that serve geographic areas and underserved populations with the greatest need. CMS proposes further that the application deadline for the additional positions available for a fiscal year be January 31 of the prior fiscal year. Therefore, for FY 2023, the application deadline would be January 31, 2022.
- Section 126 of the CAA makes available 1,000 new Medicare-funded GME positions (but not more than 200 new positions for a fiscal year), to be distributed beginning in FY 2023. Priority is given to hospitals in four statutorily-specific categories: (1) hospitals located in rural areas or areas that are treated as being located in a rural area; (2) hospitals in which the reference resident level of the hospital is greater than the otherwise applicable resident limit; (3) hospitals in states with new medical schools or additional locations and branches of existing medical schools; and (4) hospitals that serve areas designated as Health Professional Shortage Areas.
- Section 127 of the CAA makes statutory changes related to the determination of both an urban and rural hospital’s FTE resident limit for direct GME and IME payment purposes with regard to residents training in an accredited rural training track as well as to the three year rolling average used to calculate payments for these hospitals.
- Section 131 of the CAA makes statutory changes to the determination of direct GME per resident amounts and direct GME and IME FTE resident limits of hospitals that hosted a small number of residents for a short duration.
- Addressing the Health Equity Gap
CMS is requesting information on revising several 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. CMS will use feedback to create future requests for information focused on closing the health equity gap among its programs and policies.
- Hospital Inpatient Quality Reporting Program
CMS is proposing adoption of five new measures for the Hospital Inpatient Quality Reporting (IQR) Program:
- A new structural measure, Maternal Morbidity Structural Measure, beginning with a shortened reporting period from October 1, 2021 through December 31, 2021 (affecting CY 2021 reporting period/FY 2023 payment determination);
- The Hybrid Hospital-Wide All-Cause Risk Standardized Mortality (Hybrid HWM) measure in a stepwise fashion, beginning with a voluntary reporting period from July 1, 2022 through June 30, 2023, and followed by mandatory reporting from July 1, 2023 through June 30, 2024 (affecting the FY 2026 payment determination and for subsequent years);
- The COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) measure, beginning with a shortened reporting period from October 1, 2021 through December 31, 2021 (affecting the CY 2021 reporting period/FY 2023 payment determination and with quarterly reporting beginning with the FY 2024 payment determination and for subsequent years, and two medication-related adverse event eCQMs beginning with the CY 2023 reporting period/FY 2025 payment determination); and
- Hospital Harm-Severe Hypoglycemia eCQM (NQF #3503e).
CMS is proposing to remove five measures:
- Death Among Surgical Inpatients with Serious Treatable Complications (CMS PSI-04) beginning with the FY 2023 payment determination;
- Exclusive Breast Milk Feeding (PC-05) (NQF #0480) beginning with the FY 2026 payment determination;
- Admit Decision Time to ED Departure Time for Admitted Patients (ED-2) (NQF #0497) beginning with the FY 2026 payment determination, and two stroke-related eCQMs beginning with the FY 2026 payment determination;
- Anticoagulation Therapy for Atrial Fibrillation/Flutter eCQM (STK-03) (NQF #0436); and
- Discharged on Statin Medication eCQM (STK-06) (NQF #0439).
CMS is requesting comment on the potential future development and inclusion of two measures:
- Mortality for patients admitted with COVID-19; and
- Patient-reported outcomes measure following electric total hip and/or total knee arthroplasty.
CMS is also requesting general comment on ways to leverage measures to address gaps in existing health equity.
- LTACH Quality Reporting Program Updates
LTACHs that fail to comply with the LTACH Quality Reporting Program (QRP) requirements are subject to a two percentage point reduction in the annual update to the LTACH PPS standard federal rate. CMS is proposing various updates to the LTACH QRP, including:
- Adoption of a new measure – the COVID-19 Vaccination Coverage among Healthcare Personnel Measure (beginning with the FY 2023 LTACH QRP – LTACHs would be required to submit data for the period October 1, 2021 through December 31, 2021);
- Update the Transfer of Health Information to the Patient – Post-Acute Care (PAC) measure denominator to exclude patients discharged home under the care of an organized home health service or hospice (beginning with FY 2023 LTACH QRP);
- Public display of measure data for the LTACH QRP, including
- Public reporting for the Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTACH Stay measure beginning with the March 2022 Care Compare refresh or as soon as technically feasible;
- Public reporting for the Ventilator Liberation Rate for the PAC LTACH QRP Measure, beginning with the March 2022 Care Compare Refresh or as soon as technically feasible; and
- Publicly report the COVID-19 Vaccination Coverage among Healthcare Personnel measure beginning with the September 2022 Care Compare Reference or as soon as technically feasible.
- Measure Suppression Policies Related to COVID-19
To address the impact of COVID-19, CMS is proposing a measure suppression policy for the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchase (VBP) Program. This policy would allow CMS to suppress the use of certain measure data if it is determined that circumstances caused by COVID-19 have significantly affected those measures and the resulting quality scores. CMS outlines specific proposals with respect to the HRRP, HAC Program, and VBP Program.
- Updates to Medicare Promoting Interoperability Program
CMS is proposing several changes to the Medicare Promoting Interoperability Program, which encourages hospitals and providers to adopt, implement, upgrade, and demonstrate meaningful use of certified EHR technology. CMS proposals include:
- To continue the EHR reporting period of a minimum of any continuous 90-day period for new and returning eligible hospitals and CAHs for CY 2023 and to increase the EHR reporting period to a minimum of any continuous 180-day period for new and returning eligible hospitals and CAHs for CY 2024;
- To maintain the Electronic Prescribing Objective’s Query of PDMP measure as optional while increasing its available bonus from five points to 10 points for the EHR reporting period in CY 2022;
- To modify the Provide Patient’s Electronic Access to Their Health Information measure to establish a data availability requirement beginning with encounters with a date of service on or after January 1, 2016, beginning with the EHR reporting period in CY 2022;
- To add a new Health Information Exchange (HIE) Bi-Directional Exchange measure as a yes/no attestation to the HIE objective as an optional alternative to the two existing measures beginning with the EHR reporting period in CY 2022;
- To require reporting a “yes” on four of the existing Public Health and Clinical Data Exchange Objective measures (Syndromic Surveillance Reporting, Immunization Registry Reporting, Electronic Case Reporting, and Electronic Reportable Laboratory Result Reporting) or requesting the applicable exclusion(s);
- Adding a new measure to the Protect Patient Health Information objective that requires eligible hospitals and CAHs to attest to having completed an annual assessment of SAFER Guides beginning with the EHR reporting period in CY 2022;
- To remove attestation statements 2 and 3 from the Promoting Interoperability Program’s prevention of information blocking requirement;
- To increase the minimum required score for the objectives and measures from 50 points to 60 points (out of 100 points) in order to be considered a meaningful EHR user; and
- To adopt two new eCQMs to the Medicare Promoting Interoperability Program’s eCQM measure set beginning with the reporting period in CY 2023, in addition to removing four eCQMs from the measure set beginning with the reporting period in CY 2024, which is in alignment with the proposals for the Hospital IQR Program.
Advis will continue to review and provide analysis of the FY 2022 Medicare IPPS and LTACH proposed rule. As a reminder, CMS is accepting comments on the proposed rule until June 28, 2021. For any questions regarding the proposed rule, or for any organizational assistance with other healthcare regulatory/operational matters, please contact Advis or call 708.478.7030.