CMS Releases the FY 2023 Medicare IPPS and LTACH Proposed Rule

CMS recently released its Fiscal Year (FY) 2023 Medicare Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTACH) Prospective Payment System (PPS) proposed rule.  The proposed rule will update Medicare fee-for-service payment rates for inpatient hospitals and LTACHs for FY 2023.  In addition to annual payment updates, CMS put forth several other proposals, including potential payment adjustments for domestically made surgical N95 respirators, a cap on decrease to a hospital’s wage index, and a new hospital designation for maternal care. Comments on the IPPS and LTACH proposed rule are due to CMS on June 17, 2022.  Highlights follow below.

Reimbursement

Changes to Hospital Payment Rates under the IPPS – an Increase of $1.6B

For FY 2023, CMS is proposing a 3.2% increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program, and that are meaningful electronic health record (EHR) users.  Hospitals may be subject to payment adjustments (e.g., reductions for excess admissions; reductions for worst-performing quartile under the Hospital-Acquired Condition Reduction Program; and upward and downward adjustments under the Hospital Value-Based Purchasing Program).

The proposed increase in operating and capital IPPS payments will generally increase hospital payments in FY 2023 by $1.6 billion.  CMS projects disproportionate share hospital (DSH) payments and Medicare uncompensated care payments, combined, will decrease in FY 2023 by approximately $0.8 billion.

For rate FY 2023 rate setting, CMS is proposing to use the most recent available data, which includes the FY 2021 MedPAR claims and the FY 2020 cost reports, with certain modifications to account for the anticipated decline in COVID-19 hospitalizations.

Changes to Payment Rates under the LTACH PPS – an Overall Increase of $25M

CMS estimates the aggregate LTACH PPS payments will increase by approximately $25 million.

CMS is proposing to establish an LTACH PPS standard federal payment rate of $45,952.67.  This reflects the proposed 2.7% annual update to the LTACH PPS standard federal payment rate and the proposed budget neutrality factor for proposed updates to the area wage level adjustment of 1.000691.  For LTACHs that fail to submit data for the LTCH QRP, CMS is proposing to establish an LTCH PPS standard federal payment rate of $45,057.78.

Decrease in Uncompensated Care Payments

CMS is proposing to distribute approximately $6.5 billion in uncompensated care payments for FY 2023, which is a decrease of approximately $654 million from FY 2022.  The uncompensated care payment reflects the CMS Office of the Actuary’s projections that incorporate the estimated impact of COVID-19.

5% Cap on Decrease to Hospital’s Wage Index

To reduce overall volatility for hospitals, CMS is proposing to apply a 5% cap on any decrease to a hospital’s wage index from its wage index in the prior FY, regardless of the circumstances causing the decline.  In other words, a hospital’s wage index for FY 2023 would not be less than 95% of its final wage index for FY 2022.  For subsequent years a hospital’s wage index would not be less than 95% of its final wage index for the prior FY.

Payment Adjustment for Domestically Made Surgical N95 Respirators

Risks remain in maintaining preparedness for COVID-19 and future pandemics, including supply chain interruptions and with personal protective equipment that does not meet certain quality standards.  To maintain a level of domestic production for surgical N95s, CMS is considering payment adjustments to hospitals to recognize the additional resource costs they incur to acquire NIOSH-approved surgical N95 respirators that are wholly made in the United States, including raw materials and components.  CMS is soliciting feedback on the appropriateness of payment adjustments that would account for these additional resource costs.  CMS is considering such payment adjustments to apply to 2023 and potentially subsequent years.

Reporting and Interoperability Updates

Seasonal Influenza/COVID-19 Data

CMS proposes to revise the hospital and Critical Access Hospital (CAH) infection prevention and control and antibiotic CoPs to extend the current COVID-19 reporting requirements.  At the end of the COVID-19 PHE and continuing until April 30, 2024, a hospital or CAH must electronically report information about COVID-19 and Seasonal Influenza in a standardized format specified by HHS.

For COVID-19, categories of data elements include: suspected and confirmed COVID-19 infections among patients and staff; total COVID-19 deaths among patients and staff; personal protective equipment and testing supplies in the facility; ventilator use, capacity and supplies in the facility; total hospital bed and intensive care unit bed census and capacity; staffing shortages; COVID-19 vaccine administration data of patients and staff; and relevant therapeutic inventories and/or usage.

For Seasonal Influenza, categories of data elements include: confirmed influenza infections among patients and staff; total influenza deaths among patients and staff; and confirmed co-morbid influenza and COVID-19 infections among patients and staff.

CMS is also proposing to establish new reporting requirements for any future PHEs related to a specific infectious disease or pathogen.

Hospital Inpatient Quality-Reporting (IQR) Program

CMS is proposing to adopt several changes to the Hospital IQR Program, including ten new measures:

• Hospital Commitment to Health Equity beginning with the CY 2023 reporting period/FY 2025 payment determination.
• Screening for Social Drivers of Health beginning with voluntary reporting for the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination.
• Screen Positive Rate for Social Drivers of Health beginning with voluntary reporting for the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination.
• Cesarean Birth electronic clinical quality measure (eCQM) with inclusion in the measure set beginning with the CY 2023 reporting period/FY 2025 payment determination, and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination.
• Severe Obstetric Complications eCQM with inclusion in the measure-set beginning with the CY 2023 reporting period/FY 2025 payment determination, and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination.
• Hospital-Harm—Opioid-Related Adverse Events eCQM (NQF #3501e) beginning with the CY 2024 reporting period/FY 2026 payment determination.
• Global Malnutrition Composite Score eCQM (NQF #3592e) beginning with the CY 2024 reporting period/FY 2026 payment determination.
• Hospital-Level, Risk Standardized Patient-Reported Outcomes Performance Measure Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #3559) beginning with two voluntary periods, followed by mandatory reporting for the reporting period which runs from July 1, 2025 through June 30, 2026, impacting the FY 2028 payment determination.
• Medicare Spending Per Beneficiary (MSPB) Hospital (NQF #2158) beginning with the FY 2024 payment determination.
• Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary THA/TKA (NQF #1550) beginning with the FY 2024 payment determination.

CMS also proposes to refine two current measures, change the existing eCQM reporting and submission requirements, remove the zero denominator declaration and case threshold exemptions for hybrid measures, update the eCQM validation requirements for medical record requests, and update reporting and submission requirements for patient-reported outcome-based performance measures.

LTACH Quality Reporting Program (QRP)

CMS is requesting information on inclusion of the National Healthcare Safety Network (NHSN) Healthcare-associated Clostridioides difficile Infection Outcome Measure in the LTCH QRP- Request for Information (RFI).  CMS is also seeking feedback on (1) inclusion of a digital Centers for Disease Control and Prevention (CDC) NHSN Healthcare-associated Clostridioides difficile Infection Outcome measure into the LTCH QRP; and (2) measuring health disparities across the LTACH QRP.

Medicare Promoting Interoperability Program

CMS is proposing the following changes to the Medicare Promoting Interoperability Program:

• To require and modify the Electronic Prescribing Objective’s Query of Prescription Drug Monitoring Program (PDMP) measure while maintaining the associated points at 10 points beginning with the EHR reporting period in CY 2023.
• To expand the Query of PDMP measure to include Schedule II, III, and IV drugs beginning with the CY 2023 EHR reporting period.
• To add a new Health Information Exchange (HIE) Objective option, the Enabling Exchange under the Trusted Exchange Framework and Common Agreement (TEFCA) measure (requiring a yes/no response), as an optional alternative to fulfill the objective, beginning with the CY 2023 EHR reporting period.
• To modify the Public Health and Clinical Data Exchange Objective by adding an Antibiotic Use and Antibiotic Resistance (AUR) measure in addition to the current four required measures (Syndromic Surveillance Reporting, Immunization Registry Reporting, Electronic Case Reporting, and Electronic Reportable Laboratory Result Reporting beginning in the CY 2023 EHR reporting period
• To consolidate the current options from three to two levels of active engagement for the Public Health and Clinical Data Exchange Objective and to require the reporting of active engagement for the measures under the objective beginning with the CY 2023 EHR reporting period.
• To modify the scoring methodology for the Medicare Promoting Interoperability Program beginning in CY 2023.
• To institute public reporting of certain Medicare Promoting Interoperability Program data beginning with the CY 2023 EHR reporting period.
• To remove regulation text for the objectives and measures in the Medicare Promoting Interoperability Program from paragraph (e) under 42 CFR 495.24 and add new paragraph (f) beginning in CY 2023.
• To adopt two new eCQMs in the Medicare Promoting Interoperability Program’s eCQM measure set beginning with the CY 2023 reporting period, two new eCQMs in the Medicare Promoting Interoperability Program’s eCQM measure set beginning with the CY 2024 reporting period, and modify the eCQM data reporting and submission requirements to increase the number of eCQMs required to be reported and the total number of eCQMs to be reported beginning with the CY 2024 reporting period, which is in alignment with the eCQM updates proposed for the Hospital IQR Program.

Value-Based Purchasing Programs

CMS is proposing updated policies for the Hospital Readmissions Reduction Program, Hospital Inpatient Quality Reporting (IQR) Program, Hospital Value-Based Purchasing (VBP) Program, Hospital-Acquired Condition (HAC) Reduction Program, Long Term Care Hospital Quality Reporting Program (LTCH QRP), and the PPS-Exempt Cancer Hospital Reporting (PCHQR) Program.  Due to the impact of COVID-19 on measure data in value-based purchasing programs, CMS is also proposing to suppress several measures in the Hospital VBP Program and HAC Reduction Program.

Other Updates

New Hospital Designation for Maternal Care

CMS is proposing to establish a hospital quality designation that would be reported on a CMS website beginning Fall 2023.  The designation would be awarded to hospitals based on their attestation of submission of the Maternal Morbidity Structural measure, which reflects a hospital’s commitment to quality and safety of maternity care furnished.  The designation would initially be based only on data from hospitals reporting an affirmative attestation to the Maternal Morbidity Structural measure.  This would allow CMS to initially make aware the designated based on the data hospitals are currently reporting on the Maternal Morbidity Structure measure under the Hospital IQR Program.  In future notice and rulemaking, CMS intends to propose a more robust set of criteria for awarding the designation.

Solicitation of Comments for Social Determinants of Health

CMS is soliciting comments on:

• How the reporting of diagnosis codes in categories Z55 – Z65 (persons with potential health hazards related to socioeconomic and psychological circumstances) may improve CMS’ ability to recognize severity of illness, complexity of illness, and/or utilization of resources under the MS-DRGs?
• Whether CMS should require the reporting of certain Z codes? If so, which ones should be reported on hospital inpatient claims to strengthen data analysis?
• The additional provider burden and potential benefits of documenting and reporting of certain Z codes, including potential benefits to beneficiaries.
• Whether codes in category Z59 (Homelessness) have been underreported and if so, why?

Advis continues its review and analyses of the FY 2023 Medicare IPPS and LTACH proposed rule.  As a reminder, CMS is accepting comments on the proposed rule until June 17, 2022.  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.

Published: April 22, 2022