Acute care hospitals get a 2.5% pay increase in final rule
Long-term care hospital payments are expected to increase by about 1.1%, or $42 million.
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Acute care hospitals get a 2.5% pay rate increase for 2022 in the Centers for Medicare and Medicaid Services Hospital Inpatient Prospective Payment System final rule.
This reflects the projected hospital market basket update of 2.7% reduced by a 0.7 percentage point productivity adjustment and increased by a 0.5% adjustment required by legislation.
The pay increase is for hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and are meaningful electronic health record (EHR) users.
Hospitals may be subject to other payment adjustments under the inpatient rule, including: payment reductions for excess readmissions under the Hospital Readmissions Reduction Program; a payment reduction of 1% for the worst-performing quartile under the Hospital-Acquired Condition Reduction Program; and upward and downward adjustments under the Hospital Value-Based Purchasing Program, though adjustments are being made.
CMS is finalizing its proposal to rebase and revise the IPPS operating market basket and capital market basket to reflect a 2018 base year. It is also finalizing its proposal to rebase and revise the national labor‑related and non-labor-related shares based on the 2018-based IPPS market basket.
Before taking into account Medicare disproportionate share hospital payments and Medicare uncompensated care payments, the increase in operating payment rates, increases in capital payments, increases in payments for new medical technologies, increases in payments due to implementation of the imputed floor and other changes will increase hospital payments in 2022 by $3.7 billion, or 3.1%.
CMS projects Medicare DSH payments and Medicare uncompensated care payments to decrease in 2022 compared with 2021 by approximately $1.4 billion. Overall, CMS estimates hospital payments will increase by $2.3 billion.
CMS is using the FY2019 data from prior to the COVID-19 public health emergency to approximate the expected FY2022 inpatient hospital utilization.
LONG-TERM CARE HOSPITAL PROSPECTIVE PAYMENT SYSTEM
For 2022, CMS expects long-term care hospital prospective payment system payments to increase by about 1.1%, or $42 million.
Payments for discharges paid the standard payment rate are expected to increase by 0.9% due primarily to the annual standard federal rate update for 2022 of 1.9% and a projected 0.8% decrease in high cost outlier payments as a percentage of total federal payment rate payments.
Payments for discharges paid the site neutral payment rate are expected to increase by 3%. CMS estimates that discharges paid the site neutral payment rate will represent approximately 25% of all long-term care hospital cases and 10% of all payments in 2022.
The final rule for both acute and long-term care hospitals will be issued in multiple parts. CMS received more than 6,500 public comments on both related to disproportionate share hospital payments, organ acquisition costs, and provisions related to payments to hospitals for direct graduate medical education and indirect medical education costs, which will be addressed in subsequent parts.
NEW TECHNOLOGY ADD-ON PAYMENT
Since IPPS payments are generally based on the most recently available Medicare claims and cost report data, which tends to have a lag of two to three years, the statute provides temporary additional payments for cases with high costs under the New Technology Add-on Payment policy.
Under this policy, Medicare pays the applicable MS-DRG payment rate and up to an additional 65% – or 75% for certain antimicrobials – of the cost of the approved new technology. The new technology add-on payment is not budget-neutral and is generally limited to the two-to-three-year period following the date the product begins to become available.
For 2022, in connection with CMS' decision to use 2019 instead of 2020 data for rate setting, CMS is finalizing a one-year extension of new technology add-on payments for 13 technologies for which the new technology add-on payment would otherwise be discontinued beginning in 2022.
In this final rule, CMS approved 19 technologies that applied for new technology add-on payments for 2022.
Additionally, CMS is continuing the new technology add-on payments for all 23 of the technologies currently receiving the add-on payment, 10 of which remain within their newness period for 2022. For the remaining 13 technologies that are no longer within their newness period in 2022, CMS is using its exceptions and adjustments authority to provide for a one-year extension for new technology add-on payments.
In total, 42 technologies are eligible to receive add-on payments for 2022. CMS estimates that Medicare spending on new technology add-on payments will be approximately $1.5 billion, nearly a 77% increase over 2021 spending.
UNCOMPENSATED CARE PAYMENTS
CMS will distribute roughly $7.2 billion in uncompensated care payments for 2022, a decrease of approximately $1.1 billion from 2021.
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
