Summary

On August 2, 2021, the Centers for Medicare and Medicaid Services (CMS) posted the FY 2022 Inpatient Prospective Payment System (IPPS) final rule. Effective October 1, 2021, the final rule updates Medicare payment policies and quality reporting programs relevant for inpatient hospitals, and seeks to address challenges related to the COVID-19 pandemic.

CMS stated that the FY 2022 IPPS final rule will be issued in multiple parts. The agency will address comments on proposals related to disproportionate share hospital payments, organ acquisition costs, and the Consolidated Appropriations Act, 2021 (CAA) provision concerning payments to hospitals for direct graduate medical education (GME) and indirect medical education in subsequent publications.

The final rule is available here. A CMS factsheet on the final rule is available here. The final rule is scheduled to be published in the Federal Register on August 13, 2021.

Key Takeaways

  1. CMS estimates that the payment update and other rule changes will increase IPPS payments to hospitals in FY 2022 by approximately $2.3 billion. This estimate does not factor in changes in hospital admissions, real case-mix intensity or the mandatory sequestration adjustment.
  2. The FY 2022 standardized amount for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and that are meaningful electronic health record (EHR) users will be $6,121.71, an increase of 2.7% compared to the final FY 2021 standardized amount.
  3. CMS will use FY 2019 Medicare Provider Analysis and Review (MedPAR) data for the FY 2022 ratesetting process given the impact of the COVID-19 public health emergency (PHE) on inpatient utilization and case mix in FY 2020.
  4. As a one-time exception, also because of pandemic impacts, CMS will provide a one-year extension for 13 technologies whose New Technology Add-on Payment (NTAP) period was scheduled to expire.
  5. Hospitals will receive neutral payment adjustments under the Hospital Value-Based Purchasing (HVBP) Program for FY 2022.
  6. CMS will address its proposal related to the CAA, including distribution of 1,000 new Medicare-funded medical residency positions, in subsequent parts of the final rule.
  7. CMS outlines comments it received on its requests for information (RFIs) related to digital quality measures and health equity, noting that it will make changes through separate and future notice-and-comment rulemaking as necessary.

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For more information, contact Emily Cook, Deborah Godes, Sheila Madhani, Mara McDermott, Drew McCormick, Kristen O’Brien, Susan Xu or Eric Zimmerman.