CMS Releases FY 2023 IPPS Final Rule - McDermott+Consulting

CMS Releases FY 2023 IPPS Final Rule


On August 1, 2022, the Centers for Medicare & Medicaid Services (CMS) released the FY 2023 Inpatient Prospective Payment System (IPPS) final rule updating Medicare payment policies and quality reporting programs relevant for hospital inpatient services, and building on key priorities to address health disparities and improve the safety and quality of maternity care.

The final rule is available here.

A CMS factsheet on the final rule is available here.

An additional factsheet on the maternal health provisions is available here.

The final rule is scheduled to be published in the Federal Register on August 10, 2022, and will be effective on October 1, 2022.

Key Takeaways

  1. CMS estimates that the overall finalized update and other rule changes will increase IPPS payments to hospitals in FY 2023 by more than $1 billion. Payment updates and policy changes for graduate medical education (GME) programs will increase IPPS payments, but projected reductions in the uncompensated care payment pool, outlier payments and new technology add-on payments (NTAP), as well as expiration of Medicare-dependent hospital and low-volume hospital payment adjustments, will offset some of the payment increases. This estimate does not factor in changes in hospital admissions, real case-mix intensity or the mandatory sequestration adjustment.
  2. The finalized FY 2023 standardized amount for hospitals that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and that are meaningful electronic health record (EHR) users would be $6,375.74, representing a payment update of 4.3% over FY 2022.
  3. CMS did not extend the add-on payment for 11 technologies with NTAP periods expiring at the end of FY 2023. The agency also discontinued the one-year NTAP extension for the 13 technologies for which the add-on payment would have otherwise ended in FY 2022.
  4. In response to the pandemic’s continued impact on hospitals, CMS finalized proposals waiving penalties for certain quality programs as well as modifications to measures and measure calculations. The agency also includes three health-equity-based quality measures.
  5. CMS decided not to finalize proposed limitations on the Section 1115 patient days that may be included in the calculation of the Medicare disproportionate share hospital (DSH) adjustment and adopted its proposal to use the two most recent years of audited Worksheet S-10 data to distribute uncompensated care payments.
  6. CMS finalized proposed changes to the calculation of GME full-time equivalent (FTE) caps when hospital weighted FTE counts exceed the direct GME FTE cap, and will allow certain urban and rural hospitals participating in rural training tracks to enter into Medicare GME affiliation agreements in order to share FTE caps.
  7. CMS will establish a public-facing “birthing-friendly” hospital designation to promote quality and safety of maternity care. CMS will also incorporate feedback on several requests for information (RFIs), including those focused on climate change, maternal health equity, measuring disparities in care quality and moving to digital quality measures, into future policy development.


Click here to download the detailed summary of the key provisions in the final rule