CMS Releases FY 2023 IPPS Proposed Update - McDermott+Consulting

CMS Releases FY 2023 IPPS Proposed Update

On April 18, 2022, the Centers for Medicare & Medicaid Services (CMS) posted the FY 2023 Inpatient Prospective Payment System (IPPS) proposed update, along with proposed policy and regulation changes. The proposed rule would update Medicare payment policies and quality reporting programs relevant for inpatient hospitals, and would build on key priorities to address health disparities and improve the safety and quality of maternity care.

The proposed rule is available here. A CMS factsheet on the proposed rule is available here, and an additional factsheet on the maternal health and equity measures included in the proposed payment rule is available here. The proposed rule is scheduled to be published in the Federal Register on May 10, 2022, and comments are due on June 17, 2022.

Key Takeaways

  1. CMS estimates that the overall proposed update and other rule changes would decrease IPPS payments to hospitals in FY 2023 by approximately $300 million. Payment updates and policy changes to graduate medical education (GME) would increase IPPS payments, but projected reduction in the uncompensated care payment pool, outlier payment and new technology add-on payments (NTAP), as well as expiration of Medicare Dependent Hospitals and low-volume hospital payment adjustments, would more than offset the projected increase. This estimate does not factor in changes in hospital admissions, real case-mix intensity or the mandatory sequestration adjustment.
  2. The proposed 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 $6,315.77, an increase of 3.2% compared to the final FY 2022 standardized amount.
  3. CMS proposes to use the FY 2021 MedPAR data and the FY 2020 cost reports for the FY 2023 rate setting, with proposed modifications to rate setting methodologies.
  4. CMS does not propose to extend the add-on payment for the 11 technologies with NTAP periods expiring at the end of FY 2022 or for the 13 technologies with NTAP periods expiring at the end of FY 2021 that benefited from a one-time, one-year extension in FY 2022 because of the COVID-19 public health emergency (PHE).
  5. In response to the pandemic’s continued impact on hospitals, CMS proposes waiving penalties for certain quality programs and modifications to measures and measure calculations. The agency also seeks to advance health equity goals through these programs.
  6. CMS proposes limitations on the Section 1115 patient days that may be included in the calculation of the Medicare disproportionate share hospital (DSH) adjustment and to use the two most recent years of audited Worksheet S-10 data to distribute uncompensated care payments.
  7. CMS proposes to make changes to the calculation of GME full time equivalent (FTE) caps for certain hospitals and to allow certain urban and rural hospitals participating in Rural Training Tracks to enter into Medicare GME affiliation agreements in order to share FTE caps.
  8. CMS solicits feedback on several requests for information (RFIs), including RFIs focused on climate change, maternal health equity and moving to digital quality measures.



For more information, contact Emily Cook (McDermott Will & Emery – Partner), Deborah Godes, Sheila Madhani, Drew McCormick (McDermott Will & Emery – Partner), Kristen O’Brien, Katie Waldo, Caroline Reignley (McDermott Will & Emery – Partner), Susan Xu or Eric Zimmerman.