Fiscal Year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long Term Care Hospital (LTCH) Rates Final Rule (CMS-1752-F)
On August 2, 2021, the Centers for Medicare & Medicaid Services (CMS) issued the final rule for fiscal year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS). The final rule updates Medicare payment policies and rates for operating and capital-related costs of acute care hospitals and for certain hospitals and hospital units excluded from the IPPS for FY 2022.
The policies in this IPPS and LTCH PPS final rule build on key priorities to close health care equity gaps and support greater access to life-saving diagnostics and therapies during the COVID-19 public health emergency (PHE) and beyond. The rule’s provisions seek to sustain hospital readiness to respond to future public health threats, enhance the health care workforce in rural and underserved communities, and revise scoring, payment and public quality data reporting methods to lessen the adverse impacts of the pandemic and future unplanned events.
The final rule updates Medicare fee-for-service payment rates and policies for inpatient hospitals and long-term care hospitals for FY 2022. CMS is publishing this final rule to meet the legal requirements to update Medicare payment policies for IPPS hospitals and LTCHs on an annual basis. This fact sheet discusses major provisions of the final rule, which can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/current.
The FY 2022 IPPS and LTCH PPS final rule will be issued in multiple parts. CMS received more than 6,500 public comments on the FY 2022 IPPS and LTCH PPS proposed rule. The public comments on our proposal related to disproportionate share hospital payments, organ acquisition costs, and the provision of the Consolidated Appropriations Act (CAA) 2021, related to payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs, which were included in the FY 2022 IPPS and LTCH PPS proposed rule will be address in subsequent parts.
CMS will establish new requirements and revise existing requirements for the Hospital Value-Based Purchasing (VBP) Program, Hospital Readmissions Reduction Program, Hospital- Acquired Condition (HAC) Reduction Program, Hospital Inpatient Quality Reporting (IQR) Program, LTCH Quality Reporting Program, PPS-Exempt Cancer Hospital Reporting (PCHQR) Program, and the Medicare Promoting Interoperability Program.
Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the Federal Government, CMS sought stakeholder feedback in the proposed rule on ways to attain health equity for all patients through policy solution. This included ways in which to enhance hospital-specific reports that stratify measure results by Medicare/Medicaid dual eligibility and other social risk factors, ways to improve demographic data collection, and the potential creation of a hospital equity score to synthesize results across multiple measures and social risk factors.
CMS is finalizing our proposal to repeal the collection of market-based rate information on the Medicare cost report. CMS is also repealing the market-based Medicare Severity Diagnosis Related Group (MS-DRGs) relative weight methodology that was adopted effective for FY 2024. Repeal of this data collection and payment policy does not dilute CMS’s commitment to hospital price transparency.
In this FY 2022 final rule, CMS states it will continue policies finalized in the FY 2020 IPPS/LTCH PPS final rule to address wage-index disparities affecting low wage index hospitals. Additionally, this final rule also implements the imputed floor wage index provision of the American Rescue Plan Act of 2021.
Background on the IPPS and LTCH PPS
CMS pays acute care hospitals (with a few exceptions specified in the law) for inpatient stays under the IPPS. LTCHs are paid under the LTCH PPS. Under these two payment systems, CMS sets base payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness. Subject to certain adjustments, a hospital receives a single payment for the case based on the payment classification assigned at discharge. The classification systems are: IPPS: MS-DRGs and LTCH PPS: Medicare Severity Long-Term Care Diagnosis-Related Groups (MS-LTC-DRGs).
The law requires CMS to update payment rates for IPPS hospitals annually and to account for changes in the prices of goods and services used by these hospitals in treating Medicare patients, as well as for other factors. This is known as the hospital “market basket.” The IPPS pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospitals’ costs, including the patient’s condition and the cost of hospital labor in the hospital’s geographic area. CMS updates LTCH payment rates annually using to a separate market basket based on LTCH-specific goods and services.
Changes to Payment Rates under IPPS
The 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 are meaningful electronic health record (EHR) users is approximately 2.5 percent. This reflects the projected hospital market basket update of 2.7 percent reduced by a 0.7 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by legislation. We are also finalizing our proposal to rebase and revise the IPPS operating market basket and IPPS capital market basket to reflect a 2018 base year. We are also finalizing our proposal to rebase and revise the national labor‑related and nonlabor-related shares (based on the 2018-based IPPS market basket).
Hospitals may be subject to other payment adjustments under the IPPS, including:
- Payment reductions for excess readmissions under the Hospital Readmissions Reduction Program;
- Payment reduction (1 percent) for the worst-performing quartile under the Hospital- Acquired Condition Reduction Program;
- Upward and downward adjustments under the Hospital Value-Based Purchasing Program (although see information on the FY 2022 suppression policy below).
Before taking into account Medicare disproportionate share hospital (DSH) 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 FY 2022 by $3.7 billion, or 3.1 percent. CMS projects Medicare DSH payments and Medicare uncompensated care payments to decrease in FY 2022 compared to FY 2021 by approximately $1.4 billion. Overall, CMS estimates hospitals payments will increase by $2.3 billion.
Changes to Payment Rates under LTCH PPS
For FY 2022, CMS expects LTCH-PPS payments to increase by approximately 1.1 percent or $42 million. LTCH PPS payments for FY 2022 for discharges paid the standard LTCH payment rate are expected to increase by 0.9 percent due primarily to the annual standard Federal rate update for FY 2022 of 1.9 percent and a projected 0.8 percent decrease in high cost outlier payments as a percentage of total LTCH PPS standard Federal payment rate payments.
LTCH PPS payments for FY 2022 for discharges paid the site neutral payment rate are expected to increase by 3.0 percent. CMS estimates that discharges paid the site neutral payment rate will represent approximately 25 percent of all LTCH cases and 10 percent of all LTCH PPS payments in FY 2022.
Use of the FY 2019 Inpatient Hospital Utilization Data Instead of the FY 2020 Data Due to the COVID-19 PHE
CMS’ goal is to use the best available data overall when setting inpatient hospital payment rates for the upcoming fiscal year. For FY 2022, ordinarily the best available full year of data to approximate the expected FY 2022 inpatient hospital utilization would be data from FY 2020.
However, the FY 2020 data reflects changes in inpatient hospital utilization driven by the COVID-19 PHE. The vaccinations in the Medicare populations coupled with the effectiveness of the vaccines leads us to believe that there will be significantly lower risk of COVID-19 infection and fewer hospitalizations for COVID-19 in FY 2022 than occurred in FY 2020. We are using the FY 2019 data from prior to the COVID-19 PHE to approximate the expected FY 2022 inpatient hospital utilization.
Implications of Using FY 2019 Data for 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 2-to-3 years, the statute provides temporary additional payments for cases with high costs under the New Technology Add-on Payment (NTAP) policy. Under this policy, Medicare pays the applicable MS-DRG payment rate and up to an additional 65 percent (75 percent 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 2-to 3-year period following the date the product begins to become available.
For FY 2022, in connection with CMS’s decision to use FY 2019 instead of FY 2020 data for FY 2022 IPPS 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 FY 2022.
Changes to the New COVID-19 Treatments Add-on Payment (NCTAP)
In response to the COVID-19 PHE, CMS established the NCTAP for eligible discharges during the PHE. CMS anticipates inpatient cases of COVID-19 beyond the end of the PHE. Therefore, to continue to mitigate potential financial disincentives for hospitals to provide new COVID-19 treatments and to minimize any potential payment disruption immediately following the end of the PHE, CMS is extending the NCTAP for eligible COVID-19 products through the end of the fiscal year in which the PHE ends. CMS is not finalizing the proposal to discontinue the NCTAP for discharges on or after October 1, 2021 for a product that is approved for new technology add-on payments beginning FY 2022. Instead, hospitals will be eligible to receive both NCTAP and the traditional new technology add-on payment for qualifying patient stays, through the end of the fiscal year in which the PHE ends, with the new technology add-on payment reducing the amount of the NCTAP.
Applications for New Technology Add-on Payments (NTAP) Approved for FY 2022
In this final rule, CMS approved 19 technologies that applied for new technology add-on payments for FY 2022. This includes 9 technologies under the alternative pathway for new medical devices that are part of the FDA Breakthrough Devices Program and 2 technologies approved under the alternative pathway for products that received FDA Qualified Infectious Disease Product (QIDP) designation. Additionally, CMS conditionally approved one technology designated as a QIDP that otherwise meets the alternative pathway criteria but has not yet received FDA approval. After consideration of public comments, CMS also approved seven technologies submitted under the traditional new technology add-on payment pathway criteria.
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 FY 2022. For the remaining 13 technologies that are no longer within their newness period in FY 2022, CMS is using its exceptions and adjustments authority under section 1886(d)(5)(I) of the Act to provide for a one-year extension new technology add-on payments in light of the unique circumstances for FY 2022 ratesetting due to the COVID-19 PHE, as discussed above.
In total, 42 technologies are eligible to receive add-on payments for FY 2022. CMS estimates that FY 2022 Medicare spending on new technology add-on payments will be approximately $1.5 billion, nearly a 77% increase over the FY 2021 spending.
Closing the Health Equity Gap in CMS Quality Programs
Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the Federal Government, CMS is also committed to addressing significant and persistent inequities in health outcomes in the U.S. through improving data collection to better measure and analyze disparities across programs and policies.
In the final rule, CMS sought stakeholder input, via a request for information (RFI), on ideas to make reporting of health disparities based on social risk factors and race and ethnicity more comprehensive and actionable for hospitals, providers, and patients. CMS sought comment from stakeholders on future potential additional stratification of quality measure results by race, Medicare/Medicaid dual eligible status, disability status, LGBTQ+, and socioeconomic status.
CMS sought comment from stakeholders on the possible collection of a minimum set of demographic data elements by hospitals at the time of admission, and using electronic data definitions to permit nationwide, interoperable health information exchange, for the purposes of incorporating into measure specifications and other data collection efforts relating to quality.
CMS also sought comment on the potential development of a health equity score measure modeled off the Health Equity Summary Score applied to Medicare Advantage contracts/plans’ data, but adapted to the context of risk-adjusted hospital outcome measures and potentially other hospital quality measures used in CMS programs. CMS received many comments in response to this RFI, reflecting the importance of these policies. We will consider this input carefully in developing future policies.
Uncompensated Care Payments
CMS distributes a prospectively determined amount of uncompensated care payments to Medicare disproportionate share hospitals (DSHs) based on their relative share of uncompensated care nationally. As required under law, this amount is equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, adjusted for the change in the rate of uninsured individuals. Under this final rule, CMS will distribute roughly $7.2 billion in uncompensated care payments for FY 2022, a decrease of approximately $1.1 billion from FY 2021.
This total uncompensated care payment amount reflects CMS Office of the Actuary’s projections that incorporate the estimated impact of the COVID-19 pandemic. In addition, the CMS Office of the Actuary’s projection of the percent of individuals without insurance in this final rule incorporates the estimated impact of the COVID-19 pandemic and the updated expectations for FY 2022 associated with changing economic conditions, newly available data on Medicaid and Marketplace enrollment, the estimated impacts from the Families First Coronavirus Response Act (FFCRA) including the provision requiring a Medicaid Maintenance of Effort, the CARES Act, and the American Rescue Plan Act.
Consistent with the policy adopted in the FY 2021 IPPS/LTCH PPS final rule for FY 2022 and subsequent fiscal years, CMS will use a single year of data on uncompensated care costs from Worksheet S-10 of hospitals’ FY 2018 cost reports to distribute these funds. CMS will continue to use data regarding low-income insured days (Medicaid days for FY 2013 and FY 2018 SSI days) to determine the amount of uncompensated care payments for Puerto Rico hospitals, Indian Health Services, and Tribal hospitals for FY 2022, similar to the FY 2021 methodology.
Repeal of the Market-Based MS-DRG Relative Weight Policy
CMS is finalizing our proposal to repeal the requirement that a hospital report on the Medicare cost report the median payer-specific negotiated charge that the hospital has negotiated with all of its MA organization payers, by MS-DRG, for cost reporting periods ending on or after January 1, 2021. Had hospitals been required to comply with this requirement, it would have resulted in approximately 64,000 hours of administrative burden. We are also finalizing our proposal to repeal the market-based MS-DRG relative weight methodology that was adopted effective for FY 2024, and to continue using the existing cost-based MS-DRG relative weight methodology to set Medicare payment rates for inpatient stays for FY 2024 and subsequent fiscal years.
Future of Digital Quality Measurement
CMS sought comment on considerations to modernize its quality measurement enterprise in the future:
- Clarifying a potential definition of digital quality measures;
- Using the Fast Healthcare Interoperability Resources (FHIR®) standard for electronic clinical quality measures (eCQMs) that are currently in the various quality programs;
- Standardizing data required for quality measures for collection via FHIR-based Application Programming Interfaces (APIs);
- Leveraging technological opportunities to facilitate digital quality measurement;
- Better supporting data aggregation;
- Developing a common portfolio of measures for potential alignment across CMS regulated programs, federal programs and agencies, and the private sector.
CMS will consider comments received in potential future rulemaking.
Hospital Inpatient Quality-Reporting (IQR) Program
The Hospital IQR Program is a pay-for-reporting quality program that reduces payment to hospitals that fail to meet program requirements. Hospitals that do not submit quality data or fail to meet all Hospital IQR Program requirements are subject to a one-fourth reduction in their annual payment update under the IPPS. In the FY 2022 IPPS/LTCH PPS final rule, CMS is adopting new measures, removing existing measures, and finalizing changes to existing EHR certification requirements along with other administrative updates.
Specifically, the rule finalizes the adoption of:
- A new Maternal Morbidity Structural Measure, which will assess hospital participation in a statewide or national perinatal Quality Improvement initiative and implementation of safety practices or bundles. This measure will encourage hospitals to standardize protocols addressing obstetric emergencies and complications arising during pregnancy and childbirth, beginning with a shortened CY 2021 reporting period/FY 2023 payment determination;
- The COVID-19 Vaccination Coverage Among Health Care Personnel measure, which will be reported to the CDC’s National Healthcare Safety Network web-based surveillance system, beginning with a shortened reporting period from October 1, 2021 through December 31, 2021, affecting the CY 2021 reporting period/FY 2023 payment determination and for subsequent years;
- The Hybrid Hospital-Wide All-Cause Risk Standardized Mortality measure, beginning with a voluntary reporting period which will run from July 1, 2022 through June 30, 2023, and followed by mandatory reporting beginning with the reporting period which runs July 1, 2023 through June 30, 2024, affecting the FY 2026 payment determination and for subsequent years;
- Two medication-related adverse event electronic clinical quality measures (eCQMs) (Hospital Harm-Severe Hypoglycemia eCQM (NQF #3503e) and Hospital Harm-Severe Hyperglycemia eCQM (NQF #3533e)) beginning with the CY 2023 reporting period/FY 2025 payment determination.
In addition, the rule finalizes the removal of:
- The Exclusive Breast Milk Feeding (NQF #0480) beginning with the CY 2024 reporting period/FY 2026 payment determination. While this continues to be an important topic, CMS is finalizing the removal of this measure because of the availability of a measure that is more strongly associated with patient outcomes. Specifically, in keeping with the agency’s focus on maternal health, CMS is finalizing the adoption of the Maternal Morbidity Structural Measure;
- The Admit Decision Time to Emergency Department (ED) Departure Time for Admitted Patients (NQF #0497) beginning with the CY 2024 reporting period/FY 2026 payment determination. CMS is finalizing the removal of this measure because the costs associated with the measure outweigh the benefit of its continued use in the program;
- Discharged on Statin Medication eCQM (STK-06) (NQF #0439), beginning with the CY 2024 reporting period/FY 2026 payment determination. While CMS continues to believe that ensuring appropriate pharmacotherapy for stroke patients is an important topic, within the Hospital IQR Program portfolio of stroke measures, CMS identified STK-06 as appropriate for removal.
CMS is not finalizing proposals to remove the Anticoagulation Therapy for Atrial Fibrillation/Flutter eCQM (STK-03) or the Death Rate Among Surgical Inpatients with Serious Treatable Complications (PSI-04) measure after considering the stakeholder feedback received.
Additionally, beginning with the CY 2023 reporting period/FY 2025 payment determination, CMS is finalizing the requirement for hospitals to use certified EHR technology that has been updated consistent with the 2015 Edition Cures Update and is clarifying that certified technology must support the reporting requirements for all available eCQMs.
Medicare Promoting Interoperability Program
In 2011, CMS established the Medicare and Medicaid EHR Incentive Programs (now known as the Medicare and Medicaid Promoting Interoperability Programs) to encourage eligible professionals, eligible hospitals, and critical access hospitals (CAHs) to adopt, implement, upgrade, and demonstrate meaningful use of certified EHR technology (CEHRT). Under 1903(t)(5)(D) of the Social Security Act, December 31, 2021 is the last date that States can make Medicaid Promoting Interoperability payments to Medicaid eligible hospitals (other than pursuant to a successful appeal related to CY 2021 or a prior year).
CMS is finalizing the following changes to the Medicare Promoting Interoperability Program for eligible hospitals and CAHs:
- Continue the EHR reporting period of a minimum of any continuous 90-day period for new and returning eligible hospitals and CAHs for CY 2023 and to increase the EHR reporting period to a minimum of any continuous 180-day period for new and returning eligible hospitals and CAHs for CY 2024;
- Maintain the Electronic Prescribing Objective’s Query of Prescription Drug Monitoring Program (PDMP) measure as optional while increasing its available bonus from 5 points to 10 points;
- Add a new Health Information Exchange (HIE) Bi-Directional Exchange measure as a yes/no attestation, beginning in CY 2022 to the HIE objective as an optional alternative to the two existing measures;
- Require reporting “yes” on four of the existing Public Health and Clinical Data Exchange Objective measures (Syndromic Surveillance Reporting, Immunization Registry Reporting, Electronic Case Reporting, and Electronic Reportable Laboratory Result Reporting) or requesting applicable exclusion(s);
- Attest to having completed an annual assessment of all nine guides in the SAFER Guides measure, under the Protect Patient Health Information objective;
- Remove attestation statements 2 and 3 from the Promoting Interoperability Program’s prevention of information blocking attestation requirement;
- Increase the minimum required scoring threshold for the objectives and measures from 50 points to 60 points (out of 100 points) to be considered a meaningful EHR user; and
- Adopt two new eCQMs to the Medicare Promoting Interoperability Program’s eCQM measure set beginning with the reporting period in CY 2023, in addition to removing three eCQMs from the measure set beginning with the reporting period in CY 2024 (in alignment with proposals for the Hospital IQR Program).
PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The PCHQR Program collects and publishes data on applicable quality measures. CMS is removing the Oncology Plan of Care for Pain – Medical Oncology and Radiation Oncology (NQF #0383) (PCH-15) measure. This measure is being removed because it is not feasible to implement the measure specifications because the measure steward has decided to revert to a previous version of the measure and will no longer maintain the specifications for this measure as it is currently used in the PCHQR Program. The version of the measure that the measure steward has decided to revert to is designed to be paired with the Medical and Radiation—Pain Intensity Quantified (PCH –16/NQF #0384) measure (78 FR 50843), meaning they were developed to be used together, and the Medical and Radiation—Pain Intensity Quantified (PCH –16/NQF #0384) measure was removed from the PCHQR Program’s measure set beginning with the FY 2021 program year in the FY 2019 IPPS/LTCH PPS final rule because it was topped-out. CMS is also codifying existing PCHQR Program policies in our regulations, and adopting the COVID-19 Vaccination Coverage Among Healthcare Personnel measure.
Establishment of Measure Suppression Policy in Response to COVID-19 PHE in Certain Value-Based Purchasing Programs
In response to the impact of the COVID-19 PHE, CMS is finalizing a measure suppression policy in the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program that would allow CMS to suppress the use of measure data if the agency determines that circumstances caused by the COVID-19 PHE have affected those measures and the resulting quality scores significantly. This policy is intended to ensure that these programs neither reward nor penalize hospitals based on circumstances caused by the PHE for COVID-19 that the measures were not designed to accommodate. Examples of the types of external factors that the PHE has had that may affect quality measurement include changes to clinical practices to accommodate safety protocols for medical personnel and patients, as well as unpredicted changes in the number of stays and facility-level cases.
Hospital Readmissions Reduction Program (HRRP)
The HRRP is a Medicare value-based purchasing program that reduces payments to hospitals with excess readmissions. It also supports CMS’ goal of improving health care for Medicare beneficiaries by linking payment to the quality of hospital care. In the FY 2022 IPPS/LTCH PPS final rule, CMS will:
- Adopt a measure suppression policy and suppress the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate following Pneumonia Hospitalization measure (NQF #0506) beginning with the FY 2023 program year; and
- Modify the remaining five condition-specific readmission measures to exclude COVID-19 diagnosed patients from the measure denominators, beginning with the FY 2023 program year.
Hospital-Acquired Condition (HAC) Reduction Program
The HAC Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to reduce payment by one percent for “applicable hospitals,” which are subsection (d) hospitals that rank in the worst performing quartile on select measures of hospital-acquired conditions. In the FY 2022 IPPS/LTCH PPS final rule, CMS is:
- Establishing a measure suppression policy which will suppress the third and fourth quarters of CY 2020 CDC National Healthcare Safety Network Healthcare-Associated Infection (HAI) and CMS PSI 90 data from performance calculations for the FY 2022 and FY 2023 program years.
Hospital Value-Based Purchasing (VBP) Program
The Hospital VBP Program is a budget-neutral program funded by reducing participating hospitals’ base operating DRG payments each fiscal year by 2.0 percent and redistributing the entire amount back to the hospitals as value-based incentive payments. In this final rule, CMS will:
- Establish the measure suppression policy described above for the duration of the COVID- 19 PHE;
- Suppress the Hospital Consumer Assessment of Healthcare Providers and Systems survey, Medicare Spending Per Beneficiary, and five HAI measures, for the FY 2022 program year;
- Suppress the Pneumonia (PN) 30-Day Mortality Rate measure for the FY 2023 program year; and
- Remove the Patient Safety and Adverse Events Composite (CMS PSI 90) measure beginning with the FY 2023 program year. CMS continues to consider patient safety a high priority, but because the CMS PSI 90 measure is also used in the HAC Reduction Program, CMS believes removing this measure from the Hospital VBP Program will reduce the provider and clinician costs associated with tracking duplicative measures across programs.
As a result of the above measure suppressions for the FY 2022 program year, CMS believes that calculating a total performance score (TPS) for hospitals using only data from the remaining measures, all of which are in the Clinical Outcomes Domain, would not result in a fair national comparison. Therefore, CMS will not calculate a TPS for any hospital based on one domain and will instead award to all hospitals a value-based payment amount for each discharge that is equal to the amount withheld. CMS will also calculate measure rates for all measures and publicly report those rates where feasible and appropriately caveated. The agency will also update the baseline period for certain measures affected by the ECE granted in response to the COVID-19 PHE and make a few technical administrative updates.
Long Term Care Hospital Quality Reporting Program (LTCH QRP)
The LTCH QRP is a pay-for-reporting program. LTCHs that do not meet LTCH QRP reporting requirements are subject to a two-percentage points reduction in their annual percentage unit. In the FY 2022 IPPS/LTCH PPS final rule, CMS is:
- Finalizing the COVID-19 Vaccination Coverage Among Healthcare Personnel Measure;
- Finalizing updates to the denominator for the Transfer of Health (TOH) Information to the Patient-Post Acute Care (PAC) quality measure;
- Finalizing its proposal to publicly report Quality Measures with fewer than the standard numbers of quarters due to COVID-19 Public Health Emergency (PHE) exemptions;
- Finalizing its proposal to publicly report the Compliance with Spontaneous Breathing Trial (SBT) by Day 2 of the LTCH Stay measure beginning with the March 2022 Care Compare refresh or as soon as technically feasible; and
- Finalizing its proposal to publicly report the Ventilator Liberation Rate for the PAC LTCH QRP measure beginning with the March 2022 Care Compare refresh or as soon as technically feasible.
Implementation of Section 9831 of the American Rescue Plan Act of 2021 Imputed Floor Wage Index Policy for All-Urban States
Beginning with FY 2022, section 9831 of the American Rescue Plan Act of 2021 requires the permanent reinstatement of the imputed floor wage index methodology for all-urban States, defines the term all-urban State, and exempts the increased payments to hospitals in all-urban States from budget neutrality under the IPPS. Based on final rule data, for FY 2022, the all-urban States of New Jersey, Rhode Island, Delaware, Connecticut, and the District of Columbia, are eligible to receive an increase in their wage index due to application of the imputed floor, based on data available for this proposed rule. (The District of Columbia is generally treated as a State for Medicare payment purposes under section 1861(x) of the Social Security Act). CMS estimates that this provision will increase FY 2022 Medicare payments to hospitals located in all- urban States by approximately $0.2 billion.
Medicaid Enrollment of Medicare Providers for Purposes of Determining Medicare Cost Sharing Payments for Dually Eligible Individuals
Through the Medicare Savings Programs and Medicaid statutes, states cover the Medicare cost sharing for over 8 million dually eligible individuals. However, through what is commonly referred to as “lesser-of” policies, states are allowed to pay less than the full Medicare cost sharing or in certain circumstances, make no payment at all; 43 states currently have lesser- of policies for inpatient hospital cost sharing. If states pay less than Medicare cost-sharing amounts, certain Medicare providers may submit these unpaid cost-sharing amounts to Medicare for payment as reimbursement for “bad debt.” For a service provided to a dually eligible individual, this typically means furnishing a Medicaid remittance advice showing what the state paid (or did not pay). However, some states in the past have hindered some Medicare providers from enrolling in Medicaid. As a result, these non-Medicaid-enrolled providers may not be able to submit a claim for payment of Medicare cost sharing and receive a remittance advice to submit for claiming of bad debt.
Under the final rule, CMS will require state Medicaid provider enrollment systems to allow valid enrollments from all Medicare providers serving certain Medicare-Medicaid dually eligible individuals – even if a provider or supplier is out of state – for purposes of processing cost sharing claims for services furnished to these dually eligible individuals.
Medicare Shared Savings Program
CMS is finalizing policies for the Shared Savings Program to allow eligible Accountable Care Organizations (ACOs) participating in the BASIC track’s glide path the option to elect to forgo automatic advancement along the glide path’s increasing levels of risk and potential reward for performance year (PY) 2022. Under this policy, prior to the automatic advancement for PY 2022, an eligible ACO may elect to remain in the same level of the BASIC track's glide path in which it participated during PY 2021.
For PY 2023, an ACO that elects this advancement deferral option will be automatically advanced to the level of the BASIC track's glide path in which it would have participated during PY 2023 if it had advanced automatically to the required level for PY 2022 (unless the ACO elects to advance more quickly before the start of PY 2023). For an ACO that elected to defer advancement for both PY 2021 and PY 2022, the ACO will advance for PY 2023 to the level in which it would have participated for that performance year, absent both deferral elections (unless it elects to advance more quickly). ACOs will have the opportunity to make this election via ACO-MS during the application cycle, and must do so no later than September 10, 2021.
Extensions of the Rural Community Hospital and Frontier Community Health Integration Project (FCHIP) Demonstrations
Sections 128 and 129 of the Consolidated Appropriations Act of 2021, respectively, authorize a five-year extension for each of the Rural Community Hospital Demonstration and FCHIP Demonstration. CMS is including its policies for implementing these extensions in the FY 2022 IPPS/LTCH PPS final rule.
For more information, please visit: https://www.cms.gov/newsroom/press-releases/cms- proposes-enhance-medical-workforce-rural-and-underserved-communities-support-covid-19- recovery
Interim Final Rule with Comment (IFC)
Along with the FY 2022 IPPS/LTCH PPS proposed rule, CMS issued an IFC which amended current regulations at § 412.230 to allow hospitals with a rural redesignation to reclassify through the Medicare Geographic Classification Review Board using the rural reclassified area as the geographic area in which the hospital is located. In this final rule, CMS responded to comments received on the IFC, finalizing the provisions implemented in that IFC. These regulatory changes align our policy with the decision in Bates County Memorial Hospital v. Azar, 464 F. Supp. 3d (D.D.C. 2020).