Fact Sheets

Fiscal Year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System (IPPS) Final Rule with Comment Period (CMS 1752-FC3)

On December 17, 2021, the Centers for Medicare & Medicaid Services (CMS) issued a final rule with comment period to implement the legislative changes to Medicare direct graduate medical education (DGME) and indirect medical education (IME) payments to teaching hospitals that were contained in sections 126, 127, and 131 of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260, December 27, 2020). In addition, this final rule with comment period solicits comments on the following issues to inform potential future rulemaking:

  • How to account for health care provided outside of a Health Professional Shortage Area (HPSA) to HPSA residents, and feasible alternatives to HPSA scores as a proxy for health disparities in the prioritization of additional full-time equivalent (FTE) cap slots; and
  • The review process to determine eligibility for per resident amount (PRA) or FTE cap resets in situations where a hospital disagrees with the information on cost reports that are no longer within the three-year reopening period.

This final rule also addresses organ acquisition payment policies through changes, clarifications, and codifications relative to organ procurement organizations (OPOs), transplant hospitals, and donor community hospitals. CMS is not finalizing the proposed policy for counting organs for purposes of determining Medicare’s share of organ acquisition costs for organs transplanted into Medicare beneficiaries at this time to further consider issues raised in public comments. However, this final rule with comment codifies longstanding Medicare organ acquisition payment policies, with some modifications. These final policies will facilitate and support organ procurement and transplantation.

Closing Gaps in Health Equity in Graduate Medical Education (GME)

This final rule with comment period advances key priorities to close health  care equity gaps and enhance the health care workforce in rural and underserved communities. The training and retention  of physicians is critical to ensuring access to health care in underserved communities that have historically experienced workforce challenges. Section 126 of the Consolidated Appropriations Act (CAA), 2021, requires the distribution of an additional 1,000 new Medicare-funded medical residency positions to help train physicians, phased in at no more than 200 slots per year beginning in FY 2023 .       CMS estimates that this additional funding will total approximately $1.8 billion from FY 2023 through FY 2031. CMS is prioritizing applications from qualifying hospitals that serve geographic areas and underserved populations with the greatest need.

The final rule with comment period also makes additional strides to close the health equity gap in rural communities, which tend to experience health care workforce shortages. CMS is implementing section 127 of the CAA, Promoting Rural Hospital GME Funding Opportunity, which allows rural teaching hospitals participating in an accredited rural training track (RTT) to receive increases to their FTE caps.

CMS is also implementing section 131 of the CAA, Medicare GME treatment of hospitals establishing new medical residency training programs after hosting medical resident rotators for short durations in the past. Some hospitals inadvertently limited their ability to receive Medicare funding for residents in a new training program by accepting residents that rotated to the hospital from other training programs in past years. The final rule will restore that ability to qualifying hospitals that begin a new medical residency training program within the first five years after enactment. Section 131 advances health equity by allowing these hospitals, often serving underserved communities, to receive additional residency positions and increased PRAs. 

Supporting Organ Procurement and Organ Transplantation

In the FY 2022 IPPS/LTCH PPS proposed rule, CMS proposed changes pertaining to Medicare’s share of organ acquisition costs for organs transplanted into Medicare beneficiaries, changes pertaining to charges for services provided to cadaveric organ donors by donor community hospitals, and changes to longstanding Medicare organ acquisition payment policies. In the FY 2022 IPPS/LTCH PPS final rule, Part I, CMS stated that due to the number and nature of the comments that we received on the organ acquisition payment policy proposals we will address public comments associated with these issues in future rulemaking. After further consideration of the concerns raised by commenters, CMS has decided not to finalize the proposed policy with respect to counting organs at this time and may consider it in future rulemaking.

CMS is finalizing the proposed policy with modification [DECE1] [DT2] requiring donor community hospitals and transplant hospitals to bill OPOs the lesser of customary charges that are reduced to costs, or negotiated rates, in line with Medicare reasonable cost principles. This final rule with comment also codifies and clarifies certain organ acquisition payment policies relative to definitions, standard acquisition charges, Medicare coverage of living donor complications, Medicare as a secondary payor for organ acquisitions, and kidney paired donations.

Treatment of Certain Medicaid Section 1115 Demonstrations for Medicare Disproportionate Share Hospital (DSH) Payments

In the FY 2022 IPPS/LTCH PPS proposed rule, CMS proposed revisions to the regulation relating to the treatment of section 1115 waiver days for purposes of the DSH adjustment (86 FR 25457 through 25459). In the FY 2022 IPPS/LTCH PPS final rule, CMS stated that due to the number and nature of the comments that we received on our proposal, we intended to address the public comments in a separate document (86 FR 45249). CMS thanks commenters for their input on the proposal. After further consideration of the issue, CMS decided not to move forward with the current proposal. CMS expects to revisit the issue of section 1115 waiver days in future rulemaking, and we encourage stakeholders to review any future proposal on this issue and to submit comments at that time.

The FY 2022 IPPS final rule with comment period (CMS-1752-FC3) is displayed at the Federal Register and can be viewed here: