FY 2023 Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) Final Rule — CMS-1771-F
On August 1, 2022, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2023 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System (LTCH PPS) final rule.
The rule updates Medicare fee-for-service payment rates and policies for inpatient hospitals and LTCHs for FY 2023, as required by the statute. 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 policies in the IPPS and LTCH PPS rule build on key priorities to advance health equity, including by better measuring health care quality disparities, and to improve the safety and quality of maternity care.
CMS is establishing new requirements and revising existing requirements for eligible hospitals and critical access hospitals (CAHs) participating in the Medicare Promoting Interoperability Program. In addition, we are providing estimated and newly established performance standards for the Hospital Value-Based Purchasing (VBP) Program and updated policies for the Hospital Readmissions Reduction Program (HRRP), Hospital Inpatient Quality Reporting (IQR) Program, Hospital VBP Program, Hospital-Acquired Condition (HAC) Reduction Program, PPS-Exempt Cancer Hospital Reporting Program, and LTCH Quality Reporting Program. Additionally, due to the impact of the COVID-19 public health emergency (PHE) on measure data, we are pausing the use of several measures in the scoring of the Hospital VBP and HAC Reduction Programs. In addition to these measure pauses for the Hospital VBP Program, we are implementing a special scoring methodology for FY 2023 that results in each hospital receiving a value-based incentive payment amount that matches their 2% reduction to the base operating MS-DRG payment amount. Similarly, we are also pausing all six measures in the HAC Reduction Program from the calculation of measure scores and Total HAC Scores, thereby not penalizing any hospital under the FY 2023 HAC Reduction Program. For the FY 2023 HAC Reduction Program, participating hospitals will not be given a measure score, a Total HAC score, nor a payment adjustment. All paused measures will continue to be publicly reported.
Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the federal government, CMS sought stakeholder feedback on ways to advance health equity in the proposed rule. In the final rule, CMS notes that it received comment on key considerations that inform our approach to improving data collection, to better measure and analyze disparities across our programs and policies, and approaches for updating the HRRP that encourage providers to improve performance for socially at-risk populations.
CMS will continue policies finalized in the FY 2020 IPPS/LTCH PPS final rule to address wage index disparities affecting low wage index hospitals. CMS is also finalizing a policy to limit year-to-year decreases in hospitals’ wage indexes. Additionally, because we recognize that discontinuing the use of the low-income insured days proxy to calculate uncompensated care payments for these hospitals could result in significant financial disruption, in this rule we are finalizing a new supplemental payment for Indian Health Service (IHS)/Tribal hospitals and hospitals located in Puerto Rico.
This rule also includes changes to graduate medical education (GME) policies, including increasing flexibility to rural hospitals that participate in a rural track program (RTP).
This rule also includes revisions to the hospital and critical access hospital (CAH) conditions of participation for infection prevention and control and antibiotic stewardship programs. These revisions require hospitals and CAHs, after the conclusion of the current COVID-19 PHE, to continue COVID-19 and seasonal influenza reporting. We did not finalize the proposed reporting requirements in the event of a future PHE declaration.
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 diagnoses and any services performed. Subject to certain adjustments, a hospital receives a single payment for the services provided based on the payment classification assigned at discharge. The classification systems are IPPS: Medicare Severity Diagnosis-Related Groups (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 LTCHs’ payment rates annually according 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 IQR Program and are meaningful electronic health record (EHR) users, is 4.3%. This reflects a FY 2023 hospital market basket update of 4.1% reduced by a 0.3 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by statute. This update reflects the most recent data available, including a revised outlook regarding the U.S. economy and, as a result, is 1.1 percentage point higher than the proposed update for FY 2023.
Hospitals may be subject to other payment adjustments under the IPPS, including:
- Payment reductions for excess readmissions under the HRRP;
- Payment reduction (1%) for the worst-performing quartile under the HAC Reduction Program;
- Upward and downward adjustments under the Hospital VBP Program.
The increase in operating and capital IPPS payment rates, partially offset by decreases in outlier payments for extraordinarily costly cases, will generally increase hospital payments in FY 2023 by $2.6 billion. In addition, CMS projects Medicare disproportionate share hospital (DSH) payments and Medicare uncompensated care payments combined will decrease in FY 2023 by approximately $0.3 billion. CMS also estimates that additional payments for inpatient cases involving new medical technologies will decrease by $0.75 billion in FY 2023. Under current law, additional payments for Medicare-Dependent Hospitals (MDHs) and the temporary change in payments for low volume hospitals are set to expire in FY 2023. In the past, these payments have been extended by legislation, but if they were to expire, CMS estimates that payments to these hospitals would decrease by $0.6 billion.
Use of the Best Available Data
CMS’ goal is to use the best available data overall when setting inpatient hospital payment rates for the upcoming fiscal year. Therefore, in this rule we discuss our analysis of the best available data for use in the development of the FY 2023 IPPS/LTCH PPS rule, given the potential impact of COVID‑19 on hospitalizations. In this final rule, we return to our historical practice of using the most recent available data, including the FY 2021 MedPAR claims and the FY 2020 cost reports, for the FY 2023 rate setting, with certain modifications to our usual rate setting methodologies to account for the anticipated decline in COVID-19 hospitalizations of Medicare beneficiaries at IPPS hospitals and LTCHs, as compared to FY 2021. CMS believes that it is reasonable to assume that some Medicare beneficiaries will continue to be hospitalized with COVID-19 at IPPS hospitals and LTCHs in FY 2023. However, we also believe it is reasonable to assume, based on the information available at this time, that there will be fewer COVID‑19 hospitalizations in FY 2023 than are reflected in the FY 2021 data.
In light of these assumptions, first, CMS modified the calculation of the FY 2023 MS DRG and MS LTC-DRG relative weights. We calculated the relative weights for FY 2023 by first calculating two sets of weights, one including and one excluding COVID-19 claims, and then averaging the two sets of relative weights to determine the FY 2023 relative weight values. Second, CMS modified its methodologies for determining the FY 2023 outlier fixed-loss amount for IPPS cases and LTCH PPS standard federal payment rate cases. Consistent with the modification to the calculation of the FY 2023 relative weight values, we determined the outlier fixed-loss amounts for FY 2023 by calculating and averaging two fixed-loss amounts, one calculated with COVID-19 claims included and one with COVID-19 claims excluded. We also used charge inflation factors and cost-to-charge ratio (CCR) adjustment factors based on data from prior to the COVID-19 PHE. We believe using the charge inflation factors and CCR adjustment factors derived from these data provide a more reasonable approximation of the increase in costs that will occur from FY 2021 to FY 2023, because we do not believe the charge inflation that has occurred during the PHE will continue as the number of higher cost COVID-19 cases declines. We also modified the IPPS outlier fixed-loss amount calculation to factor in certain payment increases for COVID-19 cases provided by the CARES Act.
Implications of Using FY 2021 Data for New Technology Add-on Payment (NTAP)
Since IPPS payments are generally based on the most recently available Medicare claims and cost report data, which tends to have a lag of two to three years, the statute provides temporary additional payments for certain cases with high costs under the New Technology Add-on Payment (NTAP) policy. Under this policy, for eligible technologies, Medicare pays the applicable MS-DRG payment rate and up to an additional 65% (75% 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 two to three -year period following the date the product begins to become available.
For FY 2023, we are returning to our historical practice of using the latest available data (e.g., FY 2020 MedPAR claims) to recalibrate the FY 2023 MS-DRG relative weights. We believe the costs of technologies, for which the three-year anniversary date of the product’s entry into the U.S. market occurs prior to the latter half of the upcoming fiscal year (and therefore are no longer “new”), may now be fully reflected in the MedPAR claims data used to recalibrate the MS-DRG relative weights for FY 2023. As a result, we are discontinuing new technology add-on payments for these technologies in FY 2023, and we are also discontinuing new technology add-on payments for the technologies that received a one-year extension in FY 2022.
Applications for NTAP Approved for FY 2023
In this final rule, CMS approved eight technologies that applied for new technology add-on payments for FY 2023. This includes three technologies submitted under the traditional new technology add-on payment pathway and five technologies submitted under the alternative pathway for new medical devices that are part of the FDA Breakthrough Devices Program. CMS also conditionally approved one technology under the alternative pathway for products that received FDA Qualified Infectious Disease Product (QIDP) designation that otherwise meets the alternative pathway criteria, but has not yet received FDA approval. Additionally, CMS is finalizing the NTAP for one technology that it determined to be substantially similar to an existing technology approved for NTAP in FY 2022.
CMS is also continuing new technology add-on payments for 15 technologies currently receiving the add-on payment that will remain within their newness period for FY 2023. As discussed above, CMS is not using its exceptions and adjustments authority under section 1886(d)(5)(I) of the Social Security Act to provide for a one-year extension of new technology add-on payments for the remaining technologies no longer within their newness period in FY 2023, in light of its return to using the latest available data (e.g., FY 2020 MedPAR claims) to recalibrate the FY 2023 MS-DRG relative weights.
In total, 25 technologies are eligible to receive add-on payments for FY 2023. CMS estimates that FY 2023 Medicare spending on new technology add-on payments will be approximately $784 million.
Changes to NTAP Policies for FY 2023
CMS is finalizing its proposal, with some modifications, to publicly post completed NTAP applications, certain related materials, and additional application information submitted subsequent to the initial application (except for certain types of information, as described in the final rule) at the time the proposed rule is issued in order to increase transparency, minimize the risk of omission or misinterpretation of an applicant’s data, and increase operational efficiencies. This policy is effective beginning with the application cycle for FY 2024. CMS is not finalizing its proposal to use only National Drug Codes (NDCs) to identify claims involving the administration of therapeutic agents approved for NTAP, rather than ICD-10-PCS codes, after consideration of the concerns raised in public comments. CMS will continue to engage with stakeholders regarding this issue and reassess for future rulemaking.
Changes Related to MS-DRGs
CMS did not propose any new MS-DRGs for FY 2023, which means the number of MS-DRGs is maintained at 767 for FY 2023. We finalized the reclassification of laser interstitial thermal therapy (LITT) procedures under the MS-DRGs in connection with the creation of new procedure codes to describe LITT. We are finalizing our proposal to further delay implementation of the “three-way split criteria” because of the magnitude of the impact during the ongoing PHE. We are continuing our review of diagnosis codes along with a comprehensive review of the procedure code list, including when a procedure should affect MS-DRG assignment. A number of technical refinements to MS-DRG assignments are included.
Social Determinants of Health Comment Solicitation
CMS solicited public comments on how the reporting of social determinants of health (SDOH) diagnosis codes may improve our ability to recognize severity of illness, complexity of service, and/or utilization of resources under the MS-DRGs. We received feedback on how we might otherwise foster the documentation and reporting of the diagnosis codes describing social and economic circumstances to more accurately reflect each health care encounter and improve the reliability and validity of the coded data, including in support of efforts to advance health equity. Many commenters stated that they agree that codes describing homelessness have been underreported and that increasing the severity level of the codes that describe homelessness from a non-complication or comorbidity (NonCC) to a complication or comorbidity (CC) could prompt more rigorous documentation and reporting, and commenters stated that they believe that homelessness involves a level of care in line with diagnoses currently designated as CCs. CMS will take these comments into consideration for future rulemaking.
Graduate Medical Education (GME) Changes
We are finalizing two proposed changes to our GME policies.
First, after reviewing the statutory language regarding the direct GME full-time equivalent (FTE) cap and the court’s opinion in Milton S. Hershey Medical Center, et al. v. Becerra, we are finalizing a modified policy to be applied prospectively for all teaching hospitals, as well as retrospectively for certain providers and cost years. The modified policy addresses situations for applying the FTE cap when a hospital’s weighted FTE count is greater than its FTE cap, but would not reduce the weighting factor of residents that are beyond their initial residency period to an amount less than 0.5. Specifically, effective for cost reporting periods beginning on or after October 1, 2022, if the hospital’s unweighted number of FTE residents exceeds the FTE cap, and the number of weighted FTE residents also exceeds that FTE cap, the respective primary care and obstetrics and gynecology weighted FTE counts and other weighted FTE counts are adjusted to make the total weighted FTE count equal the FTE cap. If the number of weighted FTE residents does not exceed that FTE cap, then the allowable weighted FTE count for direct GME payment is the actual weighted FTE count.
Second, the law requires caps on the number of FTE residents that each teaching hospital may include in its indirect medical education (IME) adjustment and direct GME payment formulas. To provide flexibility to teaching hospitals that cross-train residents, CMS allows teaching hospitals to enter into “Medicare GME affiliation agreements” to share and redistribute those cap slots to accommodate the actual rotations of their residents. The law also includes a provision allowing additional cap slots for urban hospitals that establish “rural training tracks” with rural hospitals, now called Rural Training Programs (RTPs). Our current regulations do not allow GME affiliation agreements for RTPs. Stakeholders have requested that RTPs be afforded the same flexibility as other teaching hospitals to share their RTP cap slots via special RTP affiliation agreements. With this final rule, we are allowing an urban and a rural hospital participating in the same RTP to enter into an “RTP Medicare GME affiliation agreement” effective for the academic year beginning July 1, 2023. This should promote workforce development and training in rural areas, where there are known challenges with access to care.
Uncompensated Care Payments
CMS distributes a prospectively determined amount of uncompensated care payments to Medicare DSHs based on their relative share of uncompensated care nationally. As required under law, this amount is equal to an estimate of 75% of what otherwise would have been paid as Medicare DSH payments, adjusted for the change in the rate of uninsured individuals. In this final rule, CMS will distribute roughly $6.8 billion in uncompensated care payments for FY 2023, a decrease of approximately $318 million from FY 2022. 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 response to concerns expressed by commenters that the use of only one year of data would lead to significant variations in year-to-year uncompensated care payments, for FY 2023, CMS is using the two most recent years of audited data on uncompensated care costs from Worksheet S‑10 of hospitals’ FY 2018 and FY 2019 cost reports to distribute these funds. In addition, as we expect that FY 2024 will be the first year that three years of audited data will be available at the time of rulemaking, for FY 2024 and subsequent fiscal years, CMS will use a three-year average of the uncompensated care data from the three most recent fiscal years for which audited data are available. For example, for FY 2024 we expect to use audited data on uncompensated care costs from FY 2018, FY 2019, and FY 2020 cost reports to determine eligible hospitals’ uncompensated care payments
Beginning in FY 2023, CMS is discontinuing the use of low-income insured days as a proxy for uncompensated care in determining the amount of uncompensated care payments for IHS and Tribal hospitals, and hospitals located in Puerto Rico. Because we recognize that this policy could result in a significant financial disruption for these hospitals, we are also establishing a new supplemental payment for IHS/Tribal hospitals and hospitals located in Puerto Rico beginning in FY 2023.
Treatment of Medicaid Section 1115 Demonstrations for Purposes of Medicare Disproportionate Share Hospital (DSH) Payments
In the proposed rule, CMS proposed to revise the regulation governing the calculation of the Medicaid fraction of the Medicare DSH calculation. At this time, CMS is not finalizing any changes in regard to the treatment of section 1115 demonstration days. In response to our proposal, the agency received numerous, detailed comments. Due to the number and nature of the comments that we received on our proposal, and after further consideration of the issue, we have determined not to move forward with the current proposal. We expect to revisit the treatment of section 1115 demonstration days for purposes of the DSH adjustment in future rulemaking, and we encourage interested parties to review any future proposal on this issue and to submit their comments at that time.
Cap on Wage Index Decreases
To increase the predictability of Medicare payments for hospitals and mitigate instability and significant negative impacts to hospitals resulting from changes to the wage index, CMS is applying a 5% cap on any decrease to a hospital’s wage index from its wage index in the prior FY, regardless of the circumstances causing the decline. That is, under this policy, a hospital’s wage index will not be less than 95% of its final wage index for the prior FY. CMS is also applying this wage index cap policy in a budget neutral manner through a national adjustment to the standardized amount.
Changes to the Wage Index Rural Floor Calculation
Based on the district court’s decision in Citrus HMA, LLC, d/b/a Seven Rivers Regional Medical Center v. Becerra, No. 1:20-cv-00707 (D.D.C.) and the comments received, CMS is not finalizing the rural floor wage index policy as proposed, which would have excluded hospitals that have reclassified from urban to rural from the calculation of the rural floor, and the wage index for rural areas in the state in which the county is located as referred to in section 1886(d)(8)(C)(iii) of the Social Security Act. Rather, CMS is finalizing a policy that calculates the rural floor as it was calculated before FY 2020. For FY 2023 and subsequent years, CMS is finalizing a policy to include the wage data of hospitals that have reclassified from urban to rural in the calculation of the rural floor, and the wage index for rural areas in the state in which the county is located as referred to in section 1886(d)(8)(C)(iii) of the Act.
Current State of Hospital Assessment on the Impact of Climate Change and Health Equity
Consistent with Executive Order 14008 on Tackling the Climate Crisis at Home and Abroad which includes the commitment to achieve a climate resilient infrastructure and operations, build a climate- and sustainability-focused workforce, and advance environmental justice and equity, CMS believes that the health care sector could more effectively prepare for climate threats. In the proposed rule, CMS solicited comment, via a request for information (RFI), on how hospitals, nursing homes, hospices, home health agencies, and other providers can better prepare for the harmful impacts of climate change on beneficiaries and consumers, and how we can support them in doing so.
In this final rule, CMS acknowledges that we received comments on what HHS and CMS can do to help hospitals more effectively: (a) determine likely climate impacts on their patients so that they can develop plans to mitigate those impacts; (b) understand the threats that climate change presents to their operations and better prepare for continuous operations should there be climate-related emergencies; and (c) understand how to take action to reduce emissions and track their progress. A summary of these comments is provided in the final rule and will be used to inform potential future policy development.
Principles for Measuring Health Care Quality Disparities
Consistent with Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities through the federal government, CMS’ Equity Plan for Improving Quality in Medicare, and CMS’ strategic pillar to advance equity, CMS is also committed to addressing persistent inequities in health outcomes in the U.S. through improving data collection to better measure and analyze disparities across programs and policies. As disparity initiatives expand, it is important to model efforts off of existing best practices.
CMS sought in the proposed rule comments, via an RFI, on considerations that CMS can take into account when advancing the use of measurement and stratification as tools to address health care disparities and advance health care equity. CMS notes in the final rule that it received comments on key considerations in five specific areas that could inform our approach: identification of goals and approaches for measuring health care disparities and using measure stratification across CMS quality programs; guiding principles for selecting and prioritizing measures for disparity reporting across CMS quality programs; principles for social risk factor and demographic data selection and use; identification of meaningful performance differences; and guiding principles for reporting disparity results.
CMS also sought comments in the proposed rule on additional disparity measurement or stratification guidelines suitable for overarching consideration across quality programs. A summary of these comments is provided in the final rule and will be used to inform potential future policy development.
Continuing to Advance Digital Quality Measurement
To supplement CMS’ RFI in the FY 2022 IPPS/LTCH PPS final rule, and as part of CMS’ modernization of our digital quality measurement enterprise, we issued an RFI to gather comment on continued advancements to digital quality measurement and the use of the Fast Healthcare Interoperability Resources (FHIR®) standard for electronic clinical quality measures (eCQMs). CMS sought and received comments on:
- Revisions to the potential future definition of digital quality measures;
- Data standardization activities to leverage and advance standards for digital data; and
- Approaches to achieve FHIR eCQM reporting across quality reporting programs, and specifically for the Hospital IQR Program.
A summary of these comments is provided in the final rule and will be used to inform potential future policy development.
Establishment of a “Birthing-Friendly” Hospital Designation
Reducing maternal morbidity and mortality is a priority of the Biden-Harris Administration. To build on the White House Blueprint for Addressing the Maternal Health Crisis, CMS will establish a “Birthing-Friendly” hospital designation — a publicly-reported, public-facing hospital designation on the quality and safety of maternity care. CMS is establishing this hospital designation in Fall 2023. This proposal was made in conjunction with Vice President Harris’ nationwide call to action to reduce maternal mortality and morbidity, which included CMS’ intention to establish this proposed hospital designation. As finalized, CMS will award this designation to hospitals that report “Yes” to both questions in the Maternal Morbidity Structural Measure, reporting that the hospital participated in a national or statewide quality collaborative and implemented all recommended interventions.
CMS also solicited and received comment on potential names for the designation and additional potential data sources for CMS to consider in the future for purposes of awarding this designation.
CMS also issued an RFI in which we sought and received comments on how we can address the U.S. maternal health crisis through policies and programs, including, but not limited to, the Conditions of Participation and through measures in our quality reporting programs. A summary of these comments is provided in the final rule and will be used to inform potential future policy development.
Hospital Inpatient Quality Reporting (IQR) Program
The Hospital IQR Program is a pay-for-reporting quality program that reduces payment to hospitals that do not meet all Hospital IQR Program requirements, including the timely reporting of quality measure data, and would be subject to a one-fourth reduction in their Annual Payment Update under the IPPS. In the FY 2023 IPPS/LTCH PPS final rule, CMS is adopting ten measures, refining two current measures, making changes to the existing electronic clinical quality measure (eCQM) reporting and submission requirements, removing the zero-denominator declaration and case threshold exemptions for hybrid measures, updating our eCQM validation requirements for medical record requests, and establishing reporting and submission requirements for patient-reported outcome-based performance measures. CMS also requested comment on the potential future adoption of two Centers for Disease Control and Prevention’s National Healthcare Safety Network (NHSN) measures.
Specifically, CMS is adopting:
- Hospital Commitment to Health Equity measure beginning with the CY 2023 reporting period/FY 2025 payment determination.
- Screening for Social Drivers of Health measure and Screen Positive Rate for Social Drivers of Health measure beginning with voluntary reporting in the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination.
- Two perinatal eCQMs — Cesarean Birth and Severe Obstetric Complications—available for self-selection beginning with the CY 2023 reporting period/FY 2025 payment determination followed by mandatory reporting beginning with the CY 2024 reporting period/FY 2026 payment determination.
- Hospital-Harm — Opioid-Related Adverse Events eCQM beginning with the CY 2024 reporting period/FY 2026 payment determination.
- The Global Malnutrition Composite Score eCQM beginning with the CY 2024 reporting period/FY 2026 payment determination.
- Hospital-Level Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) Patient-Reported Outcome performance measure beginning with two voluntary reporting periods (July 1, 2023 through June 30, 2024 and July 1, 2024 through June 30, 2025), followed by mandatory reporting for the reporting period which runs from July 1, 2025 through June 30, 2026, impacting the FY 2028 payment determination.
- Hospital-Level Risk-Standardized Complication Rate Following Elective Primary THA/TKA measure beginning with the FY 2024 payment determination.
- Medicare Spending Per Beneficiary — Hospital measure beginning with the FY 2024 payment determination.
CMS is also refining two measures that are currently part of the Hospital IQR Program measure set beginning with the FY 2024 payment determination: Hospital‐Level, Risk‐Standardized Payment Associated with an Episode-of-Care for Primary Elective THA and/or TKA measure and Excess Days in Acute Care After Hospitalization for Acute Myocardial Infarction measure.
CMS requested comment on the potential future inclusion of two digital NHSN measures: Healthcare-Associated Clostridioides difficile Infection Outcome measure and Hospital-Onset Bacteremia and Fungemia Outcome measure. CMS provided a summary of comments received in the final rule and will use that input to inform potential future policy development.
Additionally, CMS is updating two policies related to eCQMs. First, we are modifying the eCQM validation policy to increase the submission requirement from 75% to 100% of the requested medical records to successfully complete eCQM validation beginning with the FY 2025 payment determination. Second, we are modifying the eCQM reporting and submission requirements to increase eCQM reporting from four eCQMs (one mandatory and three self-selected) to six eCQMs (three mandatory and three self-selected) beginning with the CY 2024 reporting period/FY 2026 payment determination.
CMS is also removing the zero denominator declarations and case threshold exemptions policies for hybrid measures beginning with the FY 2026 payment determination.
Lastly, CMS is establishing submission and reporting requirements for Patient-Reported Outcome measures beginning with the FY 2026 payment determination, specifically for the THA/TKA Patient-Reported Outcome measure being finalized in this final rule, since this is a new measure type for the Hospital IQR Program.
Medicare Promoting Interoperability Program
In 2011, CMS established the Medicare and Medicaid EHR Incentive Programs (now known as the Promoting Interoperability Programs for eligible hospitals and critical access hospitals (CAHs)) to encourage eligible professionals, eligible hospitals, and CAHs to adopt, implement, upgrade, and demonstrate meaningful use of certified EHR technology (CEHRT).
With this rule CMS is finalizing the following changes to the Medicare Promoting Interoperability Program for eligible hospitals and CAHs:
- Make mandatory the Electronic Prescribing Objective’s Query of Prescription Drug Monitoring Program (PDMP) measure, adding a third exclusion to the two that we proposed; expand the measure to include not only Schedule II opioids, but also Schedule III and IV drugs, and maintain the associated points at 10 points;
- Add a new Enabling Exchange under the Trusted Exchange Framework and Common Agreement (TEFCA) measure under the Health Information Exchange (HIE) Objective as a yes/no attestation measure, beginning with the EHR reporting period in CY 2023, as an optional alternative to the three existing measures under the HIE Objective;
- Add a new Antimicrobial Use and Resistance (AUR) Surveillance measure and require its reporting under the Public Health and Clinical Data Exchange Objective, beginning with the CY 2024 EHR reporting period;
- Beginning with the CY 2023 EHR reporting period, reduce the active engagement options for the Public Health and Clinical Data Exchange Objective from three to two options;
- Beginning with the CY 2023 EHR reporting period, require submission of the level of active engagement, in addition to submitting the measures for the Public Health and Clinical Data Exchange Objective;
- Beginning with the CY 2024 EHR reporting period, require eligible hospitals and CAHs to limit the duration of their time on level of active engagement option one to a single EHR reporting period.
- Institute public reporting of certain Medicare Promoting Interoperability Program data beginning with the CY 2023 EHR reporting period;
- Beginning with CY 2023 EHR reporting period, we will increase the Public Health and Clinical Data Exchange Objective from 10 to 25 points, increase the points associated with the Electronic Prescribing Objective from 10 to 20, reduce the points associated with the Health Information Exchange Objective from the current 40 points to 30 points, and reduce the points associated with the Provide Patients Electronic Access to Their Health Information from the current 40 to 25 points;
- Adopt two new eCQMs to the Medicare Promoting Interoperability Program’s eCQM measure set beginning with the CY 2023 reporting period, and two new eCQMs beginning with the CY 2024 reporting period, in alignment with the Hospital IQR Program;
- Modify the eCQM reporting and submission requirements to increase eCQM reporting from four eCQMs (one mandatory and three self-selected) to six eCQMs (three mandatory and three self-selected) beginning with the CY 2024 reporting period in alignment with the Hospital IQR Program.
PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
The PCHQR Program is a voluntary quality reporting program for the eleven cancer hospitals that are statutorily exempt from the IPPS. CMS collects and publishes data from PCHs on applicable quality measures. In the FY 2023 IPPS/LTCH PPS final rule, CMS is:
- Finalizing that it will begin public display of the 30-Day Unplanned Readmissions for Cancer Patients Measure (PCH-36) and the four end-of-life measures (PCH-32, PCH-33, PCH-34, and PCH-35);
- Adopting and codifying a patient safety exception into the measure removal policy; and
- Acknowledging comments received from stakeholders on the request for information in the proposed rule regarding the potential future adoption of two digital National Healthcare Safety Network (NHSN) measures: the NHSN Healthcare-associated Clostridioides difficile Infection Outcome measure and NHSN Hospital-Onset Bacteremia & Fungemia Outcome measure.
Measure Pausing or Refinement Policies in Response to COVID-19 PHE in Certain Value-Based Purchasing Programs
Since the COVID-19 PHE is ongoing, CMS will pause or refine several measures in the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program. These policies are intended to ensure that these programs do not reward or 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 patient 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 2023 IPPS/LTCH PPS final rule, CMS is:
- Resuming the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate following Pneumonia Hospitalization measure beginning with the FY 2024 program year following the pause of this measure which was previously finalized for FY 2023;
- Modifying the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate following Pneumonia Hospitalization measure to exclude patients with COVID-19 diagnosis present on admission from the measure numerators (outcomes) and denominators (cohorts), beginning with the FY 2024 program year (confidential hospital feedback reports for this measure will include this modification for the FY 2023 program year; although the measure has been paused from being used for payment calculation for the FY 2023 program year, CMS will still be calculating and publicly reporting this measure);
- Modifying all six condition/procedure specific readmissions measures to include a risk adjustment for history of COVID-19 within 12 months prior to the index admission, beginning with the FY 2024 program year;
Additionally, CMS sought and received public comment on promoting health equity through possible future incorporation of hospital performance for socially at-risk populations into the Hospital Readmissions Reduction Program, which will be used to inform future policy development.
Hospital-Acquired Condition (HAC) Reduction Program
The HAC Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by reducing payment by 1% for applicable hospitals that rank in the worst performing quartile on select measures of hospital-acquired conditions. In the FY 2023 IPPS/LTCH PPS final rule, CMS is:
- Pausing the Patient Safety and Adverse Events measure (CMS PSI 90 measure) and the five CDC NHSN Healthcare-Associated Infection (HAI) measures from the calculation of measure scores and the Total HAC Score, thereby not penalizing any hospital under the HAC Reduction Program FY 2023 program year;
- Publicly and confidentially (through Hospital Specific Report) reporting CDC NHSN HAI measure results;
- Calculating and publicly reporting the CMS PSI 90 measure displayed on the main pages of the Care Compare tool hosted by HHS after confidentially reporting these results to hospitals with a 30-day preview period;
- Pausing CY 2021 CDC NHSN HAI measures data from the FY 2024 HAC Reduction Program Year;
- Making a technical update to the measure specification to adjust the minimum volume threshold for the CMS PSI 90 measure beginning with the FY 2023 program year;
- Making a technical update to the CMS PSI 90 measure specifications to risk-adjust for history of COVID-19 diagnosis beginning with the FY 2024 program year;
- Updating the NHSN CDC HAI data submission requirements for newly opened hospitals beginning with the FY 2024 HAC program year; and
- Clarifying the removal of the no mapped location policy beginning with the FY 2023 program year.
Additionally, CMS requested and received information from stakeholders on the potential future adoption of two digital National Healthcare Safety Network (NHSN) measures: the NHSN Healthcare-associated Clostridioides difficile Infection Outcome measure and NHSN Hospital-Onset Bacteremia & Fungemia Outcome measure.
Hospital Value-Based Purchasing (VBP) Program
The Hospital VBP Program is a budget-neutral program funded by reducing participating hospitals’ base operating MS-DRG payments each fiscal year by 2% and redistributing the entire amount back to the hospitals as value-based incentive payments. In this final rule, CMS is:
- Pausing the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and five Hospital Acquired Infection (HAI) measures, for the purposes of scoring and payment for the FY 2023 program year.
As a result of the above measure pauses for the FY 2023 program year, less than half of the Hospital VBP Program measures will be available for accurate scoring. Therefore, CMS will also not calculate a Total Performance Score (TPS) for any hospital and instead award 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.
CMS will also update the baseline periods for certain measures for the FY 2025 program year. CMS also announced in the final rule technical administrative updates to the measures included in the Clinical Outcomes Domain.
Long Term Care Hospital Quality Reporting Program (LTCH QRP)
The LTCH QRP is a pay-for-reporting program. LTCHs that do not meet reporting requirements are subject to a two-percentage point reduction in their Annual Payment Update. In the FY 2023 IPPS/LTCH PPS proposed rule, CMS requested information on:
- Inclusion of the National Healthcare Safety Network (NHSN) Healthcare-associated Clostridioides difficile Infection Outcome Measure in the LTCH QRP
- Overarching Principles for Measuring Equity and Healthcare Quality Disparities Across CMS Quality Programs
While we are not responding to comments in the final rule, we will continue to take all concerns, comments, and suggestions into consideration as we continue work to address and develop policies on these important topics. With regard to health equity, public input is very valuable to the continuing development of CMS’ health equity quality measurement efforts and broader commitment to health equity; a key pillar of our strategic vision as well as a core agency function. Thus, we will use this input for future development and expansion of policies to advance health equity across the LTCH QRP, including by supporting LTCHs in their efforts to ensure equity for all of their patients, and to identify opportunities for improvements in health outcomes.
Changes to Payment Rates under LTCH PPS
For FY 2023, CMS expects LTCH PPS payments to increase by approximately $71 million. LTCH PPS payments for FY 2023, for discharges paid the LTCH standard payment rate, are expected to increase by approximately 2.3% due primarily to the annual standard federal rate update (that is, the productivity-adjusted market basket increase) for FY 2023 of 3.8% and a projected decrease in high cost outlier payments.
Extensions of the Rural Community Hospital and Frontier Community Health Integration Project (FCHIP) Demonstrations
Sections 128 and 129 of the Consolidated Appropriations Act, 2021, respectively, authorize a five-year extension for both the Rural Community Hospital Demonstration and FCHIP Demonstration. CMS is implementing these extensions in the FY 2023 IPPS/LTCH PPS final rule.
Revision to Conditions of Participation (CoP) for Hospitals and CAHs To Report Data Elements for COVID-19 and Seasonal Influenza
CMS is revising the hospital and CAH infection prevention and control CoP requirements that require hospitals and CAHs, after the conclusion of the current COVID-19 PHE, to continue reporting on a reduced number of COVID-19 data elements. The revisions will apply upon conclusion of the COVID-19 PHE and continue until April 30, 2024, unless the Secretary establishes an earlier ending date.