CMS Proposes 2023 Payments for Inpatient Hospitals

On April 18th, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (2023) proposed Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System rule. See the press release here. CMS has provided a rule overview fact sheet and maternal health fact sheet relating to the agency’s proposal to establish a hospital designation to capture maternity care quality and safety. Proposals include the following:

Increases hospital operating payment rates by 3.2 percent,[1]
Adds 5 percent wage index decrease cap,
Is not proposing any new MS-DRGs,
Considers nearly 30 new technologies for add-on payments,
GME cap changes and flexibility for rural hospitals,
Considers two most recent years of uncompensated care cost data to calculate DSH payments,
Revises DSH Medicaid fraction numerator definition,
Adopts birthing friendly hospital designation with maternal health related quality measures,
Changes to quality reporting, promoting interoperability, and value-based purchasing programs,
Considers payment adjustments for N95 respirators,
Continues hospital conditions of participation (COP) reporting requirements,
Considers pandemic readiness proposals,
Does not change organ acquisition payment policies,
$25 million increase for long-term care hospitals, and
Solicits comment on several requests for information, including social determinants of health.

CMS proposes to return to its historical practice of using the most recent available data for rate setting under this rule.[2] This proposed rule is scheduled to be published in the Federal Register on May 10, 2022, and comments are due by 5:00pm EDT on June 17, 2022.

CMS PREDICTS HOSPITAL PAYMENTS WILL DECREASE BY 300 MILLION

The Inpatient Prospective Payment System (IPPS) per-discharge payment is based on two national standardized base payment rates, one for operating costs and the other for capital-related costs. CMS adjusts each of these rates for geographic, case-mix, and other factors.[3]

Overall, for FY 2023, CMS proposes a 3.2 percent increase (compared to a 2.5 increase in FY 2022) in its operating payment rates for hospitals that submitted quality data and were meaningful electronic health record (EHR) users (see Tables 1 and 2).[4] However, even with this increase, other payment changes in the proposed rule are expected to result in a $0.3 billion overall decrease in FY 2023, as compared to FY 2022.[5]^,[6] This is generally due to the following changes:

Combined FY 2023 $0.6 billion (1.4 percent) operating payment increase,[7]
Combined decrease of $1.02 billion arising from new technology add-on payment changes,
Changes to the GME weighting methodology,
Expiration of the low-volume payment adjustment,[8] and
FY 2023 capital payment.

Operating Payments

Table 1. Proposed Update Factors for Hospital Operating Payment Rates (FY 2023)[9]

Submitted Quality Data	Meaningful EHR User	Gross FY2023 Market Basket	Adjustment for Failure to Submit Quality Data	Adjustment for Failure to be Meaningful EHR User	Multifactor Productivity Adjustment[10]	MACRA Documentation & Coding Adjustment	Net Increase in Operating Payment Rates
Yes	Yes	+3.1	N/A	N/A	-0.4	+0.5	+3.2
No	Yes	+3.1	-0.775	N/A	-0.4	+0.5	+2.425
Yes	No	+3.1	N/A	-2.325	-0.4	+0.5	+0.875
No	No	+3.1	-0.775	-2.325	-0.4	+0.5	+0.1

Table 2. Resulting Standardized Operating Amounts (FY 2023)[11]

Submitted Quality Data	Meaningful EHR User	Standardized Operating Amounts (Wage Index > 1)		Standardized Operating Amounts (Wage Index <= 1)
Submitted Quality Data	Meaningful EHR User	Labor	Non-Labor	Labor	Non-Labor
Yes	Yes	$4,269.46	$2,046.31	$3,915.78	$2,399.99
No	Yes	$4,237.24	$2,030.87	$3,886.23	$2,381.88
Yes	No	$4,172.80	$1,999.98	$3,827.12	$2,345.66
No	No	$4,140.59	$1,984.54	$3,797.58	$2,327.55

IPPS IMPACT FAVORS FOR-PROFIT HOSPITALS

CMS provides impact estimates for various provider types and these estimates incorporate policy changes in the proposed rule (certain categories are included below in Table 3). Overall, CMS estimates that facilities will experience an increase of 1.4 percent for FY 2023.

Table 3. Impact Analysis of Changes to the IPPS for Operating Payment Rates (FY 2023)[12]

Provider Type		Number of Hospitals	Net Increase to Operating Payment Rates[13]	All Budget Neutral Changes[14]	Frontier State Wage Index & Outmigration Adjustment[15]	Expiration of MDH Status[16]	All Changes[17]
ALL HOSPITALS		3,141	+3.1	0	+0.3	-0.2	+1.4
URBAN HOSPITALS		2,419	+3.2	-0.1	+0.3	-0.1	+1.4
RURAL HOSPITALS		722	+2.9	+0.9	+0.1	-1.1	+1.1
TEACHING STATUS
	Nonteaching	1,939	+3.1	+0.3	+0.2	-0.5	+1.3
	Fewer than 100 residents	932	+3.2	-0.1	+0.4	-0.2	+1.4
	100 or more residents	270	+3.1	-0.1	+0.2	0.0	+1.3
OWNERSHIP
	Voluntary	1,907	+3.2	+0.1	+0.3	-0.2	+1.2
	Proprietary	794	+3.2	+0.3	+0.2	-0.1	+2.3
	Government	439	+3.0	-0.2	+0.1	-0.2	+1.3
MEDICARE PCT OF INPATIENT DAYS
	0 – 25	683	+3.1	-0.4	+0.1	0	+1.7
	25 – 50	2,072	+3.1	+0.1	+0.3	-0.2	+1.3
	50 – 65	300	+3.0	+0.7	+0.5	-1.1	+1.0
	Over 65	35	+2.6	-2.9	0.0	-1.3	-0.5
URBAN DSH
	Non-DSH	374	+3.2	-0.6	+0.6	-0.2	+1.3
	100 or more beds	1,140	+3.2	-0.6	+0.3	0.0	+1.4
	Less than 100 beds	353	+3.2	-0.1	+0.5	-0.5	+1.5
URBAN TEACHING AND DSH
	Both teaching and DSH	663	+3.2	-0.7	+0.4	0.0	+1.4
	Teaching and no DSH	62	+3.2	-0.1	+0.5	-0.3	1.0
	No teaching and DSH	830	+3.2	-0.4	+0.2	-0.1	+1.6
	No teaching and no DSH	312	+3.2	-0.8	+0.6	-0.1	+1.4

Capital-Related Payments

The basic methodology for determining capital payments for each discharge is below:

Capital-Related Payment = (Standard Federal Rate) x (DRG Weight) x (Geographic Adjustment Factor or GAF) x (COLA for hospitals located in Alaska and Hawaii) x (1 + Capital DSH Adjustment Factor + Capital IME Adjustment Factor, if applicable)[18]

For FY 2023, the capital standardized Federal Rate is $480.29, which is 1.63 percent more than FY 2022.[19]

PERMANENT CAP ON WAGE INDEX DECREASES

Beginning FY 2023 and thereafter, CMS proposes to make permanent a 5 percent cap on any wage index decrease from the prior year, regardless of the reason for the decrease. CMS has also proposed the same permanent cap on wage index changes for post-acute care providers, including skilled nursing facilities, hospices, inpatient rehabilitation facilities, and inpatient psychiatric facilities.

DELAY IN APPLICATION OF THREE-WAY SEVERITY SPLIT FOR MS-DRGs, NO NEW MS-DRGs ARE PROPOSED

In previous rulemaking, CMS expanded the existing criteria for creating subgroups with MS-DRGs to allow for a three-way severity level split: complication or comorbidity (CC), major CC (MCC), and NonCC. Due to the ongoing public health emergency (PHE), CMS is concerned about the impact of implementing such a volume of changes and is proposing to delay the implementation of the three-way split criteria. CMS is also considering technical refinements and requesting comments on issues related to the classification of rare diseases that are represented by low-volumes in the MS-DRG claims data.

CMS is not proposing any new MS-DRGs—meaning the number of MS-DRGs will remain at 767.

CHANGES TO RELATIVE WEIGHT CALCULATION FOR MS-DRG 018, CHIMERIC ANTIGEN RECEPTOR (CAR) T-CELL THERAPIES

In the final FY 2021 IPPS rule, CMS created MS-DRG 018 for cases that include Chimeric Antigen Receptor (CAR) T-cell therapies and finalized a payment adjustment for applicable clinical trial and expanded access immunotherapy cases grouped to this DRG. CMS proposes to continue to use the same process to identify clinical trial claims in the FY 2021 MedPAR for purposes of calculating the FY 2023 relative weights. Using the same methodology from the FY 2021 IPPS/LTCH PPS final rule, CMS proposes to apply an adjustment to account for the CAR T cell therapy cases identified as clinical trial cases in calculating the national average standardized cost per case that is used to calculate the relative weights for all MS-DRGs.

NEARLY 30 TECHNOLOGIES CONSIDERED FOR ADD-ON PAYMENTS

The new technology add-on payment (NTAP) program a allows for an additional payment for medical services or technologies that are found to be: (1) new; (2) disproportionately costly to the existing MS-DRG; and (3) a substantial clinical improvement. As part of its annual process, CMS is considering 13 applications for new technology add on payments for FY 2023 under the traditional NTAP pathway. The agency is also considering 13 alternative pathway NTAP applications. CMS estimates that total payments for the 13 technologies that applied under the alternative pathway, if approved could be approximately $82 million for FY 2023.

Additionally, to improve transparency CMS is seeking input on their proposal to publicly post online future NTAP applications. Beginning with the FY 2024 application cycle CMS would post online completed applications.

CMS PROPOSES CHANGES TO GME CAPS AND FLEXIBILITY FOR RURAL HOSPITALS

In 2021, the United States District Court for the District of Columbia ruled in Milton S. Hershey Medical Center, et al. v. Becerra that CMS needed to modify how it calculates Medicare Graduate Medical Education (GME) full-time equivalent (FTE) caps.[20] After reviewing this court case’s statutory language, CMS proposes modifying the policy prospectively for all teaching hospitals and retrospectively for specific providers and cost years. Effective for cost reporting periods beginning on or after October 1, 2022, CMS proposes that if a hospital’s unweighted number of FTE residents surpasses the FTE cap, and the number of weighted FTE residents also exceeds the FTE cap, that primary care and obstetrics and gynecology weighted FTE numbers and other weighted FTE numbers are adjusted so that the total weighted FTE number equals the FTE cap.

Additionally, the law stipulates that caps are required on the number of FTE residents that teaching hospitals can include in their IME and direct GME payment formulas. To allow flexibility, the agency proposes to allow teaching hospitals to enter into ‘Medicare GME affiliation agreements’ in order to share and redistribute cap slots based on the rotations of residents. Urban hospitals that create ‘rural training tracks’ with rural hospitals [Rural Training Programs (RTPs)] will also receive additional cap slots. Currently, GME affiliation agreements are not allowed under CMS regulations. Effective for academic year beginning July 1, 2023, CMS proposes allowing urban and rural hospitals participating in the same RTP to enter into ‘RTP Medicare GME affiliation agreements.’

CMS estimates that the impact of this change for FY 2023 will be approximately $170 million.[21]

CMS TO CALCULATE DSH PAYMENTS FROM TWO YEARS OF DATA

Hospitals that receive Medicare disproportionate share hospital (DSH) receive two separate payments:

25 percent of the amount they previously would have received under Section 1886(d)(5)(F) of the Social Security Act (Act) for DSH; and
An additional payment for uncompensated care (UC) as determined by the product of three factors:

Factor 1: 75 percent of the payments that would otherwise be made under Section 1886(d)(5)(F) of the Act
Factor 2: 1 minus the percent change in the percent of individuals who are uninsured; and
Factor 3: a hospital’s UC amount relative to all DSH hospitals expressed as a percentage.

CMS proposes to distribute roughly $6.5 billion in uncompensated care (UCP) payments for FY 2023, a decrease of approximately $655 million from FY 2022. CMS proposes to use the two most recent years of data on uncompensated care costs from Worksheet S-10 of hospitals’ FY 2018 and FY 2019 cost reports to calculate factor three for the distribution of these funds. For FY 2024 and thereafter, CMS proposes to use the three most recent years of Worksheet S-10 data.

For FY 2023 and subsequent years, CMS also proposes to discontinue using low-income insured days as an alternative for uncompensated care costs for Indian Health Services and tribal hospitals and establish a new supplemental payment for these hospitals.

CMS additionally proposes to revise regulations governing the calculation of the Medicaid fraction of the Medicare DSH calculation. CMS believes that for days associated with section 1115 demonstrations to be counted in the numerator of the Medicaid fraction, those patient days must include patients who can be “regarded as” eligible for Medicaid.

Particularly, CMS proposes to amend the interpretation of individuals regarded as eligible for Medicaid as “patients who receive health insurance through a section 1115 demonstration itself or purchase such insurance with the use of premium assistance provided by a section 1115 demonstration.”[22] This change would become effective October 1, 2022.

CMS PROPOSES TO ADOPT “BIRTHING-FRIENDLY” HOSPITAL DESIGNATION

On December 7, 2021, White House released a Call to Action announcing the establishment of “birthing-friendly” hospital designation. The provisions of this proposed rule include details on how CMS plans to establish this designation. CMS has signaled on several recent occasions that this change was coming. [23]^,[24],[25]

Birthing-friendly designation is intended to be awarded to hospitals that participate in a program aimed at improving maternal health outcomes; therefore, allowing patients to choose hospitals that show a commitment to safe maternal health. If finalized, the hospital designation will be publicly reported on a CMS website beginning Fall 2023.

The proposed designation would be the first ever hospital quality designation specifically focused on maternal health in the Hospital IQR Program’s Maternal Morbidity Structural measure.

The Maternal Morbidity Structural measure was just adopted in fiscal year 2022 and it is a performance measure that assesses whether or not a hospital participates in a statewide or a national perinatal quality improvement collaborative initiative and implements patient safety practices.[26] For now, the designation will solely be based on data from hospitals that report “yes” to the Maternal Morbidity Structural measure. However, CMS plans to add more robust set of criteria for awarding the “birthing-friendly” designation in the future.

Additionally, CMS proposes to adopt two new maternal health related quality measures-the Cesarean Birth and Severe Obstetric Complication- to its Hospital IQR Program.

CHANGES TO QUALITY REPORTING, PROMOTING INTEROPERABILITY, AND VALUE-BASED PURCHASING PROGRAMS

CMS Proposes New Measure for the Inpatient Quality Reporting (IQR) Program

The Hospital Inpatient Quality Reporting (IQR) Program reduces payment to hospitals that do not meet the program requirements. Hospitals that do not meet the requirements or fail to submit quality data are subject to a one-fourth reduction in their annual payment update. For FY 2022, CMS proposes to adopt ten new quality measures including:

Hospital Commitment to Health Equity (CY 2023 reporting period/FY 2025 payment determination);
Screening for Social Drivers of Health (voluntary reporting for the CY 2023 reporting period and mandatory reporting for the CY 2024 reporting period/FY 2026 payment determination);
Screen Positive Rate for Social Drivers of Health (voluntary reporting for the CY 2023 reporting period and mandatory reporting for the CY 2024 reporting period/FY 2026 payment determination);
Cesarean Birth electronic clinical quality measure (eCQM) (inclusion in the measure set beginning with the CY 2023 reporting period/FY 2025 payment determination, and mandatory reporting for the CY 2024 reporting period/FY 2026 payment determination);
Severe Obstetric Complications eCQM (inclusion in the measure set beginning with the CY 2023 reporting period/FY 2025 payment determination, and mandatory reporting for the CY 2024 reporting period/FY 2026 payment determination);
Hospital-Harm—Opioid-Related Adverse Events eCQM (CY 2024 reporting period/FY 2026 payment determination);
Global Malnutrition Composite Score eCQM (CY 2024 reporting period/FY 2026 payment determination);
Medicare Spending Per Beneficiary (MSPB) Hospital (FY 2024 payment determination);
Hospital-Level, Risk Standardized Patient-Reported Outcomes Performance Measure Following Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (beginning with two voluntary periods, followed by mandatory reporting for the reporting period which runs from July 1, 2025 through June 30, 2026, impacting the FY 2028 payment determination); and
Hospital-Level Risk-Standardized Complication Rate (RSCR) Following Elective Primary THA/TKA (FY 2024 payment determination).

CMS is also proposing refinements to two current measures beginning with the FY 2024 payment determination:

Hospital‐Level, Risk‐Standardized Payment Associated with an Episode-of-Care for Primary Elective THA/TKA; and
Excess Days in Acute Care (EDAC) After Hospitalization for Acute Myocardial Infarction (AMI).

Lastly, CMS is requesting comment on the potential future development and inclusion of two National Healthcare Safety Network (NHSN) measures:

Healthcare-Associated Clostridioides difficile Infection Outcome; and
Hospital-Onset Bacteremia & Fungemia Outcome.

CMS is also proposing changing the existing eCQM reporting and submission requirements to increase the submission requirement from 75 percent to 100 percent validation of medical record requests to successfully complete eCQM validation beginning with the FY 2025 payment determination and to increase eCQM reporting from four to six eCQMs for the FY 2026 payment determination (CY 2024 reporting period).

CMS is also proposing to remove the zero-denominator declaration and case threshold exemptions for hybrid measures and submission and reporting requirements for patient-reported outcome-based performance measures (PRO-PMs).

CMS Proposes Changes to Measures for the Promoting Interoperability (PI) Program

The promoting interoperability program encourages eligible professionals, hospitals, and CAHs to adopt, implement, upgrade, and demonstrate meaningful use of certified EHR technology (CEHRT). CMS is proposing the following new measures to EHR reporting:

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; and
Antimicrobial Use and Resistance (AUR) Surveillance measure and require its reporting under the Public Health and Clinical Data Exchange Objective, beginning with the CY 2023 EHR reporting period.

CMS is proposing the following additional changes 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;
Require submission of the level of active engagement, in addition to submitting the measures for the Public Health and Clinical Data Exchange Objective;
Institute public reporting of certain Medicare Promoting Interoperability Program data;
Increase the Public Health and Clinical Data Exchange Objective from 10 to 25 points, to increase the points associated with the Electronic Prescribing Objective from 10 to 20, to reduce the points associated with the Health Information Exchange Objective from the current 40 points to 30 points, and to reduce the points associated with the Provide Patients Electronic Access to Their Health Information from the current 40 to 25 points.

CMS is proposing to add four new measures to the Promoting Interoperability Program’s eCQM measure set to align with the Hospital IQR program and to increase the required eCQM submissions from four to six eCQMs (beginning with the CY 2024 reporting period).

CMS Proposes to Suppress or Refine Measures for Value-Based Purchasing Programs due to COVID-19

CMS is proposing to suppress or refine several measures in the Hospital Readmissions Reduction Program (HRRP), Hospital-Acquired Condition (HAC) Reduction Program, and Hospital Value-Based Purchasing (VBP) Program due to the impacts of the COVID-19 public health emergency (PHE). More detail is included in each section below.

CMS Proposes Adjustments to HRRP Due to COVID-19

The Hospital Readmissions Reduction Program (HRRP) is a value-based purchasing program that reduces payments to hospitals with excess readmissions.

CMS proposes to resume the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following Pneumonia Hospitalization measure beginning with FY 2024 after the suppression of the measure in FY 2023 due to the COVID-19 pandemic. CMS also proposed to modify the measure to exclude COVID-19 diagnosed patients from the measure denominator beginning with the FY 2024 proposed rule.

CMS is also proposing to modify the six condition/procedure specific readmissions measures to include a covariate adjustment for history of COVID-19 withing one year preceding the index admission, beginning with the FY 2024 program year.

CMS Proposes Not to Penalize Hospitals under the HAC Reduction Program for FY 2023

The Hospital-Acquired Condition (HAC) Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by reducing payment by 1 percent for applicable hospitals that rank in the worst performing quartile on select measures of hospital-acquired conditions. CMS proposes to suppress the CMS PSI 90 measure and the five CDC NHSN HAI measures from the calculation of measure scores and the Total HAC Score due to the impacts of COVID-19, and therefore will not penalize any hospital under the HAC Reduction Program for the FY 2023 program year. CMS is also proposing not to calculate or report measure results for the HAC Reduction Program for the FY 2023 program year.

Additionally, CMS is seeking feedback on two potential digital National Healthcare Safety Network (NHSN) measures and on overarching principles for measuring healthcare quality disparities across CMS Quality Programs.

CMS Proposes Not to Calculate Performance Scores for FY 2023 Due to COVID-19 for Hospital VBP Program

The Hospital Value-Based Purchasing (VBP) Program is a budget-neutral program funded by reducing participating hospitals’ base operating DRG payments each fiscal year by 2 percent and redistributing the entire amount back to the hospitals as value-based incentive payments. For the FY 2023 program year, CMS is proposing to suppress the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and five Hospital Acquired Infection (HAI) measures. Because less than half of the Hospital VBP Program measures would be available as a result, CMS is proposing not to calculate a total performance score (TPS) for any hospital. CMS proposes to instead award all hospitals a value-based payment amount for each discharge equal to the amount withheld. CMS proposes to still calculate and publish measure rates.

CMS CONSIDERS N95 PAYMENT ADJUSTMENT

An adequate supply of personal protective equipment is critical to healthcare preparedness, and the COVID-19 pandemic has exacerbated supply challenges for personal protective equipment. CMS is considering whether to provide payment adjustments to hospitals in recognition of the substantial resource costs required to acquire domestically made NIOSH-approved surgical N95 respirators.

CMS seeks comment on proposed payment adjustments that could account for resource costs in purchasing wholly domestically made N95 respirators. The adjustments could aid in reaching a strategic goal of sustaining surgical respiratory supply for health workers and patients. The rule provides two potential frameworks, and alternative approaches to address additional hospital and health system costs:

Biweekly interim lump-sum payments reconciled at cost report settlement, or
A claims-based approach for which a MS-DRG add-on payment is established and applied to each applicable Medicare IPPS discharge.

CMS is considering applying this adjustment to FY 2023 and potentially subsequent years.

CMS CONTINUES COVID-19 AND SEASONAL INFLUENZA DATA REPORTING REQUIREMENTS FOR CONDITIONS OF PARTICIPATION WITH FUTURE PANDEMIC PROPOSALS

Conditions of participation (CoPs) are the health and safety standards that Medicare-certified providers and suppliers must meet to receive Medicare and Medicaid payment. Currently, as part of its CoPs for hospitals and critical access hospitals (CAHs) CMS requires data reporting regarding COVID-19 and seasonal influenza after the conclusion of the COVID-19 Public Health Emergency (PHE) and would continue until April 30, 2024, unless the Secretary establishes an earlier ending date. Details regarding proposed reporting are below:

Proposal would require hospitals and CAHs to report specific data elements to the CDC’s National Health Safety Network (NHSN), or other CDC-supported surveillance systems, as determined by the Secretary.
Proposal allows for scope and frequency of data collection to be reduced and limited depending on evolving clinical and epidemiological circumstances.
Unless an alternative format is proposed by the Secretary, reporting must be in a format that provides person-level information (e.g., medical record identifier, race, ethnicity, age, sex, residential county and zip code, and relevant comorbidities for affected patients).
For COVID-19 reporting, the categories of data elements that this report would include are as follows: suspected and confirmed COVID-19 infections among patients and staff; total COVID-19 deaths among patients and staff; personal protective equipment and testing supplies in the facility; ventilator use, capacity and supplies in the facility; total hospital bed and intensive care unit bed census and capacity; staffing shortages; COVID-19 vaccine administration data of patients and staff; and relevant therapeutic inventories and/or usage.
For seasonal influenza, the categories of data elements that this report would include are as follows: confirmed influenza infections among patients and staff; total influenza deaths among patients and staff; and confirmed co-morbid influenza and COVID-19 infections among patients and staff.

CMS is also proposing to establish reporting requirements for future PHEs related to future epidemics and pandemics by requiring the electronic reporting on acute respiratory illness (including, but not limited to seasonal influenza virus, influenza-like illness, and severe acute respiratory infection), SARS-CoV-2/COVID-19, and other viral and bacterial pathogens or infectious diseases of pandemic or epidemic potential when the Secretary has declared a directly-related PHE. Below are detailed some key elements of the proposal:

As with COVID-19 and seasonal influenza, CMS proposes to require hospitals and CAHs to report specific data elements to the CDC’s National Health Safety Network (NHSN), or other CDC-supported surveillance systems, as determined by the Secretary. CMS is also proposing this data would be reported on a daily basis, unless the Secretary specifies a lesser frequency, to the Centers for Disease Control and Prevention’s National Healthcare Safety Network (NHSN) or other CDC-supported surveillance systems as determined by the Secretary.

The proposed requirements would apply to local, state, and national PHEs as declared by the Secretary.
These proposed requirements would also allow for reduced frequency of reporting and modified or limited data elements that might be required at the discretion of the Secretary.
Unless an alternative format is proposed by the Secretary, reporting must be in a format that provides person-level information (e.g., medical record identifier, race, ethnicity, age, sex, residential county and zip code, and relevant comorbidities for affected patients).
Relevant to the declared PHE, the categories of data elements that this report would include are as follows: suspected and confirmed infections of the relevant infectious disease pathogen among patients and staff; total deaths attributed to the relevant infectious disease pathogen among patients and staff; personal protective equipment and other relevant supplies in the facility; capacity and supplies in the facility relevant to the immediate and long term treatment of the relevant infectious disease pathogen, such as ventilator and dialysis/continuous renal replacement therapy capacity and supplies; total hospital bed and intensive care unit bed census, capacity, and capability; staffing shortages; vaccine administration status of patients and staff for conditions monitored under this section and where a specific vaccine is applicable; relevant therapeutic inventories and/or usage; isolation capacity, including airborne isolation capacity; and key co-morbidities and/or exposure risk factors of patients being treated for the pathogen or disease of interest in this section that are captured with interoperable data standards and elements.

In terms of impact, CMS indicates that it anticipates hospitals have already established some infrastructure to collect, maintain, and report data related to infectious diseases and believes hospitals would need a minimal amount of time to begin reporting data in the event a new PHE is declared. Their impact analysis estimates a burden increase of $38,204,400 or approximately $6,162 per facility annually for weekly reporting which the agency indicates is likely an overestimate on the costs associated with reporting because it assumes that all hospitals and CAHs will report manually.

CMS is soliciting feedback on how to best balance preparedness and flexibility to respond to emergencies with the burden and costs on regulated entities. The agency is also specifically asking for comment on the burden impacts related to reporting for a specified infectious disease when a future PHE is declared.

CMS MAKES NO PROPOSALS TO CHANGE CURRENT PAYMENT POLICY FOR ORGAN ACQUISITION

Medicare reimburses transplant hospitals (THs) for organ acquisition costs, the transplant surgery, inpatient, and post-transplant costs but reimbursement comes through different payment systems.^[27]^,[28]

Medicare Part A pays for TH costs of a transplant and certain follow-up care through a DRG payment.
Medicare Part A pays for organ acquisition costs under reasonable cost principles.^[29]^,[30]
Medicare Part B generally pays for physician and other services related to the transplant procedure.

In the proposed and final FY 2022 IPPS rule, CMS had considered codifying and compiling Medicare organ acquisition policies under a new 42 CFR Part 413 subpart L that includes: new policies, existing policies,^[31] and certain policies from the Medicare Modernization Act (Pub. L. 108-173)^[32] and the 21st Century Cures Act (Pub. L. 114-255).^[33] In addition, CMS considered changes regarding counting and reporting for THs and hospital organ procurement organizations of Medicare usable organs and total usable organs on Medicare hospital cost reports. Ultimately, given the large number and nature of the comments that the Agency received on these proposals, CMS had decided to address them in future rulemaking.

For FY 2023, the agency has not made any proposals to change organ acquisition payment policy. CMS notes in their rule this year that organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis.

CMS PROPOSES $25 MILLION INCREASE FOR LONG TERM CARE HOSPITALS

Long-Term Care Hospitals (LTCHs) play a vital role within the Medicare program by caring for many patients who require hospital care for long-term debilitating illness. In 2020, the average length of stay (ALOS) in LTCHs was 27.6 days (an increase of three percent from 2019).[34] Because of the difference in complexity, resource utilization, and length of stay, LTCHs are excluded from the IPPS and are paid under the LTCH PPS.

For FY 2023, CMS estimates that the aggregate long-term care hospital (LTCH) prospective payment system (PPS) payments will increase by 0.7 percent or $25 million, as compared to FY 2022. The proposed LTCH PPS standard Federal payment rate is $45,952.67. The proposed rule affects 339 LTCHs nationwide, for discharges occurring on or after October 1, 2022.

CMS EYES MOVE TO DIGITAL QUALITY MEASURES IN LTCH QRP

CMS is requesting information on the inclusion of two new measures in the LTCH Quality Reporting Program:

National Healthcare Safety Network (NHSN) Healthcare-associated Clostridioides difficile Infection Outcome Measure
NHSN Hospital-Onset Bacteremia & Fungemia Outcome Measure

The Clostridioides difficile Infection Outcome Measure tracks the development of new Clostridioides difficile infections among patients already admitted to LTCH. The existing measure, NHSN Facility-Wide Inpatient Hospital-onset Clostridium difficile Infection Outcome Measure (NQF #1717), was adopted into the LTCH QRP in 2014. CMS is seeking public comment specifically on adding these measures (and others in the future) as digital measures, for which data would be submitted electronically utilizing an EHR program.

CMS states that the new measure would improve the original version, especially with regards to reducing regulatory burden, because it would help accelerate LTCHs’ move to fully digital measures, as digital measures pull data directly from the EHR used by the hospital.

The proposed rule also includes several RFIs on measuring health care disparities in the LTCH QRP.

PRINCIPLES FOR MEASURING HEALTHCARE QUALITY DISPARITIES

Consistent with the CMS’ goal to advance health equity, CMS is soliciting comments on what CMS should broadly consider when using measurement and stratification tools to address healthcare disparities and advance health equity, as well as how health equity should be measured in the Long-Term Care Hospital Quality Reporting Program (LTCH QRP).

CMS outlines two approaches for the LTCH QRP, one for a methodology for assisting LTCHs in identifying quality disparities, and another on health equity measures that could be included in the LTCH QRP. CMS is interested in whether using approaches similar to 1) a “within-hospital disparity method” comparing measure performance results for one measure across subgroups of patients, and 2) a “between-hospital disparity method” using performance measurement across a subgroup with a specific social risk factor could be used to gather stratified measure results for LTCH QRP Measures.

ADVANCE TOWARD FUTURE DIGITAL QUALITY MEASURES CONTINUES

Building on the FY 2022 IPPS/LTCH PPS final rule, CMS is building on its intention to fully use digital quality measurement in its reporting programs. CMS is issuing an RFI to collect information on advancements in digital quality measurement and the use of the Fast Healthcare Interoperability Resources (FHIR) standard for electronic clinical quality measures (eCQMs). CMS is requesting comment on the following areas:

Revisions to a possible definition of digital quality measures. CMS clarified that digital quality measures are self-contained measure specifications and code packages that use at least one source of health information that be digitally transmitted.
Strategies for standardizing digital data
Methods for implementing and utilizing FHIR eCQM reporting across quality reporting programs, with a focus on the Hospital Inpatient Quality Reporting Program.

SOCIAL DETERMINANTS OF HEALTH DIAGNOSIS CODES

Social determinants of health (SDOH) are the economic and social conditions that affect a range of health and quality-of-life risks and outcomes, influence health status, and contribute to health disparities and inequities. CMS requests public comment on 96 diagnosis codes that describe the SDOH in code categories Z55-Z65. CMS seeks comments on how the reporting of these codes can improve CMS’s ability to recognize the severity of illness, complexity of illness, and/or utilization of resources under the MS-DRGs. CMS believes that reporting SDOH Z codes in inpatient claims data could improve quality improvement activities, track factors affecting people’s health, offer insight into health inequities, and refine hospitals’ ability to use data within their clinical care and discharge planning teams. Consistent documentation and reporting could additionally associate nonmedical components influencing health, track progress toward addressing them, and help work toward establishing comprehensive policies to address health equity and promote high-quality care for beneficiaries.

CLIMATE CHANGE READINESS CONSIDERATIONS

CMS seeks comment on how healthcare facilities and providers can better prepare for the impacts of climate change on patients. It seeks comment from two places: stakeholder input on how CMS and the U.S. Department of Health and Human Services (HHS) can support those facilities and providers effectively in three distinct areas as well as public comment on an extensive list of issues with the understanding that some providers may have already done work in some areas listed. The information will be used to inform the development and update of policies that help providers respond to climate-related health outcomes.

Contact Applied Policy for a more detailed summary on IPPS proposed rule.

[1] For general acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users.
[2] This is a departure from the FY 2022 rule, which utilized FY 2019 data instead of FY 2020 data due to impacts of the COVID-19 pandemic. CMS proposes to use the FY 2021 MedPAR claims and FY 2020 cost reports for FY2023 rate setting.
[3] The basic methodology for determining operating payments is included in Appendix A.
[4] In the March 2022 Report to Congress, the Medicare Payment Advisory Commission, or MedPAC (a non-partisan, independent legislative branch agency) recommended that Congress update the 2022 Medicare basement rates for acute care hospitals consistent with current law. MedPAC noted in its report that Medicare payments to hospitals were below costs in 2020, payment adequacy indicators are generally positive, and COVID-19 pandemic relief funding helped to offset these losses. More information about MedPAC is available on the Commission’s website here: https://www.medpac.gov/.
[5] See page 1664 of the unpublished proposed rule.
[6] CMS anticipates that hospital operating and capital payment proposals would redistribute amounts in excess of $100 million to acute care hospitals.
[7] Includes uncompensated care and proposed supplemental payments.
[8] Under current law, the Medicare-Dependent, Small Rural Hospital (MDH) program will expire at the end of FY 2022. Hospitals qualifying as MDHs receive payments based on the (1) federal rate or the (2) federal rate plus 75 percent of the difference between payments based on the Federal rate and payments based on the hospital specific rate (whichever is higher).
[9] See Tables on page 1780 of the unpublished proposed rule.
[10] Section 3401 of the Patient Protection and Affordable Care Act, or ACA (Pub. L. 111-148) requires market basket updates under the Medicare prospective payment system to be reduced annually by the MFP adjustment. The ACA defines this adjustment as “the 10-year moving average of changes in annual economy-wide private nonfarm business multifactor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost-reporting period, or other annual period).”
[11] See Tables on page 1565 of the unpublished proposed rule.
[12] See Table I on pages 1678 - 1680 of the unpublished rule (estimates do not include assumptions about changes in volume & service mix).
[13] Payment impact of the hospital rate update and other adjustments included across all hospitals in a category.
[14] Includes weights & DRG changes, wage index changes, geographic reclassifications, and applicable budget neutrality factors.
[15] Combined impact for policies that hospitals located in frontier States have a wage index no less than 1.0 and an increase in a hospital’s wage index if a threshold percentage of residents of the county where the hospital is located commute to work at hospitals in counties with higher wage indexes. These are not budget neutral policies.
[16] Includes the impact of the expiration of MDH status for FY 2023. This is a non-budget neutral payment provision.
[17] Includes the overall estimated change in payments from FY 2022 to FY 2023.
[18] Hospitals also may receive outlier payments for high-cost cases that qualify under thresholds established for each fiscal year.
[19] CMS estimates that capital payments per discharge would decrease by approximately 0.4 percent.
[20] https://www.jdsupra.com/legalnews/district-court-invalidates-medicare-gme-6333928/
[21] See page 28 of the unpublished rule.
[22] See page 776 of the unpublished rule.
[23] https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/13/fact-sheet-biden-harris-administration-announces-additional-actions-in-response-to-vice-president-harriss-call-to-action-on-maternal-health/
[24] https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/07/fact-sheet-vice-president-kamala-harris-announces-call-to-action-to-reduce-maternal-mortality-and-morbidity/
[25] https://www.cms.gov/newsroom/press-releases/cms-announces-key-actions-reduce-maternal-mortality-and-morbidity
[26] Maternal Morbidity Structural Measure https://www.cms.gov/files/document/maternal-morbidity-structural-measure-specifications.pdf
[27] Transplant program and transplant hospital are defined at 42 CFR 482.70. CMS is phasing out the term “transplant center.”
[28] Transplant programs in a transplant hospital (TH) must meet CMS Conditions of Participation under 42 CFR Part 482, subpart E.
[29] Medicare reimburses THs for organ acquisition costs under reasonable cost principles pursuant to section 1861(v) of the Act, based on the TH’s ratio of Medicare usable organs to total usable organs.
[30] Medicare authorizes payment to Organ Procurement Organizations (OPOs) for kidney acquisition costs under reasonable cost principles pursuant to section 1861(v) of the Act, based on the OPO’s ratio of Medicare usable kidneys to total usable kidneys
[31] Provider Reimbursement Manual Part 1 – Chapter 31.
[32] Medicare Modernization Act of 2003 (Pub. L. 108-173), Section 733: Payment for Pancreatic Islet Cell Investigational Transplants for Medicare Beneficiaries in Clinical Trials. https://www.congress.gov/bill/108th-congress/house-bill/1/text
[33] The 21st Century Cures Act (Pub. L. 114-255), Section 17006: Allowing End-Stage Renal Disease Beneficiaries to Choose a Medicare Advantage Plan. https://www.congress.gov/bill/114th-congress/house-bill/34/text/pl
[34] MedCAC. Long-term care hospital services (March 2022). https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_Ch10_SEC.pdf.

Applied Policy ®