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CMS released the final 2022 Inpatient Prospective Payment System and Long-Term Care Hospital rule. Review a breakdown of payment, policy, and program changes.

Regulations

CMS Releases Final 2022 Inpatient PPS and Long-Term Care Hospital Rule

  • Jennifer Boese
  • 9/1/2021

Key insights

  • The rule finalizes repeal of the requirement that hospitals report median negotiated rates from Medicare Advantage plans.
  • The rule does NOT release final policies on multiple graduate medical education (GME) changes, such as how CMS will distribute 1,000 new GME slots. CMS continues to review the comments received and will release final policies in the future under separate regulations.
  • The rule includes various payment updates, revisions, and additions to wage index policy and multiple programs, including the Medicare Shared Savings Program and the Medicare Promoting Interoperability Program.
  • We can help you review the details of this new proposal.

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On August 2, the Centers for Medicare & Medicaid Services (CMS) released its final 2022 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital rule.

Inpatient Prospective Payment System

Payment and policy updates 

  • Market-basket update — CMS proposes a 2.7% update. Combined with a 0.7% multifactor productivity adjustment and a statutorily required increase of 0.5%, this results in a 2022 update of 2.5%.
  • Labor related shares — For discharges occurring on or after October 1, 2021, CMS finalizes a labor-related share of 67.6%.
  • National capital federal rate — CMS finalizes a rate of $472.60 for fiscal year (FY) 2022.
  • PPS-exempt hospitals marketbasket update— CMS finalizes a 2.7% update.
  • Indirect medical education (IME) adjustment — For discharges occurring during FY 2022, CMS finalizes a formula multiplier of 1.35.
  • Chimeric antigen receptor (CAR) T-cell immunotherapy — CMS finalizes adding more immunotherapies to the CAR-T Medicare Severity Diagnosis Related Group, MS-DRG 018. MS-DRG 018 will also be updated to “Chimeric Antigen Receptor (CAR) T-cell and Other Immunotherapies” to account for non-CAR T-cell therapies to be grouped into the MS-DRG for FY 2022.
  • New technology add-on payments (NTAP) — CMS finalizes continuing 10 new technology add-on payments for FY 2022. In addition, due to the pandemic, CMS finalizes extending for another year the NTAP for 13 technologies that would have expired in 2022. CMS also finalizes 19 new applications.
  • New COVID-19 treatment add-on payments — CMS is extending these payments for eligible COVID-19 products through the end of the fiscal year in which the public health emergency (PHE) ends.
  • Medicare Disproportionate Share Hospital (DSH) payments — There are three factors that go into determining these payments to DSH hospitals. For 2022, CMS calculates the factors as follows:
    • Factor 1 — DSH pool for FY 2022 is $10,488,564,546.74, which is equal to 75% of the total amount of estimated Medicare DSH payments for FY 2022 ($13,984,752,728.99 minus $3,496,188,182.25).
    • Factor 2 — CMS calculated factor 2 for the FY 2022 final rule to be 68.57%. The final FY 2022 uncompensated care amount is $10,488,564,546.74 x 0.6857 = $7,192,008,709.70.
    • Factor 3 — finalizes use of a hospital’s FY 2018 Worksheet S–10 data. [As a proxy, CMS will use low-income insured days for Puerto Rico hospitals and Indian Health Services and Tribal hospitals.]
  • Medicaid fraction in DSH calculation — Due to several court cases finding that CMS is required to consider certain days in the numerator of the Medicaid fraction, CMS had proposed but is delaying finalizing modifications to its policy on counting patient days. CMS will continue to review the comments received and release final policy in a separate document.
  • Operating room (OR) and non-operating room codes — CMS continues its ongoing work related to its review of OR and non-OR codes, including when a procedure should be considered one or the other and moving current codes from one to the other. CMS finalizes changing dozens of procedures codes from OR procedures to non-OR procedures, effective October 1, 2021, as well as dozens of non-OR procedure codes from to OR procedure codes, also effective October 1, 2021.
  • Medicare Severity Diagnosis Related Groups (MS-DRGs) — Due to the pandemic, CMS finalizes using claims data from the March 2020 update of the FY 2019 MedPAR file in its analysis of MS-DRG classification changes for FY 2022.

    CMS continues its review of MS-DRGs, including analyzing multiple change requests related to MS-DRGs. CMS also continues its ongoing work on MS-DRG severity levels: complication/comorbidity (CC), major complication/comorbidity (MCC), or non-CC. In particular, CMS continued to take comments focused on 3,490 “unspecified” codes with CC or MCCs that can be mapped back to other codes that further specify the anatomic site. CMS will maintain the severity code level designations at this time.

Wage index changes

  • Imputed rural floor — As required under the American Rescue Plan Act of 2021 (Pub. L. 117–2) enacted on March 11, 2021, CMS is re-establishing the minimum area wage index for hospitals in all-urban states beginning with discharges occurring on or after October 1, 2021. CMS indicates, based on data available at the release of this proposed rule, the change would apply to New Jersey, Rhode Island, Delaware, Connecticut, and Washington, DC.
  • Low wage index hospitals — To help mitigate wage index disparities, CMS had previously finalized policies to reduce the disparity between high and low wage index hospitals by increasing the wage index values for certain hospitals with low wage index values, and doing so in a budget-neutral manner. The wage index for hospitals with a wage index value below the 25th percentile wage index value for a fiscal year was increased by half the difference between the otherwise applicable final wage index value for a year for that hospital and the 25th percentile wage index value for that year across all hospitals. For purposes of the low wage index hospital policy, based on the data for this proposed rule, the FY 2022 25th percentile wage index value is 0.8437. CMS continues this wage-index transition, including the 5% cap phase-in of new office of management and budget (OMB) delineations for hospitals seeing reductions. In light of the pandemic, CMS will extend a 5% cap for an additional year.
  • Urban to rural wage index reclassifications — To address what it references as “gaming” of the rural wage index, CMS finalizes portions of their original proposal but delays in part. CMS believes it is appropriate to delay the requirement that cancellation requests be effective for the Federal fiscal year that begins in the calendar year after the calendar year in which the cancelation request is submitted. The current policy of requiring cancellation requests be submitted not less than 120 day prior to the end of the Federal fiscal year will remain in place for now. However, to address the potential for rural wage index manipulation in FY 2022 and future years, CMS finalizes the policy that rural reclassification be in effect for at least one year before cancellation can be requested.
  • Medicare geographic classification review board (MGCRB) — To address a previous court decision, effective for reclassification applications due to the MGCRB on September 1, 2021, for reclassification first effective for FY 2023, a hospital may apply for a reclassification under the MGCRB using the state’s rural area as the area in which the hospital is located.

Graduate medical education

CMS had included many policies related to GME in its proposed rule. However, due to the number of comments received, it did not finalize any of these policies but will release those in future publications. The issues still pending decisions include: distribution of 1,000 newly created residency slots, addressing hospitals with very low caps, and addressing Rural Training Track programs, all of which were enacted under the Consolidated Appropriations Act of 2021.

CMS indicates that as of January 1, 2021, there are 477 shared savings program ACOs serving approximately 10.7 million Medicare fee-for-service beneficiaries across the country. CMS also included the following statistics about those ACOs:   

  • 41% of ACOs (195 of 477) currently participate in two-sided risk models (shared savings and shared losses).
  • 194 ACOs participate in BASIC track’s glide path. Of those, 163 are in one-sided risk (Levels A, B) with 31 ACOs in two-sided risk (Levels C, D).
  • For PY 2021, 69 ACOs currently participate under Level E of the BASIC track.

Medicare Shared Savings Program (MSSP)

Due to the pandemic, CMS finalizes that accountable care organizations (ACOs) participating in Medicare’s BASIC track’s glide path may elect to maintain their current level of risk under the BASIC track for performance year (PY) 2022. As such, an applicable ACO may elect to remain in the same level of the BASIC track’s glide path in which it participated during PY 2021.

For PY 2023, an ACO that elects this advancement deferral option would then be automatically advanced to the level of the BASIC track’s glide path in which it would have participated during PY 2023 if it had advanced automatically.

Medicare Promoting Interoperability Program

CMS finalizes a variety of changes as discussed below.

  • A continuation of the 90-day reporting period for FY 2022 and FY 2023 but moving to a 180-day continuous reporting period for FY 2024.
  • For calendar year (CY) 2022 and subsequent years, the minimum scoring threshold is increased from 50 points to 60 points.
  • The maintain the electronic prescribing objective’s query of PDMP measure will continue to be optional for the electronic health record (EHR) reporting period in CY 2022, while increasing its associated bonus points from 5 points to 10 points.
  • Under the health information exchange objective, CMS would add the health information exchange (HIE) bi-directional exchange measure. This measure would be an optional alternative to the two existing measures — the support electronic referral loops by sending health information measure and the support electronic referral loops by receiving and reconciling health information measure. CMS proposes that eligible hospitals and CAHs may either report the two existing measures and associated exclusions OR may choose to report the new measure. CMS states the new measure would be worth 40 points. It would be reported by attestation and a “yes/no” response.
  • Under public health and clinical data exchange, CMS finalizes retaining the public health registry reporting and clinical data registry reporting measures, but makes them optional and available for bonus points beginning with the EHR reporting period in CY 2022.
  • Beginning with the EHR reporting period in CY 2022, CMS finalizes requiring an eligible hospital or CAH to report under the public health and clinical data exchange objective on the following:
    • - Syndromic surveillance reporting
    • - Immunization registry reporting
    • - Electronic case reporting
    • - Electronic reportable laboratory result reporting
  • If reporting ‘‘yes’’ for each of the four required measures, a hospital would receive 10 points. Some exclusions exists, but if those do not apply — and the eligible hospital or CAH fails to report on any one of the four measures required for this objective or reports a “no” response for one or more of these measures — it would receive a score of zero for the this objective and a total score of zero for the Medicare Promoting Interoperability Program.
  • CMS adds a safety assurance factors for EHR resilience (SAFER) guides measure to the protect patient health information objective beginning with the CY 2022 EHR reporting period. For this measure, CMS would have an eligible hospital or CAH attest to having conducted an annual self-assessment of all nine SAFER guides at any point during the calendar year in which the EHR reporting period occurs, with one “yes/no” attestation statement accounting for a complete self-assessment using all nine guides. CMS states the measure would be required in CY 2022 but not scored.
  • To maintain alignment between the hospital Inpatient Quality Reporting (IQR) Program and Medicare Promoting Interoperability Program, CMS also removes multiple eCQMs: STK-06, PC-05, and ED-2, beginning with the reporting period in CY 2024.
  • To maintain alignment with other programs and support hospitals’ ability to choose among a consistent pool of CQMs, CMS adopts the severe hypoglycemia and severe hyperglycemia CQMs for the Medicare Promoting Interoperability Program, beginning with the reporting period in CY 2023.
  • CMS requires eligible hospitals and CAHs to use only certified technology updated consistently with the 2015 Edition Cures Update — as finalized by the Office of the National Coordinator 21st Century Cures Act — to submit data for eCQMs, beginning with the reporting period in CY 2023.
  • CMS removes several attestation statements (statements 2 and 3) from the program’s prevention of information block requirement as unnecessary.

Quality programs

Measure suppression criterion

Due to the COVID-19 pandemic, CMS finalizes a measure suppression policy for various programs:

  • Hospital Readmissions Reduction Program (HRRP)
  • Hospital-Acquired Condition (HAC) Reduction Program
  • Hospital Value-Based Purchasing Program

The policy will use various factors to assess whether to suppress measures or not.

HAC reduction program

CMS finalizes suppressing the third and fourth quarters of CY 2020 CDC National Healthcare Safety Network Healthcare-Associated Infection (HAI) and CMS PSI 90 data from performance calculations for the FY 2022 and FY 2023 program years.

Hospital Inpatient Quality Reporting (IQR) program

CMS finalizes adoption of five new measures to the program:

  1. Maternal morbidity structural measure — beginning with a shortened reporting period from October 1, 2021, through December 31, 2021, affecting the CY 2021 reporting period/FY 2023 payment determination
  2. Hybrid hospital-wide all-cause risk standardized mortality (hybrid HWM) measure — beginning with a voluntary submission period that would run from July 1, 2022, through June 30, 2023, and followed by mandatory reporting beginning with the reporting period that runs July 1, 2023, through June 30, 2024, affecting the FY 2026 payment determination
  3. COVID-19 vaccination coverage among healthcare personnel (HCP) measure — beginning with a shortened reporting period from October 1, 2021, through December 31, 2021, affecting the CY 2021 reporting period/FY 2023 payment determination
  4. Hospital harm-severe hypoglycemia eCQM — beginning with the CY 2023 reporting period/FY 2025 payment determination
  5. Hospital harm-severe hyperglycemia eCQM — beginning with the CY 2023 reporting period/FY 2025 payment determination

CMS finalizes removing the following three measures between FY 2023 and FY 2026 payment determinations:

  1. Exclusive breast milk feeding (PC-05) (NQF #0480)
  2. Admit decision time to ED departure time for admitted patients (ED-2)
  3. Discharged on statin medication (STK-06)

CMS did not finalize removal of two other proposed measures: death among surgical inpatients with serious treatable complications (CMS PSI-04) and anticoagulation therapy for atrial fibrillation/flutter (STK-03)

CMS also asked for feedback and discussed comments received on three other measures it is considering for the future:

  1. 30-day, all-cause mortality measure for patients admitted with covid-19 infection
  2. Hospital-level, risk standardized patient reported outcomes measure following elective primary total hip and/or total knee arthroplasty
  3. Ways to leverage or develop new measures to address the gap in existing health inequities

Finally, CMS proposes that hospital IQR Program participants must use technology certified to the 2015 Edition Cures Update and it must support the reporting requirements for all available eCQMs beginning in 2023 reporting years.

Hospital Readmissions Reduction Program (HRRP)

CMS finalizes the following policies for the HRRP:

  • Suppress the hospital 30-day, all-cause, risk-standardized readmission rate (RSRR) following pneumonia hospitalization measure (NQF #0506) for the FY 2023 program year
  • Modify the remaining five condition-specific readmission measures to exclude COVID-19 diagnosed patients from the measure denominators, beginning with the FY 2023 program year
  • Use the MedPAR data that aligns with the applicable period for FY 2022
  • Automatically adopt the use of MedPAR data corresponding to the applicable period beginning with the FY 2023 program year and all subsequent program years, unless otherwise specified

Hospital Value-Based Purchasing Program

CMS finalizes suppressing the following for the FY 2022 program year:

  • Hospital consumer assessment of healthcare providers and systems (HCAHPS) (NQF #0166)
  • Medicare spending per beneficiary — hospital (NQF #2158)
  • National healthcare safety network (NHSN) catheter-associated urinary tract infection (CAUTI) outcome measure (NQF #0138)
  • NHSN central line-associated bloodstream infection (CLABSI) outcome measure (NQF #0139)
  • American College of Surgeons — Centers for Disease Control and Prevention harmonized procedure specific surgical site infection (SSI) outcome measure (NQF #0753)
  • NHSN facility-wide inpatient hospital-onset methicillin-resistant staphylococcus aureus (MRSA) bacteremia outcomes measure (NQF #1716)
  • NHSN facility-wide inpatient hospital-onset clostridium difficile infection (CDI) outcome measure (NQF #1717)

CMS also finalizes suppression of the pneumonia (PN) 30-day mortality rate measure for the FY 2023 program year and removing the patient safety and adverse events composite (CMS PSI 90) measure beginning with the FY 2023 program year.

CMS also finalizes the proposal to revise the scoring and payment methodology for the FY 2022 program year such that hospitals will not receive total performance scores. Instead, each hospital is awarded a payment incentive multiplier that results in a value-based incentive payment that is equal to the amount withheld for the fiscal year (2%).

PPS-exempt Cancer Hospital Quality Reporting Program

CMS finalizes removal of one measure, oncology: plan of care for pain — medical oncology and radiation oncology (NQF #0383) (PCH-15), in FY 2024 program year. CMS would adopt one measure, COVID-19 vaccination coverage among healthcare personnel, beginning with the FY 2023 program year and for subsequent years.

Additional requests for information (RFI)

CMS sought comments on digital quality measures (dQMs) and use of FHIR in order to advance to dQMs by 2025, and provided a high level summary of those. Similarly, CMS also sought comments on closing the health equity gap and provided a high level summary of those.:

Long-Term Care Hospitals (LTCH)

Payment updates

CMS proposes a 2.4% market basket update for FY 2022. When the required MFP adjustment of 0.2% is included, the result is a proposed FY 2022 update of 2.2%.

CMS indicates the standard LTCH PPS payment rates for FY 2022 would be $44,827.87 (reporting of quality data) or $43,950.62 (not reporting quality data).

CMS proposes to continue using current methodology to determine the MS-LTC-DRG relative weights for FY 2022. In doing so, it will propose to apply a normalization factor of 1.25811 and a budget neutrality factor of 1.000275.

Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

Payment updates

CMS proposes a 2.6% market basket update for FY 2022. When the required MFP adjustment of 0.7% is included, the result is a FY 2022 update of 1.9%.

CMS proposes to continue using current methodology to determine the MS-LTC-DRG relative weights for FY 2022. In doing so, it finalizes a normalization factor of 1.25815 and a budget neutrality factor of 1.0002384.

Long-term care hospital Quality Reporting Program (LTCH QRP)

CMS finalizes adoption of one new measure, COVID-19 vaccination coverage among healthcare personnel (HCP) 1352, beginning with FY 2023. CMS finalizes an update to the denominator for another measure, transfer of health (TOH) information to the patient — post-acute care (PAC), to exclude patients discharged under the care of an organized home health service or hospice.

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