CMS released its final Inpatient Prospective Payment System rule on August 2nd. The rule increases Medicare payment rates for acute care hospitals and removes some price transparency requirements. The rule also applies to discharges occurring on or after Oct. 1.

The summary of key items is as follows: 

1. Payment rate update. Hospitals that report quality data and are meaningful users of EHRs will see about a 2.5 percent increase in Medicare rates in fiscal year 2022, compared to 2021. CMS expects hospital payments to increase by an aggregate $2.3 billion in fiscal 2022. CMS said the changes in the final rule will increase payments by $3.7 billion and include a $1.4 billion decrease from other adjustments.

2. Price transparency requirements. CMS will move forward with its plan to remove median payer-specific negotiated rates by Medicare severity-diagnosis related group, with Medicare Advantage insurers. CMS said this will reduce administrative burden on hospitals by about 64,000 hours. 

3. Disproportionate share hospital payments. CMS will distribute $7.2 billion in uncompensated care payments for fiscal 2022, a decrease of about $1.1 billion from fiscal 2021.

4. Add-on payment for COVID-19 treatment. The inpatient payment rule finalizes an add-on payment for COVID-19 treatment through the end of the fiscal year in which the public health emergency ends.

5. Inpatient Quality Reporting Program. CMS proposed several changes to the Inpatient Quality Reporting Program, which reduces payment to hospitals that fail to meet program requirements. CMS will add five new measures to the program, including COVID-19 vaccination rates among healthcare personnel, a metric targeting maternal morbidity and two medication-related adverse event electronic clinical quality measures. CMS will also remove the exclusive breast milk feeding measure and make other changes

6. Medicare Promoting Interoperability Program. CMS is finalizing a few changes to the interoperability program to reduce the burden on eligible hospitals and critical access hospitals. In particular, CMS will increase the minimum required scoring threshold for the objectives and measures from 50 to 60 points, out of 100, to be considered a meaningful EHR user and adopt two new electronic clinical quality measures and remove three. 

7. Value-based payment programs. CMS will suppress most hospital value-based purchasing program measures during the public health emergency for COVID-19. As a result, hospitals will receive neutral payment adjustments under the value-based program in fiscal 2022.

Access the full rule here

We believe that overall hospitals did well with this final rule. Increases in payment rates along with reduced transparency requirements are good news.