In a win for providers, CMS dropped a requirement that would have forced hospitals to disclose their contract terms with Medicare Advantage plans from its final inpatient pay rule for 2022 released Monday.
The rule bumps payment for inpatient services by 2.5%, which will result in hospitals getting $2.3 billion more than this year, CMS said. The agency expects Medicare disproportionate share hospital payments and uncompensated costs to drop by $1.4 billion in 2022 compared to this year, while long-term care hospitals will get a 1.1% payment bump, or a gain of $42 million.
Medicare will also continue shelling out add-on payments for COVID-19 treatments and therapies through the end of the fiscal year when the public health emergency ends, in a bid to reduce hospital stays and deaths, CMS said in a statement on the rule.
The Medicare Hospital Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System sets payment rates for inpatient stays. The new final rule outlining the payment systems for 2022 is meant to build on Biden administration priorities to close health equity gaps and expand access to diagnostics and therapies during the pandemic and beyond, CMS said.
In shaping the rule, regulators used data from the 2019 fiscal year, before the pandemic, to approximate inpatient hospital utilization for 2022, when hopefully the worst of COVID-19 is in the rear view.
The 2.5% pay bump for acute hospitals is lower than the 2.8% proposed in the initial draft of the rule released in April — and lower than the 2.9% pay bump for the 2021 fiscal year — but “largely within the range of market expectations,” Credit Suisse analyst A.J. Rice said in a note.
Hospitals will receive about $7.2 billion in uncompensated care payments for the 2022 fiscal year, a decrease of about $1.1 billion from 2021.
Though rates may be slightly below what was initially proposed, the rule gives major wins for providers in the price transparency arenas. CMS finalized its proposal to repeal a requirement that hospitals include the median payer-specific negotiated charge with their MA plans on their Medicare cost reports, a step trade groups like the American Hospital Association strongly supported earlier this year.
The requirement would have resulted in about 64,000 hours of administrative burden, CMS said. However, the agency noted nixing the requirement doesn’t dilute its commitment to price transparency, even as research shows a majority of hospitals aren’t complying with a Trump-era rule on disclosing some negotiated rates.
Under the final rule, hospitals and long-term care facilities will have to report COVID-19 vaccination rates for their employees to CMS, which could affect their payments for 2023 and beyond, CMS said. Providers will also have to share more data with public health agencies to facilitate outbreak and threat management, and smoother case and lab reporting, in a bid to streamline emergency response in the future.
CMS also added a maternal morbidity measurement to its inpatient quality reporting program, under which hospitals have to report whether they participate in efforts to better perinatal health, including safety practices. The goal is to encourage hospitals to standardize protocols addressing obstetric emergencies and complications during pregnancy and childbirth, which disproportionately affect minority populations, CMS said.
The agency also sought comment on a number of proposals to force reporting of health disparities based on demographic factors, including race and ethnicity. One potential idea was to create a health equity score measure modeled after one used to rate MA plans.
However, CMS said it was still digesting stakeholder comments — it received more than 6,500 on the proposed rule overall — around ways to improve health equity, and would weave those into future rulemaking.
The Biden administration also didn’t finalize proposed changes to organ acquisition payments or graduate medical education slots.
CMS did enact an imputed floor wage index required by the American Rescue Plan passed in March this year. Under the policy, which is designed to tweak payments based on varying labor costs in urban versus rural areas, New Jersey, Rhode Island, Delaware, Connecticut and Washington, D.C. should see slight increases in their wage indices.
And CMS approved 19 new technologies for add-on payments, including nine technologies under the alternative pathway for new medical devices part of the Food and Drug Administration’s breakthrough devices program, and two approved under the FDA’s pathway for infectious disease products. CMS will also continue add-on payments for all 23 technologies currently receiving add-on payments.
The agency estimates Medicare spending on new technology add-on payments will be $1.5 billion in 2022, nearly a 77% hike over 2021 spending.