CMS releases final inpatient payment rule: 6 takeaways

CMS released its annual Inpatient Prospective Payment System final rule Aug. 1, which raises Medicare payment rates for acute care hospitals. 

The rule applies to discharges occurring on or after Oct. 1, 2022. 

Here are six takeaways from the 2,087-page final rule :

1. Acute care hospitals that report quality data and are meaningful users of EHRs will receive a 4.3 percent increase in Medicare rates in fiscal year 2023, compared to fiscal 2022. The rate reflects a hospital market basket update of 4.1 percent reduced by 0.3 percentage point for productivity, plus a 0.5 percentage point adjustment required by statute. 

"This is the highest market basket update in the last 25 years and is primarily due to higher expected growth in compensation prices for hospital workers," CMS said. 

2. CMS is adding three health equity-focused measures in the Hospital Inpatient Quality Reporting Program. The first measure will assess a hospital's commitment to establishing a culture of equity by examining five domains, including data collection, strategic planning, data analysis, leadership engagement and quality improvement. The second and third measures will examine patient-level, health-related social needs, including housing instability and food insecurity. 

3. The final rule will establish a "birthing-friendly" hospital designation in fall 2023. The designation will be based on the quality and safety of maternity care. 

"The 'birthing-friendly' hospital designation will provide important information to consumers about hospitals with a demonstrated commitment to reducing maternal morbidity and mortality by implementing best practices that advance health care quality and safety for pregnant and postpartum patients," CMS said. 

4. CMS finalized a proposed requirement for continued COVID-19-related reporting for hospitals with a reduced number of data categories as an off ramp to the current public health emergency.  

5. CMS is discontinuing the use of proxy data for uncompensated care costs in determining uncompensated care payments for Indian Health Service and Tribal hospitals and hospitals in Puerto Rico. The agency is also establishing a new supplemental payment to promote long-term payment stability for these hospitals. 

6. "We are pleased that CMS will provide hospitals and health systems with increased inpatient payments next year, rather than a cut as proposed, allowing them to better provide care for their patients and communities," American Hospital Association Executive Vice President Stacy Hughes said in a statement. "As we urged, CMS will use more recent data to calculate the market basket and disproportionate share hospital payments, which yields far more accurate figures that better reflect the historic inflation and tremendous labor and supply cost pressures hospitals and health systems face."

Ms. Hughes said the payment update will fall short of what hospitals need to overcome challenges, including inflationary expenses and increased costs tied to staff shortages. 

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