CMS Publishes FY 2022 Final IPPS & LTCH Rules

On August 2, 2021, CMS published the fiscal year (FY) 2022 final rule for the Medicare Hospital Inpatient Prospective Payment System (IPPS). This rule also covers changes to the rules for the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS), as well as changes to quality programs and interoperability program requirements. There were a few updates, including increasing payment rates for acute-care hospitals and removing several price transparency requirements. Here’s what you need to know about the FY 2022 final rule:

1. Payment rates are updated.
   CMS expects hospital payments will increase by an aggregate of $2.3 billion in FY 2022, leading to an approximately 2.5 percent increase in Medicare rates for hospitals participating in the Hospital Inpatient Quality Reporting Program and meaningful electronic health record users. Hospitals, however, may be subject to additional payment adjustments such as reductions for excess readmissions and the Hospital-Acquired Condition Reduction Program.

2. There will be changes to the New COVID-19 Treatments Add-On Payment (NCTAP).
   Due to CMS’ anticipation of COVID-19 inpatient cases beyond the end of the public health emergency (PHE), the FY 2022 final rule extends the NCTAP through the end of the fiscal year in which the PHE ends. In addition, both the NCTAP and the traditional new technology add-on payment for qualified patient stays will extend through the fiscal year in which the PHE ends. 

3. CMS will distribute $7.2 billion in uncompensated care payments to Medicare disproportionate share hospitals (DSH). 
   In the FY 2022 final rule, CMS adjusted for the change in the rate of uninsured individuals, which will lead to a $1.1 billion decrease in the overall pool of funds from FY 2021. The final rule includes the estimated effect of the COVID-19 pandemic, Medicaid Maintenance of Effort provision in the Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act, and American Rescue Plan Act of 2021. 

4. CMS reduces price transparency requirements.
   While CMS remains committed to hospital price transparency, CMS is repealing the collection of market-based rate information through the Medicare cost reports. CMS also is repealing the market-based Medicare Severity-Diagnosis Related Group weight methodology that was to be effective in FY 2024 and will continue to use the existing cost-based methodology. CMS estimated this will reduce the administrative burden on hospitals by 64,000 hours. 

5. IME and GME requirements will be discussed in future rulemaking. 
   The FY 2022 IPPS/LTCH PPS proposed rule included proposals related to implementing the provisions of the 2021 Consolidated Appropriations Act (CAA). Due to the number and nature of comments that CMS received on the proposed implementation of CAA Sections 126, 127, and 131 relating to payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs, CMS decided to address the public comments associated with the issues in future rulemaking.

6. Changes to organ acquisition payment policies will be discussed in future rulemaking.
   In addition, the FY 2022 IPPS/LTCH PPS proposed rule included proposals related to the organ acquisition payment policy for transplant hospitals, donor community hospitals, and organ procurement organizations. Due to the number and nature of comments that CMS received on the organ acquisition payment policy proposals, CMS decided to address the public comments associated with these issues in future rulemaking.

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