Update on CMS IPPS 2022 Final Rule for Hospital Revenue Cycle Management

Every update CMS makes to their IPPS rule means that healthcare leaders should rethink medical billing and coding services. This can range from new hospital revenue cycle management strategies to working with medical billing and coding companies to implement the new changes as easily as possible.

To help you today, we want to help you understand the most recent developments in the CMS IPPS 2022 final rule for hospital billing services [1]. 

Hospitals across the country are looking at an almost $2.3 billion boost in payments for 2022. This includes a 2.5% increase for reimbursement under the Medicare Inpatient Prospective Payment System (IPPS). The rule applies to general acute care hospitals that are successfully participating in the Hospital Inpatient Quality Reporting (IQR) Program and that are also meaningful users of EHR data [2]. The rule includes:

• A 2.7% market basket update
• A 0.5% positive adjustment under the Medicare Access and CHIP Reauthorization Act of 2015
• A 0.7% negative productivity adjustment

The agency has projected that IPPS operating payments per discharge will move up by about 2.6% for urban hospitals, and that the number will increase about 2.8% for their rural counterparts in comparison to 2021. CMS predicts that overall payments to long-term care hospitals (LTCH) will increase by 1.1%, or $42 million. 

Uncompensated Care

Hospital revenue cycle management leaders can also expect updates to uncompensated care payments. The agency has updated estimates of three factors that will be considered in determining payments in 2022. These factors are: 

• The estimate of 75% of the Disproportionate Share Hospital (DSH) payments that would have been paid
• An adjustment to the above amount to account for the percent change in the current national rate of uninsured individuals (as compared to the rate in 2013)
• Each eligible hospital’s estimated uncompensated care amount in relation to the estimated uncompensated care amount for eligible hospitals as a whole 

CMS will pay about $7.2 billion in uncompensated care payments for FY 2022, which is a drop of about $1.1 billion from FY 2021.

This final rule has also authorized additional payment for hospitals diagnosing and treating COVID-19 patients [3]. The agency has stated that its goal is to “mitigate potential financial disincentives for hospitals to provide new COVID-19 treatments and to minimize any potential payment disruption immediately following the end of the PHE.” 

CMS Administrator Chiquita Brooks-LaSure has made the following announcement. 

“How Medicare pays for hospital care and evaluates quality, are integral pieces of achieving and addressing gaps in health equity and strengthening our healthcare system for a more sustainable future. CMS is moving forward to incorporate what we have learned from the COVID-19 pandemic in order to improve quality and increase transparency so that patients are positioned to make informed decisions about their care.” [4]

But the Final Rule also includes additional measures to address the COVID-19 public health emergency (PHE)—CMS added a measure to the IQR program [2]. This measure requires hospitals to report on the number of healthcare personnel, by percentage, who have been fully vaccinated against the COVID-19 virus. The initial reporting period will start on October 1, 2021 and run through December 31, 2021, applying to FY 2023. After this period, hospitals must submit quarterly data starting in CY 2022 for FY 2024 and later. 

The agency will also be making changes to the New COVID-19 Treatments Add-on Payment (NCTAP). This payment was established for eligible discharges during the public health emergency under the FY 2021 IPPS final rule. It has provided enhanced payments for eligible inpatient cases that have involved the use of specific new products that have been authorized or approved to treat COVID-19. The agency has anticipated that there will be inpatient cases beyond the official end of the public health emergency, which may not adequately reflect the cost of new treatments under the assigned MS-DRG. This extension is an effort to mitigate potential financial disincentives for hospitals that can provide these new treatments. It also seeks to minimize potential payment disruption following the end of the public health emergency. 

This rule also makes adjustments to address maternal morbidity. 

CMS finalized the Maternal Morbidity Measure to its hospital quality reporting program as part of an effort to improve health equity. Brooks-LaSure highlighted the standardization of equity data to improve hospital data collection as another way CMS is working to lead the national conversation on health equity improvement. It will use comments to innovate on quality measures to better identify health equity data. She stated that they are also measuring hospital initiatives to improve maternal health outcomes as an effort to reduce disparities in maternal morbidity. 

Other Changes

Other policies finalized under the FY 2022 IPPS rule include: 

• Repeal of the requirement that hospitals must report on the Medicare cost report, the median payer-specific negotiated charge for all Medicare Advantage payers 
• Changes to the Promoting Interoperability Program
• Repeal of the Market-Based MS-DRG Relative Weight Policy
• Changes to Organ Acquisition Payment Policies
• Updates to the Medicare Wage Index

If you’re rethinking your approach to medical billing and coding services, or even your relationship with medical billing and coding companies in light of the FY 2022 updates, we suggest that you review those updates, then contact us to find out what opportunities and options you have.