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Highlights from April 27, 2021 Release of the FY 2022 IPPS Proposed Rule

Published on 

Wednesday, May 5, 2021

 | Billing 
 | Coding 
 | Quality 

CMS issued the FY 2022 IPPS Proposed Rule (CMS-1762-IFC) on Tuesday April 27, 2021. Following are highlights from the Proposed Rule.

Proposed Payment Rate Changes

The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) use is approximately 2.8 percent.

Overall, CMS estimates hospitals payments will increase by $2.5 billion.

COVID-19 Impact on Inpatient Hospitalization Utilization Data

CMS notes, in a related Fact Sheet, that their goal when setting inpatient hospital payment rates is to use the best available data. Given the impact that the COVID-19 Public Health Emergency (PHE) had during FY 2020, CMS is proposing to use the FY 2019 data to approximate the expected FY 2022 inpatient hospital utilization.

New Technology Add-On Payment (NTAP) Policy

There is good news for hospitals regarding the proposal being made related to the New Technology Add-On Payment (NTAP) policy. As background, the NTAP policy provides additional payment beyond the MS-DRG for cases where a CMS designated new technology was used and coded on the claim. Note, this “is not budget neutral and is generally limited to the 2-to 3-year period following the date of the FDA approval or clearance for marketing.”

“CMS is proposing a one-year extension of new technology add-on payments for 14 technologies for which the new technology add-on payment would otherwise be discontinued beginning FY 2022.”

New COVID-19 Treatments Add-on Payment (NCTAP)

CMS established the NCTAP policy for eligible discharges during the PHE. This policy was “designed to mitigate potential financial disincentives for hospitals to provide new COVID-19 treatments. CMS is proposing to extend this policy for eligible products through the end of the fiscal year in which the COVID-19 PHE ends.

The PHE was once again extended in April 2021 and is currently set to expire on July 20, 2021. (link to release) However, in January of this year, HHS sent a letter (link to letter) to governors indicating the likelihood that the PHE will remain in place for all of 2021. If this proposal is finalized, and the PHE ends on December 31, 2021, that would mean the NCTAP policy will be in place until September 30, 2022.

To learn more about the NCTAP policy visit the CMS NCTAP webpage by clicking here.

Quality Program Proposals

CMS is proposing a measure suppression policy that would allow CMS to suppress use of measure data if they determine that the COVID-19 PHE has affected quality measures and resulting quality scores significantly. This measure suppression policy is being proposed for:

  • The Hospital Readmission Reduction Program (HRRP),
  • The Hospital-Acquired Condition (HAC) Reduction Program, and
  • The Hospital Value-Based Purchasing (VBP) Program.

Also, with the Hospital Compare website now being the Care Compare website, CMS is proposing to update regulatory text for the HRRP and HAC Reduction Program to reflect the name change. The new Care Compare webpage ( link to site ) allows you to compare care by providers across the continuum of care (i.e. hospitals, nursing homes, home health, and hospice).

Specific to the HRRP, CMS is “seeking public comment on closing the gap in health equity through possible future stratification of results by race and ethnicity for condition/procedure-specific readmission measures and by expansion of standardized data collection to additional social factors, such as language preference and disability status.”

The Hospital VBP Program is funded by reducing participating hospitals base operating MS-DRG payments by 2%. The total estimated amount is then redistributed to hospitals based on their Total Performance Score (TPS). It is possible for your hospital to earn back a value-based incentive payment percentage that is less than, equal to, or more than the applicable reduction for that FY. The estimated amount available for incentive payments to hospitals in the current FY 2021 is $1.9 billion.

Due to the proposed measure suppression for the Hospital VBP Program, CMS is “proposing to not calculate a TPS for any hospitals based on one domain and to instead award to all hospitals value based payment amount for each discharge that is equal to the amount withheld.”

Graduate Medical Education (GME)

The Consolidated Appropriations Act (CAA), 2021, Section 126, “requires the distribution of an additional 1,000 new Medicare-funded medical residency positions to train physicians. CMS is proposing to distribute the slots to qualifying hospitals, as specified by the law, including those located in rural areas and those serving areas with a shortage of health care professionals.”

The 1,000 new slots would be phased in at no more than 200 per years beginning in FY 2023 (October 1, 2022). The estimated additional funding will total approximately $1.8 billion from FY 2023 through FY 2031.

Repeal of Hospital Negotiated Charges with Medicare Advantage Payers

Tom Nickels, Executive Vice President of the American Hospital Association, indicated in an April 27, 2021 AHA Statement on the release of the Proposed Rule that “based on our initial review, we are very pleased CMS is proposing to repeal the requirement that hospitals and health systems disclose privately negotiated contract terms with payers on the Medicare cost report. We have long said that privately negotiated rates take into account any number of unique circumstances between a private payer and a hospital and their disclosure will not further CMS's goal of paying market rates that reflect the cost of delivering care. We once again urge the agency to focus on transparency efforts that help patients access their specific financial information based on their coverage and care.” (Link to statement)

CMS is accepting comments on the proposed rule through 5 p.m. EDT on June 28, 2021.

  • CMS FY 2022 IPPS Proposed Rule CMS Fact Sheet: Link
  • CMS FY 2022 Proposed Rule web page: link
Article Author: Beth Cobb, RN, BSN, ACM, CCDS
Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc. Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Protection Assessment Tool.

This material was compiled to share information.  MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.