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May 6, 2021

CMS Releases Major Proposed Reg Impacting Medicare Payments for Hospitals

Last week, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System (IPPS) proposed regulation. This annual reg proposes updates to Medicare payment policies and rates for hospitals. Once finalized, these policies go into effect starting on October 1, 2021.

While you as emergency physicians aren’t reimbursed under the IPPS, there are important policies in the IPPS reg each year that do have an impact on you and your patients. Further, the policies in the IPPS rule sometimes foreshadow what CMS will decide to include in the Medicare Physician Fee Schedule (PFS) and Quality Payment Program (QPP) proposed reg (the major Medicare proposed reg impacting physician payments that is released in the summer).

There are a plethora of proposals in the 1,900+ page IPPS reg. Some proposals that particularly impact you and your patients include:

  • Quality Reporting: CMS modifies multiple hospital quality programs, including the Hospital Value-Based Purchasing Program (HVBP), Hospital Readmissions Reduction Program, and Hospital-Acquired Condition Reduction Program. Of note, due to the COVID-19 pandemic, CMS proposes to suppress (i.e., not score) most measures under the HVBP Program in FY 2022. Therefore, hospitals will not receive a HVBP score and will not be eligible for any positive or negative payment adjustments based on their performance in the program.

    While you are subject to your own quality reporting program under Medicare—the Merit-based Incentive Payment System (MIPS)—there is a link between MIPS and the HVBP program. Under MIPS, hospital-based physicians, like yourselves, are eligible for the “facility-based scoring option.” If you qualify for this option (you bill 75 percent or more of your services in the emergency department), you automatically receive the quality and cost performance score for your hospital through the HVBP Program. However, you can still report quality measures through another submission mechanism and receive a “traditional” MIPS score for quality. If you do so, CMS automatically takes the highest of the HVBP score and the traditional MIPS score. Since there will be no HVBP score in FY 2022, it’s unclear what will happen with the facility-based scoring option under MIPS.
  • Price Transparency: CMS is proposing to repeal a policy established in last year’s reg to use median payer-specific negotiated charge information collected on Medicare cost reports for the purposes of calculating Medicare Severity Diagnosis Related Group (MS-DRG) relative weights. This new methodology was set to begin in FY 2024. Hospitals will also not have to report on the Medicare cost report the median payer-specific negotiated charge by MS-DRG that the hospital has negotiated with all of its Medicare Advantage payers.

    It is important to note that although this data will no longer be used to set MS-DRG relative weights, negotiated charges still must be publicly reported by hospitals. In other words, the hospital price transparency requirements instituted by the Trump Administration are still in effect! As a reminder, two new hospital reporting requirements became effective in 2021. One of these requirements, which does not apply to emergency services, requires hospitals to post payer-specific negotiated rates for 300 “shoppable” services in a consumer-friendly way. As for the other requirement, hospitals must post available payer-specific negotiated rates for all services (including emergency services) in a “machine-readable format.” Hospitals are required to post facility fees and the professional fees for physicians employed by the hospital. Thus, if you are employed by your hospital, the rates for your services must be posted. Interestingly, compliance with these requirements seems to be low thus far, as a recent Health Affairs article pointed out that only 35 percent of a sample of 100 large hospitals were sharing all required information. Last month, a bipartisan group of Congressional representatives wrote a letter to the Secretary of the U.S. Department of Health and Human Services (HHS), Xavier Becerra, requesting that HHS conduct “vigorous oversight” and enforce “full compliance” of the requirements.
  • New GME slots: CMS is implementing provisions of the Consolidated Appropriations Act of 2021 relating to payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs—including distributing 1,000 new Medicare-funded medical residency positions. In the reg, CMS goes into detail on how the new residency positions would be distributed. Specifically, 200 slots are to be distributed over a five-year period starting in 2023. The first round of applications for hospitals to apply for the slots are due on January 31, 2022.  There is a statutory cap of 25 slots per hospital.

    There are no restrictions on what residency programs can be funded—they can be new or existing programs and they can be for any specialty. However, in line with the statute, CMS will prioritize applications from hospitals that fall into specific categories: hospitals that are located in rural areas, hospitals currently training residents above their full-time equivalent (FTE) cap, hospitals located in states with new medical schools or campuses, and hospitals that serve areas designated as Health Professional Shortage Areas (HPSAs).

While I definitely think you should be aware of those three proposals, there are some other noteworthy proposals. CMS is also proposing to:

  • Increase hospital payments by approximately 2.8 percent—which includes a market-basket update. As a comparison, physician payments under the PFS do not receive market-basket updates, and as you know, have not kept up with inflation for years.
  • Extend New Technology Add-on Payments for 14 technologies that would have been discontinued in FY 2022 and extend new COVID-19 treatments add-on payments for certain products.
  • Address wage-index disparities for low wage index hospitals and implement the imputed floor wage index provision of the American Rescue Plan Act of 2021.
  • For the Hospital Medicare Promoting Interoperability Program (i.e., meaningful use), continue the electronic health record (EHR) reporting period of a minimum of any continuous 90-day period in calendar year (CY) 2023. However, for CY 2024, CMS proposes to increase the minimum to 180 days. It will be interesting to see whether CMS proposes a similar reporting period for the Promoting Interoperability Category of MIPS in the CY 2022 PFS and QPP proposed reg.
  • Modify the Medicare Shared Savings Program by providing flexibility for eligible accountable care organizations (ACOs) to opt to not automatically advance to increasing levels of risk/rewards for performance year 2022. 

Finally, CMS issued two requests for information: one on evaluating options to address health disparities and the other on transitioning CMS’ quality programs and measures to be fully digital by 2025.

Public comments on the reg are due on June 28, and like in previous years, ACEP plans on submitting a comprehensive response. I’ll let you know once we do!

Until next week, this is Jeffrey saying, enjoy reading regs with your eggs

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