Hospitals, Legal

CMS proposes putting $2.5B into hospitals’ coffers, eliminating part of price transparency rule

CMS has released its proposed inpatient payment rule for fiscal year 2022, which includes a payment bump that could increase reimbursement for hospitals by $2.5 billion. Further, in a win for hospitals, the proposal aims to repeal a part of the price transparency rule related to Medicare Advantage plans.

Amid a pandemic that has decimated U.S. hospitals’ financial health, the government released a proposed rule that would boost Medicare fee-for-service payments and repeal part of the price transparency requirements.

The Centers for Medicare & Medicaid Services on Tuesday issued its proposed rule for the Inpatient Prospective Payment System for fiscal year 2022, which begins Oct. 1.

The first major proposed change involves increasing payment rates by 2.8% for general acute care hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and are meaningful EHR users. CMS estimates that uncompensated care and Medicare disproportionate share hospital payments will decrease in FY 2022, resulting in an overall hospital payment increase of $2.5 billion.

But it is important to note that the agency made its payment proposals using 2019 data to approximate expected 2022 inpatient volumes due to the Covid-19 pandemic disrupting care last year.

Another proposed change — and one that providers see as a big win — is no longer requiring hospitals to report median payer-specific negotiated charges for Medicare Advantage insurers on their Medicare cost reports. If this change is finalized, it would be retroactive to Jan. 1 of this year, when the hospital price transparency rule went into effect despite providers’ efforts to block it.

The move could also reduce the administrative burden on hospitals by approximately 64,000 hours, CMS claims.

“Based on our initial review, we are very pleased CMS is proposing to repeal the requirement,” said Tom Nickels, executive vice president of the American Hospital Association, in a statement. “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’ goal of paying market rates that reflect the cost of delivering care.”

For FY 2022, the agency is further looking to extend the timeline for two add-on payments — one for technology and the other for Covid-19 treatments. CMS is proposing a one-year extension for the add-on payments for 14 technologies that would otherwise end next year. For Covid-19 treatments, CMS wants to extend the add-on payments through the end of the fiscal year in which the public health emergency is declared over, rather than soon after it ends.

The rule also proposes changes to the CMS’ Hospital Inpatient Quality Reporting Program, which cuts payment to hospitals that do not meet certain requirements for quality reporting. These include adding a new maternal morbidity structural measure and requiring hospitals to report Covid-19 vaccination rates among their workers.

Finally, in an effort to support the training and retention of physicians, CMS is proposing creating 1,000 new Medicare-funded medical residency positions beginning in FY 2023. The agency plans to prioritize applications for these positions from qualifying hospitals that serve geographic areas with high need and underserved populations.

CMS is accepting comments on the proposed rule until June 28.

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