Medicare Payment and Reimbursement

In a win for hospitals, CMS removes a rate-reporting requirement from the Medicare FY22 Inpatient Prospective Payment System

April 29, 2021 5:42 am
  • An FY22 requirement for hospitals to disclose privately negotiated MA rates on their Medicare cost reports has been rescinded in the proposed rule for the Inpatient Prospective Payment System and long-term care hospitals.
  • The rule seeks to bolster the provider workforce in rural and underserved areas by implementing new graduate medical education slots.
  • CMS quality-based programs would undergo various updates to measures and reporting processes.

Note: For the key payment-related details in the FY22 IPPS proposed rule, see this HFMA Blog post.

The pending requirement for hospitals to disclose privately negotiated Medicare Advantage (MA) payment rates on their Medicare cost reports was withdrawn in the newly issued FY22 proposed rule for the Inpatient Prospective Payment System and long-term care hospitals.

The requirement had been established by the Trump administration in the FY21 final rule. Hospitals would have had to report the median MA payer-specific negotiated charge for each MS-DRG.

The idea was to use the data in setting Medicare payment rates, but the requirement would have added an estimated 64,000 hours to hospital administrative workloads.

In conjunction with rescinding the rate-disclosure requirement, CMS is proposing to repeal the market-based MS-DRG relative-weight methodology that was supposed to take effect in FY24. Instead, the existing cost-based methodology will remain.

HFMA expressed support for those decisions. “This proposal will avoid imposing additional burden on hospitals,” said Rick Gundling, senior vice president of healthcare financial practices.

In written comments on last year’s rule, HFMA said its members “fail to see how transitioning to a system that uses median MA ‘payer-specific negotiated charges’ achieves the stated policy goals or improves the accuracy of the Medicare IPPS.

“Further, we do not see the utility of requiring hospitals to report their ‘payer-specific negotiated charges’ as part of the Medicare cost report and strongly encourage CMS not to finalize a proposal that increases provider administrative burden — contrary to the administration’s ‘Patients Over Paperwork Initiative’ — and collects information that CMS is already requiring hospitals to publicly post.”

Also lauding the decision was the American Hospital Association, with Executive Vice President Tom Nickels stating, “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.”

A boost for graduate medical education funding

CMS touted provisions in the proposed rule that would seek to address workforce shortages by funding medical residency positions in rural and underserved communities.

The proposal is part of broader efforts to address gaps in health equity, the agency stated.

The 2020 year-end Consolidated Appropriations Act requires Medicare funding for 1,000 additional medical residency positions. In the newly released rule, CMS proposed to phase in those slots at no more than 200 positions per year beginning in FY23 for hospitals in rural areas and areas with a shortage of healthcare professionals.

Funding for the positions will total approximately $1.8 billion through FY31, according to the proposed rule.

“CMS is proposing to prioritize applications from qualifying hospitals that serve geographic areas and underserved populations with the greatest need,” the agency stated.

The proposed rule also will implement related provisions of the year-end legislation, including:

  • Increasing the cap on graduate medical education for rural-based training hospitals that participate in an accredited track
  • Allowing hospitals to receive Medicare funding for residents in a new training program even if they previously accepted residents that rotated in from other training programs

Changes to quality-program data collection

The proposed rule includes an RFI on approaches to promoting more comprehensive and actionable reporting of disparities that stem from social determinants of health and racial and ethnic factors. CMS specifically is seeking comments on:

  • Stratification of quality-measure results by race, dual-eligible status, disability status, LGBTQ+ and socioeconomic status
  • Collection of a minimum set of demographic data elements by hospitals at the time of admission
  • Use of electronic data definitions to permit nationwide, interoperable health information exchange to enhance quality-data compilation
  • Development of a health-equity measure modeled on the MA Health Equity Summary Score and adapted to risk-adjusted hospital outcome measures

Updates to quality-program measures

The rule would implement various changes to quality-incentive programs.

Value-Based Purchasing and related programs. In response to COVID-19, CMS is proposing a “measure suppression policy” in the Value-Based Purchasing, Readmissions Reduction and Hospital-Acquired Condition programs. CMS will be authorized to suppress the use of certain measures when it determines that circumstances of the public health emergency have significantly affected performance on those measures.

For example, quality measurement could be affected by “changes to clinical practices to accommodate safety protocols for medical personnel and patients, as well as unpredicted changes in the number of stays and facility-level cases,” CMS stated.

In a proposed clarification, approved extraordinary circumstances exceptions would exempt a hospital only from reporting data in a given period, not from participating in the quality programs generally.

Measure sets for all three programs also would undergo changes. See the fact sheet for details.

Medicare Promoting Interoperability Program. Among a slew of changes in requirements for participating hospitals, the reporting period would expand from 90 days to 180 days in CY24.

In addition, the minimum score to fulfill meaningful-use criteria would expand from 50 to 60 points in FY22. Two new electronic clinical quality measures would be added in CY23, and four would be removed in CY24.

Hospital Inpatient Quality-Reporting Program. The proposed rule would add five measures, two of which would require reporting in the last few months of CY21. Those are:

  • A Maternal Morbidity structural measure
  • A COVID-19 Vaccination Coverage Among Healthcare Personnel measure

CMS also would remove five measures from the program and, beginning in CY23, would require hospitals to use certified technology that has been updated in accordance with the 2015 Edition Cures Update.

Flexibility for Medicare Shared Savings Program participants

Accountable care organizations participating in the BASIC track’s glide-path option won’t have to increase their risk level in performance year 2022 as previously required. However, for PY23, they will need to move to the level they would have reached that year had they continued along the glide path as scheduled.


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