September 1, 2021

Over the last two weeks, we have brought you our summation of the recently released 2022 Inpatient Prospective Payment System (IPPS) Final Rule (FR). Today’s alert will be our last installment of the FR and is based, in part, on summaries provided by both the Centers for Medicare and Medicaid Services (CMS) and the American Hospital Association (AHA).

Readmissions Reduction Program

The Hospital Readmissions Reduction Program (HRRP) is a Medicare value-based purchasing program that reduces payments to hospitals with excess readmissions. It also supports CMS’s goal of improving healthcare for Medicare beneficiaries by linking payment to the quality of hospital care. In the 2022 IPPS FR, CMS will:

Adopt a measure suppression policy and suppress the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate following Pneumonia Hospitalization measure (NQF #0506), beginning with the 2023 program year; and

Modify the remaining five condition-specific readmission measures to exclude COVID-19 diagnosed patients from the measure denominators, beginning with the 2023 program year.
Hospital-Acquired Condition Reduction Program

The Hospital-Acquired Condition (HAC) Reduction Program creates an incentive for hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to reduce payment by one percent for “applicable hospitals,” which are subsection (d) hospitals that rank in the worst performing quartile on select measures of hospital-acquired conditions. In the FY 2022 IPPS FR, CMS is establishing a measure suppression policy which will suppress the third and fourth quarters of CY 2020 CDC National Healthcare Safety Network Healthcare-Associated Infection (HAI) and CMS PSI 90 data from performance calculations for the FY 2022 and FY 2023 program years.

Value-Based Purchasing Program

The Hospital Value-Based Purchasing (VBP) Program is a budget-neutral program funded by reducing participating hospitals’ base operating DRG payments each fiscal year by 2.0 percent and redistributing the entire amount back to the hospitals as value-based incentive payments. In the 2022 FR, CMS will:

Establish the measure suppression policy described above for the duration of the COVID- 19 PHE;

Suppress the Hospital Consumer Assessment of Healthcare Providers and Systems survey, Medicare Spending Per Beneficiary, and five HAI measures, for the 2022 program year;

Suppress the Pneumonia (PN) 30-Day Mortality Rate measure for the 2023 program year; and

Remove the Patient Safety and Adverse Events Composite (CMS PSI 90) measure, beginning with the 2023 program year. Because the CMS PSI 90 measure is also used in the HAC Reduction Program, CMS believes removing this measure from the Hospital VBP Program will reduce the provider and clinician costs associated with tracking duplicative measures across programs.
As a result of the above measure suppressions for the FY 2022 program year, CMS believes that calculating a total performance score (TPS) for hospitals using only data from the remaining measures, all of which are in the Clinical Outcomes Domain, would not result in a fair national comparison. Therefore, CMS will not calculate a TPS for any hospital based on one domain and will instead award to all hospitals a value-based payment amount for each discharge that is equal to the amount withheld. CMS will also calculate measure rates for all measures and publicly report those rates where feasible and appropriate. The agency will also update the baseline period for certain measures affected by the ECE granted in response to the COVID-19 public health emergency (PHE) and make a few technical administrative updates.

Imputed Floor Wage Index Policy

Beginning with FY 2022, section 9831 of the American Rescue Plan Act of 2021 requires the permanent reinstatement of the imputed floor wage index methodology for all-urban States, and exempts the increased payments to hospitals in all-urban States from budget neutrality under the IPPS. For FY 2022, the all-urban States of New Jersey, Rhode Island, Delaware, Connecticut, and the District of Columbia, are eligible to receive an increase in their wage index due to application of the imputed floor. CMS estimates that this provision will increase FY 2022 Medicare payments to hospitals located in all-urban States by approximately $0.2 billion.

Medicaid Enrollment of Medicare Providers

Through the Medicare Savings Programs and Medicaid statutes, states cover the Medicare cost sharing for over 8 million dually eligible individuals. However, through what is commonly referred to as “lesser-of” policies, states are allowed to pay less than the full Medicare cost sharing or in certain circumstances, make no payment at all (43 states currently have lesser- of policies for inpatient hospital cost sharing). If states pay less than Medicare cost-sharing amounts, certain Medicare providers may submit these unpaid cost-sharing amounts to Medicare for payment as reimbursement for “bad debt.” For a service provided to a dually eligible individual, this typically means furnishing a Medicaid remittance advice showing what the state paid (or did not pay). However, some states in the past have hindered some Medicare providers from enrolling in Medicaid. As a result, these non-Medicaid-enrolled providers may not be able to submit a claim for payment of Medicare cost sharing and receive a remittance advice to submit for claiming of bad debt.

Under the FR, CMS will require state Medicaid provider enrollment systems to allow valid enrollments from all Medicare providers serving certain Medicare-Medicaid dually eligible individuals—even if a provider or supplier is out of state—for purposes of processing cost sharing claims for services furnished to these dually eligible individuals.

Medicare Shared Savings Program

CMS is finalizing policies for the Shared Savings Program to allow eligible Accountable Care Organizations (ACOs) participating in the BASIC track’s glide path the option to elect to forgo automatic advancement along the glide path’s increasing levels of risk and potential reward for performance year (PY) 2022. Under this policy, prior to the automatic advancement for PY 2022, an eligible ACO may elect to remain in the same level of the BASIC track’s glide path in which it participated during PY 2021.

For PY 2023, an ACO that elects this advancement deferral option will be automatically advanced to the level of the BASIC track’s glide path in which it would have participated during PY 2023 if it had advanced automatically to the required level for PY 2022 (unless the ACO elects to advance more quickly before the start of PY 2023). For an ACO that elected to defer advancement for both PY 2021 and PY 2022, the ACO will advance for PY 2023 to the level in which it would have participated for that performance year, absent both deferral elections (unless it elects to advance more quickly). ACOs will have the opportunity to make this election via ACO-MS during the application cycle, and must do so no later than September 10, 2021.

For a complete rendering of the 2022 IPPS Final Rule, please go to the following link: https://www.federalregister.gov/documents/2021/08/13/2021-16519/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-and-the. To find out more about us and our unique hospital-based services, please visit us at info@miramedgs.com.