News: FY 2022 IPPS proposed rule

CDI Strategies - Volume 15, Issue 18

Hospitals that successfully participate in the Hospital Inpatient Quality Reporting program and are meaningful EHR users could see a 2.8% payment increase, if the fiscal year (FY) 2022 Inpatient Prospective Payment System (IPPS) proposed rule is finalized, according to Revenue Cycle Advisor. Including disproportionate share hospital and Medicare uncompensated care payments, the agency estimates hospital payments will increase by $2.5 billion.

This year’s IPPS proposal includes broad efforts to cushion the ongoing impact of the COVID-19 pandemic on hospital revenue and resources. Although CMS typically uses hospital utilization data from the previous FY when setting upcoming payment rates, the agency believes this strategy wouldn’t be appropriate in a pandemic year which has drastically altered inpatient admissions, Revenue Cycle Insider reported. The agency believes the rapid pace of vaccinations will lead to far fewer COVID-19 infections and hospitalizations in 2022 than in 2020, according to its fact sheet. Therefore, the agency proposes leveraging FY 2019 hospital utilization data, although it is also seeking comment on using FY 2020 data.

Additionally, the proposed rule would also distribute 1,000 new physician residency slots over five years to hospitals in healthcare deserts, phasing in 200 slots per year over five years, at a Medicare-funded cost of about $300 million a year, HealthLeaders reported.

“Hospitals are often the backbone of rural communities—but the COVID-19 pandemic has hit rural hospitals hard, and too many are struggling to stay afloat," Health and Human Services Secretary Xavier Becerra said in a media release. “This rule will give hospitals more relief and additional tools to care for COVID-19 patients and it will also bolster the healthcare workforce in rural and underserved communities.”

The proposed rule, released April 27, also eliminates sweeping changes to MS-DRG rate-setting finalized in the 2021 IPPS final rule. The 2021 IPPS final rule required hospitals to report the median payer-specific negotiated payment rate by MS-DRG for all contracted Medicare Advantage (MA) payers and crosswalk negotiated MS-DRG rates for MA plans to Medicare MS-DRGs on the Medicare cost reports, Revenue Cycle Insider reported. The agency planned to use this data to separate MS-DRG rates from hospitals’ cost-to-charge ratio and move to a market-based MS-DRG rate setting policy by FY 2024.

Now, CMS proposes scrapping both the requirement to report median payer-specific negotiated payment rates by MS-DRG for MA payers and the planned rate-setting overhaul. The agency estimates repealing the reporting requirement will save hospitals roughly 64,000 hours of work.

The proposed rule also includes MS-DRG updates and numerous provisions related to quality reporting and measurement, interoperability, and more. The ACDIS Regulatory Committee was pleased that the agency agreed with its recommendation to change CHF CC exclusion codes and the reassignment of code B33.24 into MDC 5 in the proposed rule, but was disappointed on the lack of movement related to social determinants of health. 

“We provided the agency with detailed analysis, and they agreed, so that’s moving forward,” said Susan Wallace, MEd, RHIA, CCS, CDIP, CCDS, CRC, FAHIMA, vice president of inpatient services/CDI at Administrative Consultant Service, LLC, in Shawnee, Oklahoma, a member of the ACDIS Regulatory Committee during its regular meeting.

“This shows that we can have some influence with CMS,” said Howard Rodenberg, MD, MPH, CCDS, chair of the ACDIS Regulatory Committee and the CDI physician advisor at Baptist Health in Jacksonville, Florida.

Editor’s Note: The FY 2022 IPPS proposed rule can be found here. The Revenue Cycle Advisor article can be found here. The HealthLeaders article can be found here. The ACDIS Regulatory Committee is actively collecting input from the CDI community related to IPPS concerns. Share your concerns by emailing them to ACDIS Editorial Director Melissa Varnavas at