CMS finalizes $2.3B pay bump for hospitals in federal fiscal 2022

A sticky note says Medicare on top of a pile of money
The Centers for Medicare & Medicaid Services proposed an additional $2.3 billion in inpatient Medicare payments for the next fiscal year, but it included some new data requirements. (Getty/Steve Dunning)

The Biden administration has finalized a rule that gives hospitals an overall $2.3 billion for the 2022 fiscal year that begins in October and scraps a proposal for hospitals to disclose Medicare Advantage rates. 

The final Hospital Inpatient Prospective Payment Services rule, released Monday by the Centers for Medicare & Medicaid Services (CMS), also includes a 1.1% hike for long-term care hospitals. The regulation also extends an add-on payment for new COVID-19 treatments through the end of the fiscal year where the public health emergency ends and requires hospitals to submit data on several public health measures to identify emerging outbreaks.

“With this final rule, we are further improving how we measure and evaluate data while investing in quality care for people that rely on Medicare for coverage,” said CMS Administrator Chiquita Brooks-LaSure in a statement.

Overall, CMS expects hospital payments to increase by $2.3 billion for the 2022 federal fiscal year.

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It expects a $3.7 billion bump for operating payment rates, boosts for new medical technologies and other changes. However, CMS projects that Medicare disproportionate share hospital payments and uncompensated care payments will decrease by $1.4 billion.

Long-term care hospital payments will increase by 1.1% or $42 million for 2022.

But CMS decided not to move forward with a proposal that hospitals disclose privately negotiated MA rates on their Medicare cost reports. The decision earned plaudits from the hospital industry, which has fiercely fought a rule that went into effect this year that requires facilities to post payer-negotiated rates online. 

"This policy was originally adopted for the stated purpose of better aligning fee-for-service Medicare payments with market rates," the American Hospital Association said in a statement late Monday. "However, privately negotiated rates take into account a number of unique circumstances between a private payer and a hospital that are not an appropriate benchmark for fee-for-service Medicare payments."

The rule does include a new key requirement for both hospitals and long-term care hospitals to report COVID-19 vaccination rates among healthcare workers. The requirement comes as more and more hospital systems are mandating that their workers get vaccinated.

The agency also approved new technology add-on payments for 19 technologies. The rule aims to continue add-on payments for 23 technologies, meaning that 42 are eligible for the payments in the next federal fiscal year.

CMS is also extending a separate add-on payment for new COVID-19 treatments. The agency created the payment last year to ensure that patients can get the latest treatments to combat the virus.

CMS decided to extend the payments even after the end of the COVID-19 public health emergency, which is expected to run through 2021. CMS is extending the payments until the end of the fiscal year when the emergency ends.

The goal is to “minimize any potential payment disruption immediately following the end of the PHE,” CMS said in a fact sheet on the final rule.

Another part of the final rule expands the required reporting for hospitals participating in the Promoting Interoperability Program.

Eligible hospitals and critical access hospitals must attest to CMS they are “in active engagement” with the agency to submit data “for measures related to nationwide surveillance for early warning of emerging outbreaks and threats; automated case and laboratory reporting for rapid public health response and visibility on immunization coverage so public health agencies can tailor vaccine distribution strategies,” according to a release on the rule.