142 bipartisan lawmakers push CMS to reconsider inpatient payment rule updates

Hospitals’ campaign against the Biden administration’s 2023 inpatient payment proposal has picked up steam on the Hill with more than 140 bipartisan lawmakers petitioning the Centers for Medicare & Medicaid Services (CMS) to revise its “regrettably inadequate” rates.

CMS Administrator Chiquita Brooks-LaSure received two letters from 112 representatives and 30 senators Tuesday addressing the Inpatient Prospective Payment Systems rule that would dictate inpatient rates for the coming fiscal year.

The rule, proposed in April, calls for a market basket update of 3.2% for acute care hospitals’ Medicare payments beginning in the fall as well as a 0.4 percentage point productivity adjustment. This comes on top of a 2.7% payment update that was implemented for fiscal year 2022.

In their letters, lawmakers wrote that the annual update does not accurately reflect changes in the prices of goods and services as intended.

Specifically, the historical data used in the agency’s calculations don’t take into account supply and labor issues fueled by the COVID-19 pandemic and assumes that the hospital industry is on par with the broader economy’s productivity gains, they wrote.

“However, in reality the uncertain conditions hospitals continue to operate under due to COVID-19 have resulted in productivity declines, not gains,” senators wrote in their letter. “The overall healthcare industry continues to struggle to regain its footing in a changed world.”

Both letters called on the agency to use its special exceptions and adjustments authority so that it can retrospectively adjust the 2.7% market basket update implemented for fiscal year 2022 to match the year’s actual market basket, which the American Hospital Association (AHA) said in June was trending closer to 4%.

The senators took their request a step further by urging Brooks-LaSure to “consider holding off” of the 0.4 percentage point productivity cut proposed for the coming year alongside the fiscal year 2022 corrections.

“These important changes will ensure Medicare payments for acute care services more accurately reflect the cost of providing hospital care today and for the coming year,” the senators wrote.

Hospitals have generally denounced CMS’ proposed rates, which they noted would be taking effect as congressional pandemic relief runs dry. The requests penned by lawmakers Tuesday mirror recommendations the AHA sent to Congress late last month.

Jim Kaufman, president and CEO of the West Virginia Hospital Association, said the state’s hospitals and hospital employees supported the congressional letter and their representative Carol Miller, R-West Virginia, who helped spearhead the effort.

“The current economic conditions, workforce shortages, combined with the continued challenges of COVID-19 has put West Virginia hospitals under severe financial pressure and the CMS proposal to update hospitals payments less than inflation is woefully inadequate,” Kaufman wrote. “We appreciate Rep. Miller and the 111 members of the House for expressing this concern to CMS and ensuring hospitals have the resources they need to serve their communities."

The administration has also felt pushback on its other fiscal 2023 payment rule proposals tied to physician and outpatient care reimbursement, which were recently characterized by provider groups as “a slap in the face” in light of the industry’s labor, inflation and other pandemic challenges.