CMS finalizes 4.3% bump for hospital inpatient payments in 2023

The Biden administration finalized a 4.3% bump for inpatient payments for the federal fiscal year 2023, an increase compared to the 3.2% that was originally proposed back in April. 

The Centers for Medicare and Medicaid Services released on Monday the final Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System rule that updates payments to hospitals. The rule also details health equity quality measures hospitals must now meet for participation in the Inpatient Quality Reporting program. 

“CMS is taking action to support hospitals, including updating payments to hospitals by a significantly higher rate than in the proposed IPPS rule,” CMS Administrator Chiquita Brooks-LaSure said in a statement.

Acute care hospitals paid under the IPPS and also meaningfully use electronic health records can expect to see a 4.3% increase in their rates based on a market basket update of 4.1%. 

“This is the highest market basket update in the last 25 years and is primarily due to higher expected growth in compensation prices for hospital workers,” CMS said in a release. 

Long-term care hospitals can expect to see hikes of 2.4% in payments or $71 million.

In addition to the payment increases, CMS is laying out new requirements for hospitals to measure health equity. 

The rule adds three measures to the inpatient quality reporting program focused on equity. The first aims to assess a hospital’s equity culture by examining strategic planning and leadership engagement. The other two measures focus on screening and identification of social needs such as food insecurity and transportation. 

“By screening for and identifying such unmet needs, hospitals will be in a better position to serve patients holistically by addressing and monitoring what are often key contributors to poor physical and mental health outcomes,” CMS said in a release. 

The new measures come as CMS is figuring out how to close equity gaps across the healthcare ecosystem. CMS is exploring adding equity measures to 

Other updates in the final rule include:

  • Creation of a “birthing-friendly” hospital designation that provides important information to consumers on how the hospital has reduced maternal morbidity and mortality.
  • Continuing current COVID-19 reporting requirements for hospitals and critical access hospitals but it will not finalize proposed requirements for any future public health emergencies.
  • A distribution of roughly $6.8 billion in uncompensated care payments for fiscal year 2023, a decline of approximately $318 million from the previous fiscal year. The change reflects projections on the impact of the pandemic, CMS said.