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IPPS Final Rule Bumps Up Reimbursement 4.3%

Analysis  |  By John Commins  
   August 01, 2022

AHA says they're "pleased" with the increase, but complain it "still falls short".

Acute care hospitals could see a 4.3% bump in reimbursements in fiscal year 2023 under a revised Inpatient Prospective Payment System final rule released Monday, about $1 billion more than the federal government had proposed in April, the Centers for Medicare & Medicaid Services announced.

"This reflects a FY 2023 hospital market basket update of 4.1% reduced by a 0.3 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by statute," CMS says in a media release. "This update reflects the most recent data available, including a revised outlook regarding the U.S. economy and, as a result, is 1.1 percentage point higher than the proposed update for FY 2023."

The higher reimbursement will go to hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and that are meaning users of electronic medical records, CMS says.   

The reimbursements for individual hospitals could vary upwards or downwards under the Hospital Value-based Payment Program. Hospitals could also be subjected to payment reductions for excess readmissions, and hospitals in the worst-performing quartile will see a 1% reduction in payments under the Hospital-Acquired Conditon Reduction Program.  

The cost of the IPPS payment increase will be about $2.6 billion. CMS projects that increase will be partially offset with decreases in disproportionate share payments and uncompensated care costs totaling about $300 million, and reductions of about $750 million for inpatient payments for cases involving new technologies.  

In April, CMS had initially proposed an IPPS increase of 3.2% for FY 2023, an additional $1.6 billion. However, that proposal drew flack from the hospital lobby. The Federation of American Hospitals called the proposed increase "woefully inadequate."

"It does not reckon for the hyper-inflation, staffing crisis, and the continuing pandemic, which will impact resources necessary for patient care well into the future," FAH said in April.

The announcement Monday that the reimbursement would be bumped up to 4.3% brought a tepid response from a "pleased" American Hospital Association.

"This update still falls short of what hospitals and health systems need to continue to overcome the many challenges that threaten their ability to care for patients and provide essential services for their communities," AHA Executive Vice President Stacey Hughes says in a media release.

"This includes the extraordinary inflationary expenses in the cost of caring hospitals are being forced to absorb, particularly related to supporting their workforce while experiencing severe staff shortages," Hughes says. "We will continue to urge Congress to take action to support the hospital field, including by extending the low-volume adjustment and Medicare-dependent hospital programs."

“This update still falls short of what hospitals and health systems need to continue to overcome the many challenges that threaten their ability to care for patients and provide essential services for their communities.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The higher reimbursement will go to hospitals that successfully participate in the Hospital Inpatient Quality Reporting Program and that are meaning users of electronic medical records.   

The reimbursements for individual hospitals could vary upwards or downwards under the Hospital Value-based Payment Program.

Hospitals could also be subjected to payment reductions for excess readmissions, and hospitals in the worst-performing quartile will see a 1% reduction in payments under the HAC Reduction Program.

In April, CMS had initially proposed an IPPS increase of 3.2% for FY 2023, an additional $1.6 billion. However, that proposal drew flack from the hospital lobby. 

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