The American Hospital Association (AHA) once again responds to a CMS' proposed rule with concern about the increased costs hospitals are facing during the pandemic.
AHA is urging CMS to reconsider the payment rate increase proposed in the inpatient rehabilitation facility prospective payment system (IRFPPS) proposed rule for fiscal year (FY) 2023. The AHA says the rate increase is not enough, pointing to increased hospital expenses during the pandemic as a reason for adjustment.
This latest letter echoes the same concerns the AHA had regarding payment rates proposed in the FY 2023 inpatient prospective payment system proposed rule released earlier this year.
CMS proposed the FY 2023 IRFPPS rule in March, which includes a net increase in payments of 2% relative to FY 2022, or $170 million. This reflects a 3.2% market-basket update, a 0.4% cut for productivity, and a 0.8% decrease related in high-cost outlier payments.
This, the AHA says, is not a large enough increase to account for the rise in hospital costs across labor, drugs, and supplies during the pandemic, as well as inflationary pressures.
The letter cites labor expenses per patient rising 19.1% through 2021, compared to pre-pandemic levels in 2019, while January 2022 labor expenses per adjusted discharge were 52% higher than January 2020.
"We are deeply concerned about increased costs to hospitals that are not reflected in the market basket adjustment and ask CMS to discuss in the final rule how the agency will account for these increased costs," AHA writes.
"We also are concerned about the reduction for productivity and ask CMS in the final rule to further elaborate on the specific productivity gains that are the basis for the proposed 0.4% productivity offset to the market basket, as this does not align with hospitals' [public health emergency] experiences related to actual losses in productivity during the pandemic."
AHA also expresses concern over CMS' methodology in determining the increase in the high-cost outlier threshold. The proposed rule would result in a 37% increase, from $9,491 in FY 2022 to $13,038 in FY 2023. Without the significant change, outlier payments in FY 2023 would be 3.8 of total payments, based on CMS analysis of FY 2021 claims.
On CMS' request for information on the IRF transfer policy, which is meant to disincentivize early discharges from IRFs, AHA advises CMS to evaluate its data before expanding the policy.
As far as the IRF Quality Reporting Program, the AHA requests that CMS move back the proposed date of when IRF providers would have to collect patient assessment data upon admission, from October 1, 2023, to October 1, 2024. According to AHA, this adjustment would relieve some of the proposal's burden on providers by giving them time to prepare.
Jay Asser is the contributing editor for strategy at HealthLeaders.