Inpatient hospitals receive 4.3% more Medicare reimbursement

Medicare payments for hospital inpatient services will rise 4.3% in fiscal year 2023, according to the final rule released Monday by the Centers for Medicare and Medicaid Services.

This amounts to (BUT) a salary increase of about $2.6 billion, higher than the 3.2% rate hike proposed by CMS in April.

Hospital trade groups have asked CMS to use its “exceptions and adjustments” powers to remove the statutory fee formula and give institutions even more increase, but the agency refused to do so. According to industry groups, the initially proposed rate would not have adequately covered the costs of hospitals.

“Regarding the commenters’ request that the CMS consider other methods and data sources to calculate the final update of the market basket of rules, we believe that based on 2018. [inpatient prospective payment system] the market basket continues to properly reflect the IPPS cost structure, and we believe that the price proxies used … are an appropriate representation of changes in the prices of inputs used by hospitals in providing services,” the CMS final rule states.

Rates for the next fiscal year apply to acute care general hospitals that participate in the Hospital Quality Reporting Program and use electronic health records, although according to CMS, other adjustments may affect individual hospital rates. Long-term care hospitals will receive a 2.3% increase, or $71 million.

CMS has used the most recent data available to determine rates for fiscal year 2023 despite the ongoing COVID-19 public health emergency. But the agency will continue to suppress and edit measures for its Rehospitalization Reduction Program, Hospital Incidence Reduction Program, and Hospital Value-Based Procurement Program to prevent institutions from being rewarded or penalized due to the circumstances of the pandemic.

Medicare Disproportionate Share Unreimbursed hospital and Medicare payments will be reduced by approximately $300 million in fiscal year 2023, compared to the proposed $800 million cut. In the next fiscal year, CMS will distribute about $6.8 billion in care grants.

CMS has moved forward with a plan to end insured low income days as a replacement for non-reimbursed care and will establish new surcharges for the Indian Health Service, tribal and Puerto Rican hospitals.

The agency has not followed through with the plan to exclude certain unpaid care pool days from the Medicare DSH calculation. Hospitals in several states, especially those that have not expanded Medicaid under the Affordable Care Act, have argued that the policy could cost hundreds of millions of dollars to social media providers.

CMS has finalized the hospital as “delivery-friendly” and added health equity measures to the Hospital Quality Reporting Program. Other measures will be added, including perinatal health and adverse events related to opioids.

Under the final rule, hospitals, including critical access hospitals, must continue to provide data on COVID-19 and seasonal flu until April 2024.

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