CMS releases the FY 2023 hospital inpatient prospective payment system final rule

Rivet Blog Rules IPPS

It’s that time of year again. On August 1, 2022, the Centers for Medicare & Medicaid Services (CMS) announced the release of its FY 2023 hospital inpatient prospective payment system (IPPS) final rule, and with it a whole slew of changes that take effect October 1, including policy and payment updates as well as new, revised, and deleted ICD-10-CM/PCS codes. Here are some highlights:

Operating payment rates

  • CMS finalized an increase in operating payment rates by 4.3% for hospitals paid through IPPS that use an electronic health record and participate in the Inpatient Quality Reporting (IQR) program.

MS-DRG relative weight changes

  • CMS will implement a budget neutral permanent cap of 10% for any MS-DRG relative weight changes that result in payment reductions.

Wage index

  • CMS finalized a 5% cap on any decrease to a hospital’s wage index over prior year beginning in FY 2023.

Uncompensated care payments

  • CMS will distribute roughly $6.8 billion in uncompensated care payments for FY 2023, a decrease of approximately $318 million from FY 2022.

New technology add-on payments

  • CMS approved eight technologies that applied for new technology add-on payments for FY 2023. The agency is also continuing new technology add-on payments for 15 technologies currently receiving the add-on payment that will remain within their newness period for FY 2023. In total, 25 technologies are eligible to receive add-on payments for FY 2023.

Conditions of Participation

  • CMS will require hospitals, including critical access hospitals, to contribute COVID-19 and seasonal influenza reporting as a Condition of Participation after the COVID-19 public health emergency ends.

Patient safety indicator (PSI) 90

  • CMS will pause the CMS Patient Safety and Adverse composite measure (CMS PSI 90) and the five Centers for Disease Control and Prevention National Healthcare Safety Network hospital acquired infection (HAI) measures from the calculation to measure scores and the total hospital acquired condition (HAC) score.

Hospital Consumer Assessment of Healthcare Providers and Systems (CAHPS)

  • CMS finalizes suppressing the CAHPS for the FY 2023 year.

IQR Program

  • CMS finalizes multiple changes to the Hospital IQR Program, including the adoption of 10 new measures over the course of several years.

Medicare Promoting Interoperability Program

  • CMS will require and modify the Electronic Prescribing Objective’s Query of Prescription Drug Monitoring Program.

Hospital Readmission Reduction Program

  • CMS will resume use of the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following Pneumonia Hospitalization measure (National Quality Forum [NQF] #0506) for the FY 2024 program year.
  • CMS will modify the Hospital 30-Day, All-Cause, RSRR following Pneumonia Hospitalization measure (NQF #0506) to exclude COVID-19 diagnosed present on admission patients from the measure numerator and denominator, beginning with the Hospital-Specific Reports for the FY 20234 program year.
  • CMS will modify all six condition/procedure-specific measures to include a risk adjustment for patient history of COVID-19 within one year prior to the index admission beginning with the FY 2024 program year.

How to prepare

Review the rule in its entirety. There are also plenty of other changes regarding the low-volume adjustment, Medicare Dependent Hospital program, urban to rural reclassifications, graduate medical education payments, hospital-acquired condition reduction program, and more. Rivet Health Law, PLC can help you understand the rule and how it might affect your healthcare organization. Contact us to learn more.