CMS Issues CY 2023 Proposed Rule for Inpatient Prospective Payment System

On April 18, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that updates Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) for fiscal year (FY) 2023. Once these polices become final, they will cover inpatient hospital discharges on or after October 1, 2022. Highlights are described below:

  • CMS is proposing to use FY 2021 MedPAR file and the 2020 Medicare cost report data for ratesetting with modifications to account for the anticipated decline in COVID-19 IPPS hospitalizations. 
  • A proposed increase in payment rates for acute care hospitals under IPPS that successfully participate in the Hospital Inpatient Quality Reporting (IQR) and demonstrate meaningful use of Electronic Health Record (EHR) program of approximately 3.1 percent.
  • Proposed codes changes include 1,176 new ICD-10-CM codes and 45 new ICD-10-PCS codes. There are no new proposed MS-DRGs.
  • W.L. Gore and Associates, Inc., submitted an application for new technology add-on payments (NTAP) for the GORE® TAG® Thoracic Branch Endoprosthesis (TBE) device for FY 2023. If CMS approves this new technology add-on payment in the final rule, the maximum new payment for a case involving the GORE® TAG® TBE device would be $27,807 for FY 2023 (65% of the average cost of the technology). Public comments are requested on whether this technology meets cost criterion, subject to the technology receiving FDA marketing approval corresponding to the EAP designation by July 1, 2022.
  • CMS is proposing the unadjusted national average hourly wage is $47.77. This includes adjustment of the labor-related share for discharges occurring on or after October 1, 2022 of 67.6 percent, which was finalized for FY 2022. CMS is proposing not to make any further changes to the labor-related share, and therefore continuing to use 67.6 percent for FY 2023.
  • CMS is proposing to apply a 5 percent cap policy to prevent yearly variations in the wage index as a way to reduce overall instability for hospitals. Additionally, application of this wage index cap would be done in a budget neutral manner through a national adjustment to the standardized amount.
  • Proposed changes to the Hospital Readmissions Reduction Program include modification of specific measures to exclude COVID-19 patients and/or patients with a history of COVID-19.
  • Proposed changes to the performance standards for the Hospital Value-Based Purchasing (VBP) program include multiple measure suppression; baseline period updates; and scoring/payment methodology revision.
  • For hospitals excluded from IPPS payment, CMS has proposed the rate-of-percentage of 3.1, which will be applied to the FY 2022 target amounts to calculate the FY 2023 target amounts. 

The complete IPPS proposed rule summary can be found on the GORE Coding Resource Center website under “Education – CMS Rules Updates”: https://gore.rccsclients.com/education/rules-updates/.