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CMS to boost Medicare inpatient provider payments by $2.5 billion

por John R. Fischer, Senior Reporter | May 03, 2021
CMS will increase Medicare fee-for-service payments to acute care inpatient hospitals and long-term care providers by $2.5 billion
CMS plans to boost Medicare fee-for-service payments to acute care inpatient hospitals and long-term care providers by $2.5 billion.

The agency will set payment rates based on 2019 data (instead of 2020 data due to the effect of the pandemic), reports Modern Healthcare

The boost in payments would include funding for additional medical residency positions, which CMS expects will cost $300 million each year after a five-year phase-in of 1,000 additional residencies. This, combined with increases in capital payments, payments for new technologies, and payments from the implementation of the imputed floor and other proposed changes in the rule would increase hospital payments in all by $3.4 billion in fiscal year 2022, according to Healthcare Finance News.

In addition, it has proposed eliminating the mandate on providers to disclose median payer-specific negotiated charges for services to Medicare Advantage insurers in Medicare cost reports. "With this proposal, CMS estimates this will reduce administrative burden on hospitals by approximately 64,000 hours," a CMS spokesperson told HCB News.

The spokesperson added that the agency is also proposing its repeal "after further consideration of the many contract arrangements hospitals use to negotiate rates with Medicare Advantage organization payers, and the usefulness, for rate setting purposes, of the market-based data."

Price disclosure, meanwhile, to MA insurers has been required since January 1 of this year. Hospitals and medical organizations have long said the practice neither benefits consumers or lowers healthcare costs.

“The policies CMS is proposing to mitigate the impact of COVID-19 on quality measures will help prevent a hospital’s quality score from telling a false story and being unfairly penalized,” said Premier in a statement.

Caitlin Donovan, senior director of the Patient Advocate Foundation, told HCB News that the proposal to get rid of price disclosure to MA insurers is understandable but still somewhat troubling. “Patients don't shop for care the way they would for any other services and the type of transparency being provided isn't going to change that trend. However, I did hope that pricing transparency would be a tool for researchers to track pricing on a systemic level. Providers and insurers alike could hide behind hidden costs to justify all sorts of initiatives, like balance billing, without us being able to verify their claims.”

In addition, the rule calls for extending add-on payments for new COVID-19 treatments until the end of the fiscal year of when the pandemic ends and to permanently reinstate the imputed floor-wage-index for all-urban states for the fiscal 2022 year.

CMS has also proposed several changes to the Hospital Readmissions Reduction Program, the Hospital-Acquired Condition Program and the Hospital Value-Based Purchasing Program, to ensure hospitals are not penalized for COVID-19-affected quality measures; and for accountable care organizations in the BASIC track of the Medicare Shared Savings Program to opt out of advancing to a higher level of risk for fiscal year 2022 performance. They would instead be automatically advanced in FY 2023 to the level they were supposed to go to in 2022.

CMS has asked the public to comment on how it can better health equity through quality measurement and value-based payment programs.

Comments on the proposed rule are due by June 28.

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