Medicare payments for hospital inpatient services will rise 4.3% in fiscal 2023 under a final rule the Centers for Medicare and Medicaid Services published Monday.
That amounts to a pay increase of about $2.6 billion and is higher than the 3.2% rate hike CMS proposed in April.
Hospital trade groups asked CMS to use its "exceptions and adjustments" authority to override the regulatory payment formula and give facilities an even larger increase, but the agency declined to do so. The original proposed rate wouldn't have adequately covered hospitals' costs, industry groups said.
"Regarding commenters' request that CMS consider other methods and data sources to calculate the final rule market basket update, we believe the 2018-based [inpatient prospective payment system] market basket continues to appropriately reflect IPPS cost structures and we believe the price proxies used...are an appropriate representation of price changes for the inputs used by hospitals in providing services," CMS wrote in the final rule.
The rates for next fiscal year apply to general acute care hospitals that participate in the Hospital Inpatient Quality Reporting Program and use electronic health records, although other adjustments could impact individual hospitals' rates, according to CMS. Long-term care hospitals will get a 2.3%, or $71 million, increase.
CMS used the most recent available data to set fiscal 2023 rates, despite the ongoing COVID-19 public health emergency. But the agency will continue to suppress and edit measures for its Hospital Readmissions Reduction Program, Hospital-Acquired Condition Reduction Program and Hospital Value-Based Purchasing Program to keep facilities from being rewarded or penalized by pandemic circumstances.
Medicare Disproportionate Share Hospital and Medicare uncompensated care payments will decrease by about $300 million in fiscal 2023, down from a proposed $800 million cut. CMS will distribute about $6.8 billion in uncompensated care payments next fiscal year.
CMS moved forward with a plan to discontinue low-income insured days as an uncompensated care stand-in, and will establish new supplemental payments for Indian Health Service, tribal and Puerto Rican hospitals.
The agency didn't execute a plan to exclude certain uncompensated care pool days from the Medicare DSH calculation. Hospitals in a handful of states, particularly those that have not expanded Medicaid under the Affordable Care Act, argued that the policy could have deprived safety-net providers of hundreds of millions of dollars.
CMS finalized a "birthing-friendly" hospital designation and added health equity measures to the inpatient quality reporting program. Other measures, including those on perinatal health and opioid-related adverse events, will be added.
Hospitals, including Critical Access Hospitals, must continue reporting COVID-19 and seasonal flu data through April 2024, according to the final rule.