Final Medicare inpatient rule includes 4.3 percent payment increase

August 11, 2022

On Monday, the Centers for Medicare & Medicaid Services (CMS) issued its final 2023 inpatient rule. The rule increases hospital inpatient prospective payment system rates for hospitals that meet quality reporting requirements by 4.3 percent for FY 2023. We are pleased the rates in the final rule increased 1.1 percent from the proposed rule. The increase is the result of a 4.1 percent market basket update, minus a 0.3 percentage point for productivity, plus a 0.5 percentage point required by statute. In its comments on the proposed rule, WSHA advocated for an increase to the marketbasket and a reduction of the productivity adjustment factor, both of which are partially reflected in the final rule. While the payment increase is helpful, it still runs far short of the increases to the cost of providing care that hospitals are experiencing. Other provisions of the FY 2023 rule include:

  • Suppressing most measures in its Hospital Value-based Purchasing Program, and all measures in its Hospital-Acquired Condition Reduction Program to avoid payment penalties to hospitals. CMS will still publicly report the FY 2023 results of the HAC Reduction Program’s patient safety indicator measure.
  • Returning to using the most recent data available for rate setting but will make several modifications to account for the COVID-19 pandemic.
  • Making permanent the 5 percent limit to reductions to a hospital’s wage index from the previous year.
  • Using multiple years of Worksheet S-10 cost report data to determine uncompensated care costs, specifically FY 2018 and FY 2019 data to distribute FY 2023 payments and a three-year average for FY 2024 and beyond.

(Andrew Busz, )


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