CMS Releases FY 2023 Proposed Rule to Update Hospital IPPS

The Centers for Medicare & Medicaid Services (CMS) recently released a proposed rule to update the Medicare fee-for-service (FFS) hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2023. When all proposed changes are considered, the rule is expected to result in a net decrease due to proposed cuts to disproportionate share hospital (DSH) and other payments. The MHA considers these cuts to be unacceptable given the extraordinary inflationary environment and extreme labor and supply cost pressures that hospitals continue to experience.  The proposed rule would:

  • Reduce national DSH and uncompensated care (UCC) pool payments by $800 million. The CMS projects a UCC pool of roughly $6.5 billion to be allocated to hospitals based on audited Worksheet S-10 data from FY 2018 and FY 2019 cost reports. The CMS proposes to use a three-year average to calculate payments starting in FY 2024.
  • Eliminate payment enhancements for Medicare-dependent hospitals and low-volume hospitals absent congressional action to extend those payments beyond the Sept. 30, 2022, expiration date.
  • Provide a net 3.2% increase in the federal operating rate for hospitals that successfully participate in the inpatient quality reporting program (QRP) and are meaningful electronic health record users.
  • Increase the standard federal capital rate by 1.6% from $472.60 to $480.29.
  • Establish a cost outlier threshold of $43,214, up 39% from the current $30,988 threshold, resulting in fewer cases qualifying for an outlier payment. The CMS adjusts the threshold annually to ensure that outlier payments do not exceed the established target of 5.1% of aggregate IPPS payments.
  • Cap wage index decreases at 5%, ensuring each hospital’s wage index is at least 95% of its final wage index for the prior fiscal year. This policy would be funded by a national adjustment to the standard federal operating rate. The CMS proposes to continue the current policy that provides a wage index increase for hospitals in the bottom quartile.
  • Modify graduate medical education policy related to full-time-equivalent caps and increase flexibility for rural hospitals that participate in a rural track program.
  • Suppress several measures in the hospital value-based purchasing program and continue the special scoring methodology used for FY 2022 to ensure hospitals are neither penalized nor rewarded due to the COVID-19 public health emergency.
  • Suppress all six measures in the hospital acquired conditions (HAC) reduction program. If finalized as proposed, hospitals will not be given a measure score, a total HAC score, or a payment penalty for FY 2023.
  • Establish a publicly reported hospital designation on the quality and safety of maternity care in efforts to reduce maternal mortality and morbidity, a priority of the Biden-Harris administration. The CMS would award this designation to hospitals that report “Yes” to both questions in the Maternal Morbidity Structural Measure, previously finalized in the Hospital Inpatient QRP.
  • Seek input on ways to advance health equity. The CMS is seeking comment on key considerations to improve data collection to better measure and analyze disparities across CMS programs and policies and approaches for updating the Hospital Readmission Reduction Program to encourage providers to improve performance for socially at-risk populations.
  • Seek input on the appropriateness of a payment adjustment for FY 2023 and beyond to recognize the additional resource costs associated with acquiring surgical N95 respirators that are approved by the National Institute for Occupational Safety and Health and are wholly domestically made.

The MHA is continuing to review the proposed rule and will provide hospitals with an estimated impact analysis soon. The association will also share its draft comments with members when available. The CMS will accept comments on the proposal through June 17. Members with questions should contact Vickie Kunz at the MHA.

Virtual Training Offered Feb. 15 for FY 2019 Medicaid DSH Audit

Myers and Stauffer LC, Michigan’s contractor for the federally mandated Medicaid disproportionate share hospitals (DSH) audits, encourages hospital staff to participate in the upcoming virtual training at 10:30 a.m. Feb. 15. Hospital staff will also benefit from viewing a pre-recorded general DSH training prior to the webinar. The pre-recorded training covers general DSH survey instructions and updates, while the Feb. 15 training will cover Michigan-specific requirements, followed by a question-and-answer session.

The following information may be used to join the Michigan-specific webinar:

Join from the meeting link
Meeting password: MIDSH
Join by phone: 1-844-740-1264 USA Toll Free
Meeting number (access code): 2427 043 9967

Myers and Stauffer plans to distribute the initial data request for the fiscal year (FY) 2019 audits to hospitals Feb. 11, and hospitals will have until March 14 to return the completed survey.  Members with questions should contact Vickie Kunz at the MHA.

Legislature Passes State Budget That Protects Healthcare Funding

capitol building

Michigan CapitolThe Michigan Legislature approved Sept. 22 the fiscal year (FY) 2022 state budget. The governor has indicated support for the budget that goes into effect Oct. 1, and the agreement protects vital funding sources for patient care in Michigan hospitals and expands access to healthcare services. The MHA published a statement on the passage of the budget Sept. 22.

Specifically, the budget reflects the protection or enhancement of many MHA priorities:

  • Continues enhanced outpatient Medicaid rates. For FY 2022, the increase in rates is projected to result in the continuation of funding that translates to $270 million in net revenue for hospitals.
  • Protects funding for the rural access pool and obstetrical stabilization fund.
  • Continues to maintain funding for disproportionate share hospitals (DSH) and graduate medical education (GME), pursuant to the MHA board-supported multiyear budget agreement.
  • Fully funds the Healthy Michigan Plan.
  • Continues the additional $2.35 hourly wage increase for direct care workers at skilled nursing facilities and enhanced reimbursement for ground ambulance services to reimburse at 100% of the Medicare rate.
  • Continues expanded Medicaid coverage for women up to 12 months postpartum.
  • Adds $3 million in new funding to set up a statewide system of care for stroke and ST-elevated myocardial infarction (STEMI) emergencies within the existing statewide trauma system.

In addition, nearly $10 billion in state and federal funding is still available that will be allocated through a supplemental budget process. The MHA will advocate the state use portions of the funding to address the association’s behavioral health priorities and workforce issues.

Members with questions on the state budget may contact Adam Carlson at the MHA.

Resources Available for FY 2018 Disproportionate Share Hospital Audits

Myers and Stauffer, Michigan’s contractor for the federally mandated Medicaid disproportionate share hospital (DSH) audits, recently hosted a webinar regarding the fiscal year (FY) 2018 audits currently underway for hospitals that received a payment from any of the FY 2018 Medicaid DSH pools. The timeline for the FY 2018 audits is:

  • Feb. 22 — DSH surveys and Medicaid fee-for-service paid claims data distributed to hospitals.
  • March 19 — completed surveys due to Myers and Stauffer. Hospitals are encouraged to upload their completed survey and other data to the Myers and Stauffer web portal. For information on registering for the portal, contact Kellen Teel at the MHA. Exhibits that include protected health information must be submitted accordingly.
  • March – May — desk reviews to be completed.
  • May – June — on-site/expanded reviews.
  • Sept. 30 — draft report due to the Medical Services Administration.
  • Dec. 31 — Final report due to the Centers for Medicare & Medicaid Services.

Myers and Stauffer encourages hospital staff to review a pre-recorded DSH training that covers general DSH survey instructions and updates. Michigan-specific materials from the Feb. 24 are available upon request from Crystal Mitchell at the MHA. Hospitals should present questions to Myers and Stauffer via email or by calling (800) 374-6858. Members with other questions regarding the DSH audits should contact Kellen Teel or Vickie Kunz at the MHA.

Webinar Reviews Requirements for Upcoming Disproportionate Share Hospital Audits

Myers and Stauffer LC, Michigan’s contractor for the federally mandated Medicaid disproportionate share hospital (DSH) audits, will soon distribute information requests to hospitals for the state fiscal year (FY) 2018 DSH audits. Hospitals that received payments from any of the Medicaid DSH pools for FY 2018, including the hospital provider tax-funded outpatient uncompensated care DSH pool, are subject to these audits.

The MHA is coordinating an educational webinar with representatives from Myers and Stauffer and the Medical Services Administration (MSA) to assist hospitals in completing the audit process. The Michigan-specific webinar is scheduled for 1 to 3 p.m. Feb. 24 and will review:

  • Hospital reporting requirements.
  • Steps necessary for the Michigan Medicaid program to comply with the Centers for Medicare & Medicaid Services (CMS) reporting and audit requirements.
  • Data that will be requested from hospitals that received payments from any Medicaid DSH pool for state FY 2018.
  • Lessons learned from past audits, particularly those for FY 2017.

A draft report is due to the MSA Sept. 30, with the final audit report due to the CMS Dec. 31. The Feb. 24 webinar will feature a formal presentation covering Michigan-specific data requirements followed by a question-and- answer period. Myers and Stauffer encourages hospital staff to review a pre-recorded DSH training that covers general DSH survey instructions and updates prior to the webinar.

No registration is required for the webinar. Hospitals are encouraged to login by 1 p.m. Feb. 24 using the password “MIDSH.” Participation via phone is available by calling (844) 740-1264 and using attendance code 185-802-8641.

Members with questions regarding the DSH audits should contact Kellen Teel or Vickie Kunz at the MHA. For assistance in accessing the webinar, contact Crystal Mitchell at the MHA.