Today, the FAH submitted comments on CMS’s FY 2023 Proposed Rule for IPPS and LTCH PPS payments and quality. The letter makes recommendations on many issues with key recommendations related to the market basket update, DSH payments, outliers, and quality measure suppression, including:

• Hospital Market Basket Update: The FAH letter raises serious concerns with CMS’s proposed market basket update of only 3.1 percent for IPPS and 2.7 percent for LTCH PPS for FY 2023, which seriously understates the unprecedented inflationary environment hospitals and health systems are experiencing. The FAH urges CMS to adjust its market basket update methodology for FY 2023 and adjust for forecast error in setting FY 2022 payments by using its special exceptions authority. The FAH and AHA also commissioned a report by FTI on the unprecedented inflationary cost pressures and need for an updated market basket methodology.
• Uncompensated Care Disproportionate Share Hospital Payments: The FAH raised concerns that CMS’s calculations for DSH significantly underestimated expected contractions in Medicaid and Marketplace enrollment in FY 2023 and urges CMS to adjust uninsured estimates to fully capture the impact of the anticipated conclusion of the PHE and expiration of expanded Marketplace subsidies on the uninsured rate.
• Outlier Payments: The FAH raised concerns with the dramatic and accelerating increases in the fixed outlier threshold and recommended methodology changes for IPPS and LTCH hospitals that use data from periods before the PHE to lower the threshold level and help ensure that rural hospitals, whose DRG payments are offset 5.1 percent, can access outlier payments.
• Quality Measure Suppression in Response to COVID: The FAH letter applauds CMS’s extensive efforts to apply policy and process suppression measures in response to COVID-19 PHE impacts and eliminate payment adjustments for the Hospital Value Based Purchasing (HVBP) program and Hospital Acquired Conditions (HAC) reduction program. The FAH urges CMS to also apply a suppression policy that would eliminate all Hospital Readmissions Reduction Program (HRRP) payment penalties for FY 2023.

A final rule is expected on August 1 and will be effective beginning October 1.

To see the FAH’s full comment letter, click here.