IPPS Final Rule: Major Changes Coming

EDITOR’S NOTE: CMS has published the Fiscal Year 2023 (Oct 1, 2022) final rules for Medicare payments. The major rule is, of course, the inpatient hospital prospective payment system (IPPS) and long-term care hospital (LTCH) PPS rule. The final rule, as reported by Stanley Nachimson, contains several payment and quality program changes that go into effect Oct 1.

Under IPPS, general acute care hospitals that successfully participate in the Hospital IQR Program and are meaningful electronic health record users will see an increase in operating payments of 4.3 percent. This is an increase of 1.1 percent above the proposed rule and reflects more recent economic data. While this is positive news for hospitals, the American Hospital Association is concerned that this rate increase will not cover increased hospital costs.

Relative weights for DRGs have been calculated using an average of data that includes and excludes COVID-19 claims. The Centers for Medicare & Medicaid Services (CMS) believes this gives a better estimate of changes for Fiscal Year (FY) 2023. CMS did not propose any new MS-DRGs for FY 2023, which means the number of MS-DRGs is maintained at 767 for FY 2023. CMS also finalized the reclassification of laser interstitial thermal therapy (LITT) procedures under the MS-DRGs. As well there are some technical refinements to MS-DRG assignments.

CMS approved eight technologies that applied for new technology add-on payments for FY 2023, and is continuing payment for 15 existing ones.

The final rule also included updates to graduate medical education reimbursement, uncompensated care payment policies, and a cap on wage index decreases. Updates were also made to the promoting interoperability program, and the hospital quality reporting program. 

CMS will establish a “birthing-friendly” hospital designation — a publicly reported, public-facing hospital designation for the quality and safety of maternity care in fall 2023.

LTCH payments are expected to increase by 2.3 percent in FY 2023 under the LTCH PPS program.

FY2023 Skilled Nursing Facility (SNF) Prospective Payment System Final Rule 

CMS estimates the aggregate impact of the payment policies in this final rule would result in an increase of 2.7 percent, or approximately $904 million, in Medicare Part A payments to SNFs in FY 2023 compared to FY 2022.

On Oct. 1, 2019, CMS implemented a new case-mix classification model, called the patient-driven payment model (PDPM), under the SNF PPS. When finalizing PDPM, CMS also finalized that this new case-mix classification model would be implemented in a budget-neutral manner, meaning that the transition to PDPM from the prior case-mix classification model, the Resource Utilization Group, Version 4, would not result in an increase or decrease in aggregate SNF spending.

Since PDPM implementation in FY 2020, the CMS initial data analysis showed an unintended increase in payments of approximately 5 percent or $1.7 billion per year. As with past case-mix classification model transitions, CMS conducted the data analysis to recalibrate the parity adjustment in order to achieve budget neutrality under PDPM.

CMS is finalizing the recalibration of the PDPM parity adjustment factor of 4.6 percent with a two-year phase-in period that would reduce SNF spending by 2.3 percent, or approximately $780 million, in FY 2023 and 2.3 percent in FY 2024.

This rule includes several other policy changes to the ICD-10 code mapping for the PDPM, updates to the SNF value-based purchasing program, and updates to the participation requirements for LTC H facilities.

The FY 2023 hospice payment update percentage is 3.8 percent (an estimated increase of $825 million in payments from FY 2022).

The hospice payment update includes a statutory aggregate cap that limits the overall payments per patient that is made to a hospice annually. The cap amount for FY 2023 is $32,486.92 (FY 2022 cap amount of $31,297.61 increased by 3.8 percent). 

And for inpatient psychiatric facilities, total estimated payments are estimated to increase by 2.5 percent, or $90 million, in FY 2023 relative to IPF payments in FY 2022.

Programming note: ICD10monitor is producing an exclusive live and on-demand three-day ICD-10 coding webcast Aug 17, 18 and 19, featuring coding authority Laurie Johnson and CDI expert Erica Remer, MD. Register here.  

Print Friendly, PDF & Email

Stanley Nachimson, MS

Stanley Nachimson, MS is principal of Nachimson Advisors, a health IT consulting firm dedicated to finding innovative uses for health information technology and encouraging its adoption. The firm serves a number of clients, including WEDI, EHNAC, the Cooperative Exchange, the Association of American Medical Colleges, and No World Borders. Stanley is focusing on assisting health care providers and plans with their ICD-10 implementation and is the director of the NCHICA-WEDI Timeline Initiative. He serves on the Board of Advisors for QualEDIx Corporation. Stanley served for over 30 years in the US Department of Health and Human Services in a variety of statistical, management, and health technology positions. His last ten years prior to his 2007 retirement were spent in developing HIPAA policy, regulations, and implementation planning and monitoring, beginning CMS’s work on Personal Health Records and serving as the CMS liaison with several industry organizations, including WEDI and HITSP. He brings a wealth of experience and information regarding the use of standards and technology in the health care industry.

Related Stories

Best Advice: Begin Now to Prepare for 2025

Best Advice: Begin Now to Prepare for 2025

I have been preparing for the three August webinars on the Inpatient Prospective Payment System (IPPS) for the 2025 fiscal year (FY). The final rule

Read More

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

The Inpatient Admission Order: Master the Who, When, and How

The Inpatient Admission Order: Master the Who, When, and How

During this webcast Dr. Ronald Hirsch delves into the inpatient admission order process including when to get it, when it becomes effective, its impact on billing and payment, who can write it, how to cancel it, the effects on the beneficiary, and more. You’ll leave with a clear understanding of inpatient orders and guidelines for handling improper orders that you can implement immediately.

June 20, 2024
Navigating AI in Healthcare Revenue Cycle: Maximizing Efficiency, Minimizing Risks

Navigating AI in Healthcare Revenue Cycle: Maximizing Efficiency, Minimizing Risks

Michelle Wieczorek explores challenges, strategies, and best practices to AI implementation and ongoing monitoring in the middle revenue cycle through real-world use cases. She addresses critical issues such as the validation of AI algorithms, the importance of human validation in machine learning, and the delineation of responsibilities between buyers and vendors.

May 21, 2024
Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Frank Cohen shows you how to leverage the Comprehensive Error Rate Testing Program (CERT) to create your own internal coding and billing risk assessment plan, including granular identification of risk areas and prioritizing audit tasks and functions resulting in decreased claim submission errors, reduced risk of audit-related damages, and a smoother, more efficient reimbursement process from Medicare.

April 9, 2024
2024 Observation Services Billing: How to Get It Right

2024 Observation Services Billing: How to Get It Right

Dr. Ronald Hirsch presents an essential “A to Z” review of Observation, including proper use for Medicare, Medicare Advantage, and commercial payers. He addresses the correct use of Observation in medical patients and surgical patients, and how to deal with the billing of unnecessary Observation services, professional fee billing, and more.

March 21, 2024
Comprehensive Inpatient Clinical Documentation Integrity: From Foundations to Advanced Strategies

Comprehensive Inpatient Clinical Documentation Integrity: From Foundations to Advanced Strategies

Optimize your inpatient clinical documentation and gain comprehensive knowledge from foundational practices to advanced technologies, ensuring improved patient care and organizational and financial success. This webcast bundle provides a holistic approach to CDI, empowering you to implement best practices from the ground up and leverage advanced strategies for superior results. Participants will gain actionable insights to improve documentation quality, patient care, compliance, and financial outcomes.

June 26, 2024
Advanced Inpatient Clinical Documentation Integrity: Harnessing Technology, Analytics, and Compliance

Advanced Inpatient Clinical Documentation Integrity: Harnessing Technology, Analytics, and Compliance

Join expert Angela Comfort, MBA, RHIA, CDIP, CCS, CCS-P., as she helps you navigate advanced inpatient CDI technologies, regulatory changes, and system interoperability. Angela will provide actionable strategies for integrating AI and predictive analytics into CDI practices, ensuring seamless system interoperability, and maintaining compliance with evolving regulations. Attendees will learn to select and implement advanced EHR systems and CDI software, leverage data analytics to enhance documentation accuracy, and stay audit-ready with the latest compliance updates. Real-world case studies and practical tools will empower you to drive continuous improvement in CDI, improve patient outcomes, and enhance organizational efficiency. Don’t miss this opportunity to advance your CDI practices and stay ahead in this dynamic field.

July 11, 2024
Foundations of Inpatient Clinical Documentation Integrity: Enhancing Accuracy and Compliance

Foundations of Inpatient Clinical Documentation Integrity: Enhancing Accuracy and Compliance

Join expert Angela Comfort, MBA, RHIA, CDIP, CCS, CCS-P, for an insightful webcast on improving inpatient clinical documentation integrity (CDI). Inaccurate documentation can lead to misdiagnosis, improper treatment, and compromised patient safety. High workloads, lack of standardized practices, and outdated EHR systems contribute to these issues, affecting care quality and financial outcomes. Angela will offer practical strategies and tools to enhance accuracy, consistency, and timeliness in documentation. Attendees will learn to use standardized templates, checklists, and advanced EHR systems, while staying compliant with regulations. Improve patient care, ensure accurate billing, and reduce audit risks with actionable insights from this essential webcast.

June 26, 2024
Mastering E/M Coding: Navigating the Evolving Landscape

Mastering E/M Coding: Navigating the Evolving Landscape

Join industry expert, Kathy Pride, RHIT, CPC, CPMA, CCS-P, for an in-depth exploration of Evaluation and Management (E/M) coding, tailored for healthcare professionals navigating recent guideline changes. Dive into advanced topics beyond mere code selection, including shared visits, criteria for selecting E/M levels, and documentation best practices. Gain clarity on complex guideline terminology and ensure compliance with regulatory standards. This comprehensive session is essential for coders, auditors, educators, and practitioners seeking to enhance their proficiency in E/M coding and maximize revenue capture.

June 19, 2024

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

Honor Memorial Day with Savings! Get 20% off all items using code MEMORIAL24 at checkout. Shop today and save! Offer valid until May 31. Exclusions apply.

Happy World Health Day! Our exclusive webcast, ‘2024 SDoH Update: Navigating Coding and Screening Assessment,’  is just $99 for a limited time! Use code WorldHealth24 at checkout.