CMS Releases Final FY 2022 Medicare Inpatient Prospective Payment System (IPPS) Regulations

To continue to lead their organizations through the pandemic and focus on these initiatives, organizations will also need to focus on changing Medicare policies and updated payment rates, given the effects they will have on margins.
Each year the Centers for Medicare & Medicaid Services (CMS) publishes the proposed and then final rules for the Inpatient Prospective Payment System (IPPS), updating Medicare payment regulations and rates.
The final rule for FY 2022 was released on August 2, 2021.


Highlights include:

  • Increase in IPPS payments for FY 2022 is estimated to be $3.7 billion.

  • Uncompensated care payments (UCC) and Disproportionate Share payments are estimated to decrease by $1.4 billion. Acute care hospitals will receive an estimated increase in payments of $2.3 billion.

  • Reinstate the imputed floor wage index for all urban states per Section 9831 of the American Rescue Plan Act of 2021 which is estimated to increase payments by $200 million in FY 2022.

  • Graduate medical education payment revisions were introduced in the Consolidated Appropriations Act (CAA) of 2021. CMS has stated that due to the number and nature of comments, it will address the final decision in a separate document.

  • Organ Acquisition payment policy to codify the Medicare usable organ counting policy to count only organs transplanted into Medicare patients. Changes to this policy were in the proposed rules. It has not been adopted in the final rule for 2022, but it will be reconsidered in future rule-making policies.

  • Value based care changes will affect Medicare payments as follows:

    • Hospital Readmissions Reduction (HRR) Program-DRG payments reduced impacting 2,500 hospitals for a total of $521 million.

    • Hospital Acquired Conditions (HAC) Reduction Program-17.2% of hospitals will experience a change.

    • Value Based Incentive based Payment Program (VBP)-Budget Neutral with an expected pool of $1.9 billion available for VBP incentives.

    • Medicare Shared Savings Program (ACOs)-Freezing participation level to the BASIC Track will reduce Federal spending by an estimated $90 million.

  • Inpatient Quality Increase the collection of information for Hospital Reporting (IQR) Program will increase the burden of for 3,300 hospitals by 2,475 hours with the cost of $101,475 over a 4-year period from FY 2022 reporting period.

BDO has summarized the CMS FY 2022 Medicare IPPS final regulations that reflect CMS’ effort to streamline some of its existing payment policies that you may find of interest.

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