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Issue Brief: CMS Hospital Inpatient Prospective Payment System (IPPS) Proposed Rule CY 2023

Center for Medicare and Medicaid Services (CMS)

April 18, 2022


On April 18, 2022, CMS released its annual IPPS proposed rule. This proposed rule makes changes to the hospital inpatient prospective payment system (IPPS), which governs Medicare fee-for-service payment for inpatient hospitals and long-term care hospitals. The proposed rule also includes updates to quality reporting requirements and interoperability requirements. 

Major Proposed Changes for CY 2023

  • Payment Rates: CMS is proposing a payment increase of 3.2% for hospitals that meet meaningful use and quality reporting requirements.  Hospitals have already raised concerns that this amount will not be sufficient to account for the rate of inflation over the previous year.  Additionally, CMS has proposed changing the disproportionate share (DSH) calculation for Medicaid to include only those patients whose insurance is provided under an 1115 waiver or pay for most or all of their insurance premiums through premium assistance provided under an 1115 waiver. CMS estimates that there will be decrease of $654 million in DSH payments from the previous year. 

  • Payment for Domestically-Produced Supplies: CMS is soliciting comments on a payment adjustment for the purchase of N95s from domestic suppliers for both hospitals and outpatient facilities (i.e., under the hospital outpatient prospective payment system). The agency notes that it recognizes that hospitals are incurring additional costs by purchasing from domestic manufacturers, and requests comments on an appropriate payment adjustment to support those purchases.  ASHP is pleased that the agency is addressing supply chain issues in its proposed rule – additional payment support for domestically-produced suppliers to ensure a strong supply chain is consistent with ASHP’s most recent consensus recommendations on supply chain security.

  • Conditions of Participation (CoPs) for Infection Prevention and Control and Antibiotic Stewardship Programs: CMS is proposing to change CoPs for infection prevention and control and antibiotic stewardship programs to “extend the current COVID-19 reporting requirements and establish new reporting requirements for any future public health emergencies (PHEs) related to a specific infectious disease or pathogen.” CMS further notes that these new requirements for continued reporting of COVID-19 and influenza (or other PHE) would begin after the end of the current COVID-19 PHE. 

  • Quality Reporting Changes: CMS is proposing a number of changes to hospital quality measures, including the introduction of new measures related to equity, use of social determinants of health, and opioid-related adverse events. CMS is also soliciting feedback on a new program aimed at improving maternal health outcomes. 

Applicability and Timing

In general, policy proposals adopted in an IPPS proposed rule become effective on January of the next calendar year (so January 1, 2023 for this proposed rule). However, the timeframe for adoption of certain policies set forth in this year’s proposed rule may vary based on the duration of the COVID PHE (e.g., the new COVID and flu reporting CoP change). 

We strongly encourage members to submit feedback, questions, or concerns to ASHP to assist in the development of our written comments on the proposed rule. Comments are due to CMS on June 17, so please send any input to Jillanne Schulte Wall at [email protected] by June 1, 2022.