CMS issues FY23 proposed payment rules for hospices, inpatient psychiatric facilities and inpatient rehabilitation facilities

In each of the proposed rules, a key provision aims to ensure providers no longer experience significant wage-index decreases from one year to the next.

CMS has released proposed rules governing FY23 prospective payments to hospices, inpatient psychiatric facilities (IPFs) and inpatient rehabilitation facilities (IRFs). The public comment period runs through May 31 for all three rules.

In the hospice rule, as in the other two, perhaps the biggest news is the proposed implementation of a permanent budget-neutral approach to “smooth” annual changes in the wage index. Specifically, a hospice’s wage index could decrease by no more than 5% from the prior year, regardless of the underlying reason for the decrease.

CMS is proposing to update hospice payments by 2.7%, or $580 million, for hospices that meet quality-reporting requirements. The update is subject to change based on economic factors that affect the market-basket update or productivity adjustment before publication of the final rule.

The maximum payment per hospice patient in FY23 would be $32,142.65, reflecting the 2.7% update to the 2022 statutory cap.

The rule also provides an update on the development of a patient assessment instrument to be used in the Hospice Quality Reporting Program (QRP).

Inpatient psychiatric facilities

IPFs that meet quality-reporting requirements likewise would receive a base 2.7% payment update under the proposed rule, with the rate subject to change based on changes to the market-basket update or the productivity adjustment before the final rule is published. However, aggregate payments to IPFs actually would decrease by 1.2% due to updates to the outlier threshold.

The rule also includes the same 5% cap on decreases in the wage index for IPF prospective payments as was proposed for hospices.

The rule also includes a request for information on ways for CMS to advance the use of measurement and stratification “as tools to address healthcare disparities and advance health equity” in inpatient psychiatric services.

Inpatient rehabilitation facilities

IRFs that meet quality-reporting requirements would receive a 2.8% payment update based on the market-basket update and productivity adjustment, with the rate subject to change before the final rule is published, according to the proposed rule. Aggregate IRF payments would increase by 2% after factoring in updates to the outlier threshold.

The proposed rule also includes the same 5% cap on decreases in the wage index that was proposed for hospices and IPFs.

The proposed rule seeks comments on:

• An Office of Inspector General recommendation to include home health in the IRF transfer policy
• The methodology for updating facility-level adjustment factors, specifically rural, low-income and teaching-status adjustments

In the IRF QRP, CMS proposes to expand requirements to cover all IRF patients regardless of payer starting in FY25. Providers would need to start collecting the requisite data on all patients beginning Oct. 1, 2023.

Also pertaining to the IRF QRP, CMS seeks stakeholder feedback on:

• Inclusion of the National Healthcare Safety Network’s Healthcare-associated Clostridioides difficile (C. difficile) Infection outcome measure
• Overarching principles for measuring equity and healthcare quality disparities across CMS quality programs