CMS Finalizes 4.3% Bump For Hospital Inpatient Payments In 2023

Inpatient hospitals get 4.3% Medicare reimbursement bump | Modern Healthcare

Source: Fierce Healthcare, by Robert King

The Biden administration finalized a 4.3% bump for inpatient payments for the federal fiscal year 2023, an increase compared to the 3.2% that was originally proposed back in April.

The Centers for Medicare and Medicaid Services released on Monday the final Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital Prospective Payment System rule that updates payments to hospitals. The rule also details health equity quality measures hospitals must now meet for participation in the Inpatient Quality Reporting program.

“CMS is taking action to support hospitals, including updating payments to hospitals by a significantly higher rate than in the proposed IPPS rule,” CMS Administrator Chiquita Brooks-LaSure said in a statement.

Acute care hospitals paid under the IPPS and also meaningfully use electronic health records can expect to see a 4.3% increase in their rates based on a market basket update of 4.1%.

“This is the highest market basket update in the last 25 years and is primarily due to higher expected growth in compensation prices for hospital workers,” CMS said in a release.

Long-term care hospitals can expect to see hikes of 2.4% in payments or $71 million.

In addition to the payment increases, CMS is laying out new requirements for hospitals to measure health equity.

The rule adds three measures to the inpatient quality reporting program focused on equity. The first aims to assess a hospital’s equity culture by examining strategic planning and leadership engagement. The other two measures focus on screening and identification of social needs such as food insecurity and transportation.

“By screening for and identifying such unmet needs, hospitals will be in a better position to serve patients holistically by addressing and monitoring what are often key contributors to poor physical and mental health outcomes,” CMS said in a release.

The new measures come as CMS is figuring out how to close equity gaps across the healthcare ecosystem. CMS is exploring adding equity measures to

Other updates in the final rule include:

  • * Creation of a “birthing-friendly” hospital designation that provides important information to consumers on how the hospital has reduced maternal morbidity and mortality.
  • * Continuing current COVID-19 reporting requirements for hospitals and critical access hospitals but it will not finalize proposed requirements for any future public health emergencies.
  • * A distribution of roughly $6.8 billion in uncompensated care payments for fiscal year 2023, a decline of approximately $318 million from the previous fiscal year. The change reflects projections on the impact of the pandemic, CMS said.

Inflation-Dogged Health Systems Confident Payers Will Concede Higher Rates In 2023 Contract Negotiations

Health systems confident payers will concede higher 2023 rates

Source: Fierce Healthcare, by Dave Muoio

Executives from some of the country’s largest for-profit health systems say it’s likely their organizations will be able to pass rising cost pressures along to commercial insurers during the next round of contract negotiations.

 
 

Speaking to investors during earnings calls this past week, the hospital chains each reported limited non-COVID volumes, supply chain interruptions and pricey contract labor rates that are expected to persist through the end of the year.

Those challenges took their toll on the for-profit health systems, which have across the board adjusted their financial projections downward or, in Community Health Systems’ case, led to a second consecutive quarter of losses.

These hurdles have only been exacerbated by skyrocketing inflation rates that have recently struck the country and are expected to continue in the near term. But here, at least, the health systems say their commercial contracts can help blunt the damage.

HCA Healthcare’s Sam Hazen told investors that the company is “pretty much contracted for 2022.” Those agreements have terms that provide “some protection in the short run” that “allows us to reposition some of our pricing as we move through the next few years to reflect more accurately the inflationary pressures that we’re seeing,” he said.

 

Looking to the coming year’s commercial negotiations, Hazen said HCA has already seen “some early success and recognition by the payers” and that some of its recently renegotiated contracts reflected higher price escalation than those of the past.

“I think it’s reasonable to assume that we were in 3.5% to 4% zone previously with our commercial pricing,” he told investors. “We’re in a competitive positioning as a company globally and that allows us to negotiate based upon the inflationary pressures. … I believe our relationships will allow us to get to a number that makes sense for both organizations, but I do anticipate it being somewhere around the mid-single-digits.”

Universal Health Services Chief Financial Officer Steve Filton said his company is “aggressively” looking to trim under-earning managed care contracts and seek out higher prices in the coming year.

Both its acute and behavioral care hospitals are identifying contracts that “are not even remotely” keeping pace with inflationary and labor pressure and giving those payers notice of terminations “at a pace faster than, quite frankly, I can really remember,” he told investors.

 

The country’s largest health insurance company has already signaled some pricing flexibility.

During UnitedHealth Group’s investor call a few weeks back, CEO Andrew Witty, for instance, said the payer will be “very, very respectful of the kind of underlying phenomena within the cost trends of the environment.”

Brian Thompson, CEO of UnitedHealthcare, echoed those comments with respect to inflation and providers’ labor costs with a warning that those factors will have “more impact” on contract pricing in 2023.

Filton said those were the first such acknowledgments he could recall ever coming out of the massive payer—blood in the water for hospitals gearing up to negotiate.

“It struck me, at least, that there was a different tone from some of the payers,” he told investors. “So, our expectation is that payers will be more receptive to [rate increases] in 2023, but we’ll also continue to be aggressive and try and grab the bull by the horns where we’re able to and wrangle rate increases from reluctant payers where we can and where we can’t.”

The ink has already dried on negotiations between Tenet Healthcare and UnitedHealthcare, with the former announcing its hospitals, ambulatory facilities, physicians and other providers all contracted straight through 2025, Tenet Healthcare shared during its earnings call.

Tenet CEO Saum Sutaria, M.D., wasn’t able to share the contract’s specific terms but told investors his company is “pleased with the terms.” While the pricing of managed care isn’t going to cover this year’s 8% to 9% consumer price index increases, he said the arrangement does include escalators and removes some uncertainty surrounding long-term pricing.

As for the remainder of its contracts for 2023 and beyond, Sutaria said he expects inflation to be a central focus of negotiations.

“Every conversation we are having with plans, [the] inflation environment is obviously top of mind,” the CEO said. “Overall, where do we think rates will be? … We see rate increases [in the] 3%, 4%, 5% type of range.”

Elsewhere in the industry, Fitch Ratings warned in a recent research note for the nonprofit hospital market that commercial payers will likely earn some wins in the fight on rate increases due to their often larger size and the inflationary pressures affecting their own bottom lines.

“Nevertheless, providers may be able to pursue rate increases above those achieved in recent years, considering the interdependent relationship of providers and payers,” Fitch wrote.

Medicare Recipients To See Premium Cut — But Not Until 2023

Medicare recipients to see premium cut — but not until 2023 - ABC News

Source: Associated Press

Medicare recipients will get a premium reduction — but not until next year — reflecting what Health and Human Services Secretary Xavier Becerra said Friday was an overestimate in costs of covering an expensive and controversial new Alzheimer’s drug.

Becerra’s statement said the 2022 premium should be adjusted downward but legal and operational hurdles prevented officials from doing that in the middle of the year. He did not say how much the premium would be adjusted.

Medicare Part B premiums jumped by $22 a month, to $170.10, for 2022, in part because of the cost of the drug Aduhelm, which was approved despite weak evidence that it could slow the progression of Alzheimer’s.

The Centers for Medicare and Medicaid Services has limited coverage of Aduhelm to use in clinical trials approved by the Food and Drug Administration or the National Institutes of Health. It began reassessing the premium increase under pressure by Congress and consumers.

The drug’s manufacturer, Cambridge, Massachusetts-based Biogen, has cut the cost of the drug in half, to about $28,000 a year.

CMS cited the sharp reduction in the price of the drug and the limitations on coverage in concluding that cost savings could be passed on to Medicare beneficiaries. In a report to Becerra, the agency said the premium recommendation for 2022 would have been $160.40 a month had the price cut and the coverage determination both been in place when officials calculated the figure.

The premium for 2023 for Medicare’s more than 56 million recipients will be announced in the fall.

“We had hoped to achieve this sooner, but CMS explains that the options to accomplish this would not be feasible,” Becerra said. “CMS and HHS are committed to lowering health care costs — so we look forward to seeing this Medicare premium adjustment across the finish line to ensure seniors get their cost-savings in 2023.”

Last Updated 08/10/2022

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