October 14, 2021

Proposed and Final Federal Payment Rules

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For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander BerlajolliBrianna J. Santolli, or Connor Breza.


CMS Releases Proposed Payment Rules

86 FR 35874: Under the 2022 Home Health Prospective Payment System proposed rule, Centers for Medicare & Medicaid Services ("CMS") would increase payments to home health agencies by 1.8 percent, which CMS estimates to be $330 million.  However, CMS noted that home health agencies may see an aggregate 0.1 percent, or $20 million, decrease in payments due to the reductions made in the rural add­‑on payment.  CMS also proposed a nationwide expansion of the Home Health Value‑Based Purchasing model, which was originally implemented in nine states on January 1, 2016.

The proposed rule also would make permanent some of the home health conditions of participation implemented during the COVID‑19 pandemic, including the 14‑day on‑site supervisory requirement when a patient is receiving skilled nursing services.  Comments are due by August 27, 2021.

86 FR 36322: Under the 2022 End‑Stage Renal Disease ("ESRD") Prospective Payment System proposed rule, CMS would increase the current base rate for ESRD by $2.42 to $255.55 for 2022.  CMS also proposed lifting the payment rate for renal dialysis services for individuals with acute kidney injury to $255.55.  The new rule would update the outlier services' fixed‑dollar loss amounts for 2022 using 2020 data, such that for pediatric beneficiaries, the fixed‑dollar loss amount would decrease from $44.78 to $30.38, and the Medicare allowable payment amount would decrease from $30.88 to $28.73; for adult beneficiaries, the fixed‑dollar loss amount would decrease from $122.49 to $111.18, and the Medicare allowable payment would decrease from $50.92 to $47.87.

Due to the significant impact of COVID‑19, CMS proposed to modify scoring and payment methodologies to ensure that no facility will receive a payment reduction in 2022.  Additionally, the rule would extend the remaining deadlines for ESRD providers and facilities to submit September through December 2020 ESRD quality incentive program data until September 1, 2021.  Comments are due by August 31, 2021.

86 FR 39104: Under the 2022 Physician Fee Schedule proposed rule, the conversion factor for 2022 is $33.58, decreased from $34.89 in 2021.  CMS also suggested defining a "physician‑owned distributor" as a medical device manufacturer or applicable group purchasing organization, where physicians or a physician's immediate family members have at least 5 percent ownership or receive compensation in the form of a commission, return on investment, profit‑sharing, profit distribution, or other remuneration directly or indirectly based on sale or distribution of devices.  The new definition would only be for open payments reporting, and it would not apply to the Anti‑Kickback Statute or its safe harbors.  Comments are due by September 13, 2021.

CMS Finalizes 5 Payment Rules

CMS has released final payment rules for inpatient facilities, skilled nursing facilities, hospices, inpatient psychiatric facilities, and inpatient rehabilitation facilities.  The final rules are effective October 1, 2021.

Inpatient Facilities

86 FR 44774: Under the Inpatient Prospective Payment System ("IPPS") final rule, CMS estimates that, overall, hospitals that report quality data and are meaningful users of electronic health records ("EHRs") will see a 2.5 percent increase in Medicare rates for 2022.  CMS expects that hospital payments will increase by an aggregate $2.3 billion.  An add‑on payment for COVID‑19 treatment through the end of the fiscal year in which the public health emergency ends also was finalized under the rule.

Additionally, CMS has added five new measures to the Inpatient Quality Reporting Program, including COVID‑19 vaccination rates among health care personnel and a maternal morbidity structural measure.  CMS also finalized changes to the interoperability program to reduce the burden on eligible hospitals and critical access hospitals, including an increase to the minimum required score for the objectives and measures from 50 to 60 points (out of 100 points) to be considered a meaningful EHR user.

Skilled Nursing Facilities

86 FR 42424: The final rule increases payments to skilled nursing facilities ("SNFs") by 1.2 percent in 2022.  CMS estimates that the overall economic impact will be a $410 million increase in Medicare Part A payments to SNFs in 2022.  Additionally, the final rule requires SNFs to report the COVID‑19 vaccination status of their employees to the Centers for Disease Control and Prevention's National Healthcare Safety Network on a weekly basis.


86 FR 42528: Under the final rule, hospices will see a 2 percent increase in payments for 2022, which CMS estimates to be $480 million, as well as an increase to the cap that limits the amount of payments a hospice receives per patient annually to $31,297.61.  CMS also will implement a new measure for the Hospice Quality Reporting Program called the Hospice Care Index, which has 10 indicators of quality that are calculated from the claims data.  Moreover, the final rule makes permanent several waivers issued during the COVID‑19 pandemic, including a waiver that allowed the use of pseudo‑patients for hospice aide competency testing.

Inpatient Psychiatric Facilities

86 FR 42608: The final rule increases the payment rate for inpatient psychiatric facilities ("IPFs") by 2 percent in 2022.  CMS estimates that the overall economic impact will be an $80 million increase in payments to IPFs.  Moreover, CMS finalized a policy to ensure that medical residents will not be displaced if their teaching hospital or program closes, preventing them from getting board‑certified.  IPFs will also be required to report the COVID‑19 vaccination status of their employees to the CDC NHSN.

Inpatient Rehabilitation Facilities

86 FR 42362: Under the final rule, there will be a net increase to the payment rate for inpatient rehabilitation facilities ("IRFs") of 1.5 percent in 2022.  The net increase includes the IRF market basket increase factor of 1.9 percent, less a 0.4 percent decrease in estimated IRF outlier payments.  CMS estimates that the overall payments to IRFs will increase by $130 million in 2022.  Like SNFs and IPFs, IRFs are also required to report the COVID‑19 vaccination status of their employees.

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