CMS Drops 4 FY22 Medicare Payment Rules: SNF, Hospice, IRF, IPF

July 30, 2021 - CMS recently released four final Medicare payment rules for fiscal year (FY) 2022. The rules cover new rates and other policies for skilled nursing facilities (SNFs), hospice agencies, inpatient rehabilitation facilities (IRFs), and inpatient psychiatric facilities (IPFs).

SNF Prospective Payment System FY 2022 Final Rule

SNFs are slated to see an increase in Medicare Part A payments of approximately $410 million next fiscal year, according to the final rule for the SNF Prospective Payment System in FY 2022. The payment bump includes a $411 million increase from an update to payment rates, which CMS set at 1.2 percent next year. However, CMS estimated in the final rule that SNFs would lose out on about $1.2 million because of a reduction to SNF Medicare payment rates for the recent blood-clotting factors exclusions, required by the Consolidated Appropriations Act, 2021.

CMS also noted that the total impact on Medicare payments to SNFs do not include Value-Based Purchasing Program reductions, which the agency estimated to be $184.25 million in FY 2022.

In addition to payment rates, the final rule also included a methodology for recalibrating the parity adjustment in the Patient Driven Payment Model (PDPM), a new system for paying SNFs based on patient characteristics, rather than therapy minutes.

The new methodology will help the PDPM achieve required budget neutrality after the model has proven to unintentionally increase payment by about 5 percent or $1.7 billion.

Other notable policies in the final rule include PDPM ICD-10 code mappings, addition of new quality measures to the SNF Quality Reporting Program, including one related to COVID-19 vaccination among workers, and an expansion of the Value-Based Purchasing Program measure set.

Hospice Payment Rate Update Final Rule for FY 2022

CMS also issued a final rule updating hospice Medicare payments and the aggregate cap amount for FY 2022, as well as finalizing changes to Hospice Conditions of Participation (CoP) and the Hospice Quality Reporting Program (HQRP).

Hospice agencies are slated to see a 2.0 percent increase in Medicare payment rates, which totals about $480 million in FY 2022, according to the final rule. Additionally, CMS finalized an aggregate cap amount to $31,297.61, about a 2.0 percent increase compared to the cap amount in FY 2021.

The final rule will also rebase and revise hospice labor shares for all four levels of care using 2018 Medicare cost report data for freestanding hospices. The final FY 2022 labor shares are 66.0 percent for routine home care, 75.2 percent for continuous home care, 61.0 percent for inpatient respite care, and 63.5 percent for general inpatient care.

In terms of the Hospice CoP, CMS decided to update hospice aide competency evaluation standards to permanently include the pandemic-era flexibility that allowed the use of the pseudo-patient for hospice aide competency training. The agency also finalized a policy enabling hospices to conduct a competency evaluation related to the deficient and related skills demonstrated during a hospice aide supervisory visit.

The Hospice Quality Reporting Program will include four quality measures and will soon include Consumer Assessment of Healthcare Providers and Systems (CAHPS®) Hospice Survey Star ratings on Care Compare. The final rule will also add claims-based hospice visits in the last days of life measure to public reporting.

IRF Prospective Payment System for FY 2022

IRFs are slated for a 1.9 percent Medicare payment rate increase in FY 2022, according to the final rule for the IRF Prospective Payment System next fiscal year. But CMS estimates that overall Medicare payments to IRFs will increase by 1.5 percent, or $130 million, compared to payments made in FY 2021.

Policies in the final rule impacting the total payments to IRFs in FY 2022 include a Medicare Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) payment provision from a 2018 interim final rule. The final rule also includes a provision that was included in a DMEPOS proposed rule from 2020. Specifically, the rule will exclude wheelchair accessories (including seating systems) and seat and back cushions furnished in connection with group 3 or higher complex rehabilitative power wheelchairs from fee schedule adjustments and modify the regulatory definition of “item.”

Additionally, IRFs will see changes to their Quality Reporting Program. CMS finalized the COVID-19 vaccination coverage among healthcare personnel measure and the transfer of health information to the patient post acute care measure. CMS will also use three quarters—Q3 2020 through Q1 2021—of data for assessment-based measures and six quarters for claims-based measure to refresh the Care Compare website after disruptions caused the by COVID-19 pandemic last year.

IPF Prospective Payment System for FY 2022

Finally, the final rule for the IPF Prospective Payment System contains a 2.0 percent bump to Medicare payment rates in FY 2022. Overall, IPFs are slated to see a 2.1 percent, or $80 million, increase in Medicare payments next year relative to IPF payments in FY 2021.

The final rule also includes changes to the IPF Quality Reporting Program and updates to the teaching policy.

In FY 2022, the IPF Quality Reporting Program will include several new measures, according to the final rule. Those measures are:

• COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP)
• Follow-up After Psychiatric Hospitalization (FAPH) 
• Timely Transmission of Transition Record (Discharges from an Inpatient Facility to Home/Self Care or any Other Site of Care)
• Alcohol Use Brief Intervention Provided or Offered and Alcohol Use Brief Intervention (SUB-2/2a)/ Tobacco Use Treatment Provided or Offered and Tobacco Use Treatment (TOB-2/2a)

Additionally, CMS finalized the proposal to transition to patient-level reporting for chart-abstracted measures, starting with voluntary reporting of data for the FY 2023 payment determination. The new policy will also transition to required patient-level reporting after that year.

For the teaching policy, CMS decided to implement “conforming changes…with respect to displaced residents from IPF hospital closures and closures of IPF teaching programs.” The policy aligns the IPF teaching policy with the one in the Inpatient Prospective Payment System and will apply to FY 2022 and subsequent years.