CMS’s new rule proposal increases payment rates, focuses on health equity and workforce

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule on Tuesday that looks to make adjustments to Medicare payment policies, improve data collection related to health equity and vaccination rates, and support the rural health care workforce.

The rule touches on a wide range of issues which are detailed below.


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Payment rates & transparency requirements:

The rule proposes increasing operating payment rates for acute care hospitals paid under the Hospital Inpatient Prospective Payment System (IPPS) by 2.8%.

“This reflects the projected hospital market basket update of 2.5 percent reduced by a 0.2 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by legislation.”

The rules stipulates that the 2.8% rate increase is for hospitals that participate in the Hospital Inpatient Quality Reporting Program and are “meaningful electronic health record users.”

CMS estimates the payment increase will boost hospital payments in FY 2022 by $3.4 billion. It also estimates that Medicare disproportionate share hospital payments and uncompensated care payments will decline in FY 2022, resulting in an overall hospital payment increase of $2.5 billion.

Another key proposal in the new rule would repeal the mandate put in place during the Trump administration that would require hospitals to disclose certain negotiated rates with private Medicare plans on their Medicare cost reports.

This move is being praised by the hospital industry. Following the release of the rule, Tom Nickels, executive vice president of the American Hospital Association, said:

“We are very pleased CMS is proposing to repeal the requirement that hospitals and health systems disclose privately negotiated contract terms with payers on the Medicare cost report. We have long said that privately negotiated rates take into account any number of unique circumstances between a private payer and a hospital and their disclosure will not further CMS’s goal of paying market rates that reflect the cost of delivering care.”



CMS’s proposed rule also looks to improve workforce shortages through funding medical residency positions in hospitals in underserved and rural communities. CMS proposes distributing 1,000 additional physician residency slots to qualifying hospitals, phasing them in at 200 new slots per year over the course of 5 years.

CMS says the additional funding for these new slots will total about $300 million each year once fully phased in.

HHS Secretary Xavier Becerra said in a statement that this rule will provide relief to hospitals hit particularly hard during the COVID-19 pandemic.

“This rule will give hospitals more relief and additional tools to care for COVID-19 patients and it will also bolster the health care workforce in rural and underserved communities.”


Data Collection:

The rule also includes requirements for new data collection, specifically calling on hospitals to report COVID-19 vaccination rates among health care workers at their facilities. CMS says this data will help determine if hospitals are taking steps to limit COVID spread among their workforce and will help assess the country’s long-term readiness and recovery efforts.

CMS is also proposing expanding data collection through the Promoting Interoperability program. The proposal would require hospitals to report on four measures including Syndromic Surveillance Reporting, Immunization Registry Reporting, Electronic Case Reporting, and Electronic Reportable Laboratory Result Reporting.

CMS says this type of data will help prepare public health agencies to respond to future health threats.

“Requiring these measures would enable nationwide syndromic surveillance for early warning of emerging outbreaks and threats; automated case and laboratory reporting for rapid public health response; and local and national visibility on immunization uptake so public health can tailor vaccine distribution strategies.”

In an effort to close equity gaps, the proposed rule states CMS will also solicit feedback “on opportunities to leverage diverse sets of data (race, Medicare/Medicaid dual eligible status, disability status, LGBTQ+, socioeconomic status, etc.) and new methodological approaches to advance equity through the quality measurement and value-based purchasing programs.”