IPPS 2023 Final Rule
On August 10, 2022 the Centers for Medicare & Medicaid Services (“CMS”) published its annual final rule for the federal fiscal year (“FY”) 2023 inpatient prospective payment system (“IPPS”) and long-term care hospital (“LTCH”) payment system. Academic Medical Centers across the nation should take note as this final rule implemented changes that have a significant impact on hospitals’ graduate medical education payments.
Direct Graduate Medical Education Payments
In response to the U.S District Court’s decision in GME Solutions’ assisted appeal, Milton S. Hershey Medical Center v. Becerra, No. 19-cv-2680, CMS finalized its proposal (http://gmesolutions.com/ipps-2023-proposed-rule/) to replace the existing policy at 42 CFR 413.79(c)(2)(iii) with a new payment formula. Hospitals operating over the FTE cap will be reimbursed for the lower of the FTE cap or the current year weighted FTEs. If the current year weighted FTEs exceed the FTE cap CMS will apply a formula to allocate the weighted FTEs between primary care and other to equal the FTE cap. The new rules will permit the hospitals to calculate the prior and penultimate year FTEs utilizing the same methodology. In addition, the new methodology will apply to the additional cap slots that hospitals were awarded under Section 422 of the Medicare Modernization Act.
The new rule applies to cost reporting periods beginning on or after October 1, 2001. Though the rule is retroactive, CMS will not reopen cost reports to apply the revised methodology. Given this, it is imperative for hospitals to appeal this issue if the new methodology is not used when the hospital’s cost report receives its Notice of Program Reimbursement (NPR).
Medicare GME Affiliation Agreements with Certain Rural Track FTE Limitations
CMS also finalized its proposed rule to allow urban and rural teaching hospitals participating in the same separately accredited rural training program to enter into “Rural Track Medicare GME Affiliation Agreement.” The urban and rural hospitals must participate in the same separately accredited 1-2 family medicine rural track program” to be eligible to enter an affiliation agreement.
Only rural and urban hospitals that have rural track FTE limitations in effect prior to October 1, 2022, will be permitted to enter into affiliation agreements, and the affiliation agreements would be effective with the July 1, 2023 academic year.
Medicare Advantage GME Payments
Lastly, instead of announcing updates to the Medicare Advantage Nursing and Allied Health (“NAH”) payment rates and GME reduction factors in transmittals, CMS will be announcing in the annual IPPS rule, as they did in this, 2023, final rule. CMS has finalized its proposal to reduce Medicare Advantage GME payments to hospitals by 3.71% for calendar year 2020 and 3.22% for calendar year 2021. The reduction in the Medicare Advantage GME payments funds the NAH Medicare Advantage payment pool, which is capped at $60 million.
Find full text of FY 2023 Final Rule: https://www.govinfo.gov/content/pkg/FR-2022-08-10/pdf/2022-16472.pdf
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