Increased Medicare Reimbursements and Nursing Home Audits

The proposed increase is approximately 2.8 percent.

Hear ye, hear ye: there will be a Medicare reimbursement rate increase!

On April 27, the Centers for Medicare & Medicaid Services (CMS) proposed a rule to increase Medicare fee-for-service payment rates for inpatient hospitals and long-term care hospitals for the 2022 fiscal year (FY). The proposed rule will also update Medicare payment policies and rates for operating and capital‑related costs of acute-care hospitals, and for certain other hospitals.

The proposed increase in operating payment rates for general acute-care hospitals paid under the Inpatient Prospective Payment System (IPPS) that successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program and are meaningful electronic health record (EHR) users is approximately 2.8 percent. 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.

Secondly, a sample audit of nursing homes conducted by CMS will lead to more scrutiny of nursing homes and long-term care facilities. The sample audit showed that two-thirds of Massachusetts’s nursing homes that receive federal Medicaid and Medicare funding are lagging behind in required annual inspections – and the state is representative of the country.

A total of 237 nursing homes and long-term care facilities in the state, or 63.7 percent of the total, are behind on their federal health and safety inspections by at least 18 months. The national average is 51.3 percent.

We cannot blame COVID for everything. Those inspections lagged even before the pandemic, the data shows, but ground to a halt last year, when in-person visits to nursing homes were discontinued to help prevent spread of the virus.

Lastly, on April 29, CMS issued a final rule to extend and make changes to the Comprehensive Care for Joint Replacement (CJR) model. You’ve probably heard Dr. Ronald Hirsh reporting on this topic. The CJR model aims to pay providers based on total episodes of care for hip and knee replacements to curb costs and improve quality. Hospitals in the model that meet spending and quality thresholds can get an additional Medicare payment, but hospitals that don’t meet targets must repay Medicare for a portion of their spending.

This final rule revises the episode definition and payment methodology, and makes other modifications to adapt the CJR model to changes in practices and fee-for-service payments occurring over the past several years. The changes in practices and payments are expected to limit or reverse early evaluation results demonstrating the CJR model’s ability to achieve savings while sustaining quality. This rule provides the time needed to test modifications by extending the CJR model for an additional three performance years, through Dec. 31, 2024 for certain participant hospitals.

The CJR model has proven successful, according to CMS. It began in 2016. Hospitals had a “statistically significant decrease” in average payments for all hip and knee replacements relative to a control group, accounting for $61.6 million (a savings of 2 percent of the baseline).

Programming Note: Listen to Knicole Emanuel’s RAC Report on Monitor Mondays, Monday at 10 a.m. Eastern.