Final rules on hospice, inpatient psychiatric and rehab increase payment above proposals

Final rules on hospice, inpatient psychiatric and rehab increase payment above proposals

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The Centers for Medicare and Medicaid Services has finalized three rules for hospice care, inpatient psychiatric facilities and inpatient rehabilitation facilities.



The 2023 hospice payment update is 3.8%, which is expected to result in an increase of $825 million in payments from 2022.

The 3.8% is based on a 4.1% market basket percentage increase, reduced by 0.3 percent productivity adjustment. Hospices that fail to meet quality reporting requirements will receive a 2% point reduction to their annual payment.

The Fiscal Year (FY) 2023 Hospice Payment Rate Update final rule and a summary of key supplies effective October 1, 2022, includes a permanent 5% cap on negative wage index changes.

It also outlines Hospice Quality Reporting Program updates, including the new Hospice Outcomes and Patient Evaluation Tool, the Consumer Assessment of Healthcare Providers and Systems hospice survey, quality measures for FY 2023, and a summary of public comments from the request for information to inform future efforts related to HQRP health equity.

CMS’s proposed ruleissued in March, updated hospice payments by 2.7%, and compares to a 2.3% increase for 2022.

Inpatient Psychiatric Facilities

Inpatient psychiatric facilities payments are expected to increase by 2.5%, or $90 million in 2023 compared to 2022, according to the Fiscal Year 2023 Inpatient Psychiatric Facilities (IPF) Prospective Payment System final rule.


This is a 3.8% increase, based on a 4.1% market basket update less a 0.3% productivity adjustment. Additionally, CMS is updating the outlier threshold so that outlier payments remain at 2% of total payments. This will result in a 1.2% decrease in aggregate payments to the outlier threshold, so that the 3.8% increase and the 1.2% decrease result in a 2.5% overall increase.

CMS has applied a permanent 5% cap on wage index decreases.

CMS’s proposed rule, issued in March, updated the payment rate by 2.7%, with facility payments expected to increase by 1.5%. The 1.5% payment rate increase was based on a comparison to the 2022 rate.

Inpatient Rehabilitation Facilities

The Fiscal Year 2023 Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) final rule updates inpatient rehab facility payments by 3.9%, with estimated overall payments to increase by 3.2% after productivity and outlier adjustments.

Total payments are projected to increase by $275 million.

Again, CMS has applied a permanent 5% cap on annual wage index decreases.

It expanded quality data reporting on all IRF patients, regardless of paying. This means inpatient rehab facilities will be required to collect data on all patients.

In March, CMS proposed a 2.8% increase, based on a market basket update of 3.2% less a 0.4% productivity adjustment.


All three payment updates in the final rule are larger than what CMS proposed this spring.

Hospital providers are awaiting the final rule on inpatient payment, which has been proposed at a 3.2% increase for 2023.

The American Hospital Association has said this is not enough to account for inflation, supply chain and workforce challenges and the continued cost of the COVID-19 pandemic.

This week, 112 House members and 30 senators agreed, sending letter to CMS to increase the Inpatient Prospective Payment System final rule to more accurately reflect the cost of providing hospital care to patients.

Twitter: @SusanJMorse
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