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AHA pressed CMS to rethink proposed inpatient payment rates

  • A new CMS proposed inpatient payment rates for the fiscal year 2023 would result in a net decrease in hospital payments compared to this year.  
  • This proposed rule would increase inpatient PPS payment rates by 3.2% in FY 2023.  
  • AHA stated that CMS financial projections are not aligned with the current situation hospitals and health systems are facing. 

The American Hospital Association (AHA) is opposed to a CMS hospital inpatient prospective payment system. This proposed rule for the fiscal year 2023 would result in a net decrease in hospital payments compared to this year.  

This tentative rule proposes a 3.2% rate increase for inpatient PPS (Prospective Payment System) payments in FY (Fiscal Year) 2023.  

These proposed changes would put even more pressure on the healthcare system. Hospitals and health systems have been nimble in responding to surges in COVID-19 cases throughout the pandemic. According to AHA, there has been a massive growth in expenses and rising inflation; leading to even more challenges for America´s hospitals and health systems. 

Therefore, Rick Pollack, AHA President & CEO, stated that the entity has been making a case to CMS urging it to adjust the market-basket update to account for the inflationary environment the industry is experiencing and eliminate the productivity cut.  

“CMS made financial projections based on historical data that do not align with what has transpired during the past few years. The economic “steady-state” assumptions of past trends have been upended by the reality of the pandemic, historic inflation levels and many other factors,” Pollack explained. 

In addition, other hospital groups such as the Federation of American Hospitals (FAH) has pushed back against the rate update stating that this proposed rule won´t provide enough support for hospitals and health systems considering hyperinflation, staffing shortages, and the pandemic.  

Some of the key highlights of this CMS´ proposed policies are: 
  • Increase inpatient PPS payment rates by 3.2% in FY 2023. 
  • Cut DSH (Disproportionate Share Hospital) payments by about $800 million, due partially to a decrease in the uninsured population.  
  • Decrease outlier payments by 1.8% points.  
  • End the Medicare-dependent hospital and low-volume adjustment programs, which expire on September 30, 2022, under the law. 
  • Add 10 new measures to the inpatient quality reporting (IQR) program.  

Read more about this CMS proposed rule on FY 2023 IPPS Proposed Rule Home Page.

Stay tuned for this and more industry news through our July 2022 newsletter. Subscribe to our monthly newsletter and our Health Prime Blog for ongoing leading industry medical practice articles and policy updates. 


FY 2023 IPPS Proposed Rule Home Page | CMS 

AHA Summary of Hospital Inpatient PPS Proposed Rule for Fiscal Year 2023 | AHA 

Hospital Associations ´Extremely Concerned´ About CMS´Proposed Payment Rate Update | HealthLeaders Media

AHA Asks Congress to Urge CMS to Fix Inadequate Inpatient Payment Proposal | AHA 



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