News: FY 2023 IPPS final rule and official guidelines released, 4.3% bump for payments

On August 1, CMS issued its fiscal year (FY) 2023 Inpatient Prospective Payment System (IPPS) final rule, applying to discharges occurring on or after October 1, 2022. In the accompanying announcement, CMS said that the FY 2023 IPPS “updates Medicare payments and policies for hospitals, drives high-quality, person-centered care, and promotes fiscal stewardship of the Medicare program.” They added that the rule also finalizes new measures encouraging hospitals to build health equity.

“The increase in operating payment rates for general acute care hospitals paid under the IPPS, that successfully participate in the Hospital IQR Program and are meaningful electronic health record (EHR) users, is 4.3%,” CMS said in the rule’s fact sheet. This update is a 1.1% increase compared to the 3.2% originally proposed in April, reflecting the most recent data available of the FY 2023 hospital market basket update and a revised outlook of the United States economy. According to the announcement, hospitals may be subject to other payment adjustments under the IPPS, including:

• Payment reductions for excess readmissions under the Hospital Readmissions Reduction Program (HRRP)
• Payment reduction (1%) for the worst-performing quartile under the Hospital-Acquired Condition (HAC) Reduction Program
• Upward and downward adjustments under the Hospital Value-Based Purchasing (VBP) Program

Among other changes, CMS has added three health equity-focused measures, including to assess a hospital’s commitment to it and to examine social needs, Becker’s Hospital Review said in their coverage of the story. The final rule also will establish a “Birthing-Friendly” hospital designation with the priority of reducing maternal morbidity and mortality.

In line with the proposed rule, CMS did not add any MS-DRGs for FY 2023, maintaining the total number at 767 for the coming year. Additionally, despite soliciting comments, no changes were made to the social determinants of health code designations, though CMS stated in the fact sheet that they received many comments saying that codes describing homelessness should be given CC status. CMS said that they would take these comments under consideration.

In addition to the final rule, the Official Guidelines for Coding and Reporting for FY 2023 have also been issued. Notably, the update includes a new line under the (somewhat infamous) “guideline 19” under Section I.A.19 that directs that “if there is conflicting medical record documentation, query the provider.”

Editor’s note: To read the full FY 2023 IPPS final rule, click here. To read the FY 2023 Official Guidelines for Coding and Reporting, click here. To read Becker’s Hospital Review’s coverage of this release, click here. To read the 2023 IPPS final rule fact sheet, click here.