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What to know about CMS’ 2022 rules

Key takeaways from five final and two proposed rules from CMS

CMS adopted five final Medicare Prospective Payment System rules for FFY 2022 and proposed two rules for calendar year 2022.

DataGen has interpreted and analyzed each of the final and proposed rules to help you gauge how these changes may impact your organization.
These rules include regular updates to the wage index and other significant items listed below.
  • The Inpatient PPS final rule includes the following proposals:
    • rebasing and revising the IPPS marketbasket and the Capital Input Price Index from FFY 2014 cost report data to FFY 2018 data;
    • rate increase (+0.5%) for the Medicare Access and CHIP Reauthorization Act of 2015 coding offset adjustment;
    • nonstandard adjustments to hospital wage indexes (for eligible hospitals) including bottom quartile adjustments, a 5% wage index “stop-loss” and the reintroduction of an imputed floor policy as mandated by the Consolidated Appropriations Act of 2021;
    • updates to Medicare Disproportionate Share Hospital payment policies, including hospitals being eligible for DSH payments in FFY 2022 based on audited FFY 2018 S-10 data;
    • repealing the policy requiring hospitals to report the median payer-specific negotiated rates for inpatient services by Medicare Severity Diagnosis Related Group for Medicare Advantage organizations on the Medicare cost report; and
    • modifying limitations on redesignation by the Medicare Geographic Classification Review Board.
  • The Long Term-Care Hospital PPS final rule includes: beginning in FFY 2021, the Bipartisan Budget Act of 2018 mandates an IPPS equivalent payment rate for all discharges for LTCHs with fewer than 50% of their cases eligible for LTCH standard payment.
  • The CY 2022 Outpatient PPS proposed rule includes:
    • halting the elimination of the Inpatient Only list and adding back in services removed in CY 2021;
    • creation of a universal low volume Ambulatory Payment Classification policy;
    • amending price transparency requirements; and
    • changes to the Radiation Oncology model.
  • The CY 2022 Home Health PPS proposed rule includes:
    • recalibration of the Patient-Driven Grouping Model case-mix weights, functional levels and comorbidity adjustment subgroups; and
    • expansion of the HH VBP program to all Medicare-certified HHAs, with CY 2022 being the first performance year and CY 2024 being the first payment adjustment year.
  • All payment settings include the use of a COVID-19 Vaccination Coverage among Healthcare Personnel measure in quality programs. Due to the pandemic, CMS is suppressing the Hospital Inpatient and SNF Value-Based Purchasing programs for 2022.
DataGen has published briefs on all of these rules and analyzed provider-specific estimated reimbursement impacts for each payment setting. Generally, providers use the proposed rule analyses for advocacy and education on what CMS is planning, whereas the final rule analyses are used for budgeting.

Table 1: FFY 2022 Medicare IPPS Final Rule Analysis





Estimated FFY 2021 IPPS payments




Estimated FFY 2022 IPPS payments




Total estimated change FFY 2021 to FFY 2022*







*The values shown in the table do not include the 2.0% sequestration reduction to all lines of Medicare payment authorized by Congress through FFY 2031. As part of the Medicare Sequester Relief Act, Congress eliminated the 2% sequester on Medicare payments from Oct. 1, 2021 through Dec. 31, 2021. The estimated reduction due to sequestration for FFY 2022 IPPS-specific payments will be: $1,913,437,300.

Table 1 shows the estimated change in Medicare payments for FFY 2022 under the IPPS. Compared to FFY 2021, both the dollar impact amounts for operating and capital are projected to increase. This analysis is particularly important for all providers to make educated budgeting decisions.

For more information, including our projections for all care settings, contact DataGen and follow us on LinkedIn.

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