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2022 Enacted Medicare Cuts Analysis

DataGen’s 2022 Enacted Medicare Cuts Analysis shows how hospitals have been impacted by existing Medicare fee-for-service provider payment cuts enacted by Congress to achieve Medicare payment policy and/or long-term deficit reduction goals. This analysis is provided to DataGen clients for advocacy purposes only.

The impacts shown in this analysis include the major legislative, regulatory and quality cuts enacted since 2010 and are described below. 

Enacted legislative cuts analyzed:

  • Medicare marketbasket, Medicare Disproportionate Share Hospital and quality adjustments authorized by the Affordable Care Act of 2010; note that for this analysis, quality adjustments are broken out into their own category; 
  • the effect of the 2.0% across-the-board sequestration reduction to payments authorized by the Budget Control Act of 2011, and the 4.0% sequestration reduction resulting from the calendar year 2021 triggering of the Statutory Pay-As-You-Go Act of 2010 (PAYGO); 
  • inpatient coding adjustment reductions authorized by the American Taxpayer Relief Act  of 2012; 
  • the reduction in bad debt payments authorized by the Middle Class Tax Relief and Job Creation Act of 2012;
  • payment adjustments for services paid for under the clinical laboratory fee schedule authorized by the Protecting Access to Medicare Act of 2014;
  • reduction of Outpatient Prospective Payment System payments to non-excepted, off-campus sites to a level equivalent to that paid under the Medicare Physician Fee Schedule, required by the Bipartisan Budget Act of 2015;
  • marketbasket adjustments authorized by the Medicare Access and CHIP Reauthorization Act of 2015;
  • change in Home Health PPS payments resulting from the implementation of the Patient-Driven Grouping Model; and
  • payment reductions authorized by the Bipartisan Budget Act of 2018, including adding hospice to the Inpatient PPS short-stay, post-acute care transfer policy.

Enacted regulatory cuts analyzed:

  • regulatory coding adjustments implemented by CMS;
  • 2.0% reduction to the CY 2016 outpatient marketbasket update for rate inflation due to packaging of laboratory payments;
  • long-term care hospital site-neutral payment adjustment implemented in the federal fiscal year 2016 final rule;
  • payment impacts resulting from CMS’ reduction in OPPS payments for 340B Program-purchased drugs;
  • reduction in payments for Wholesale Acquisition Cost-based drugs from WAC+6% to WAC+3%;
  • change in SNF PPS payment methodology from the RUG-IV system to the Patient-Driven Payment Model; and
  • reduction of OPPS payments for clinic services provided at excepted off-campus sites to a level equivalent to that paid under the Medicare Physician Fee Schedule.

The quality-based payment reform impacts analyzed reflect the IPPS payment adjustments related to three mandatory quality-based payment reform initiatives: the Value-Based Purchasing, Readmissions Reduction and Hospital-Acquired Conditions Reduction programs.

These cuts could have a major impact on hospital finances and operations in the coming years. To learn more about this impact and about how to thrive in alternative payment models, contact us today.


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