Medicare Moves to Hike Payments, Penalties for Hospitals in 2022


July 19, 2021 11:20 am

Medicare wants to pay acute care hospitals 2.3%—or nearly $10.8 billion—more for outpatient services next year, the Biden administration announced Monday.

The proposed rule (RIN 0938-AU43) from the Centers for Medicare & Medicaid Services would also increase the penalty for hospitals that don’t comply with the hospital price transparency final rule.

The agency is proposing a minimum penalty of $300 a day for smaller hospitals with an inpatient count of 30 or fewer. And a “penalty of $10/bed/day for hospitals with a bed count greater than 30, not to exceed a maximum daily dollar amount of $5,500,” the proposal said. Penalties could reach a maximum of $109,500 per hospital for a full year of noncompliance, the rule said.

“As President Biden made clear in his executive order promoting competition, a key to price fairness is price transparency,” Health and Human Services Secretary Xavier Becerra said in a statement. 

“With today’s proposed rule, we are simply showing hospitals through stiffer penalties: concealing the costs of services and procedures will not be tolerated by this Administration,” Becerra said.

Hospital reporting data shows wide variation in prices “even within the same hospital or the same system, depending on what each insurance plan has negotiated with that hospital,” the rule explained.

“CMS takes seriously concerns it has heard from consumers that hospitals are not making clear, accessible pricing information available online, as they have been required to do since January 1, 2021,” the agency said in a statement.

Medicare hospital payments would reach roughly $82.7 billion in 2022 under the proposed rule.

In its March report to Congress, the Medicare Payment Advisory Commission had recommended a 2% payment update for hospitals in 2022, noting it “would be enough to maintain beneficiaries’ access to care and keep payment rates close to the cost of delivering high-quality care efficiently.”

In 2019, fee-for-service Medicare paid acute care hospitals $186 billion for 8.7 million inpatient stays on behalf of 5.5 million beneficiaries and 97.1 million outpatient visits for 20.6 million beneficiaries.

Ambulatory Surgical Centers

The proposed rule would also increase Medicare payments for ambulatory surgical centers by 2.3% next year.

The commission has urged the HHS secretary to stop all payment updates for surgical centers until the facilities start providing more details to the CMS about their actual costs.

The proposed rule calls for public comment on “methods that would mitigate the burden of reporting costs on ambulatory surgical centers while also collecting enough data to reliably use such data in the determination of ASC costs.”