CMS Releases 2022 Final Medicare Hospital Outpatient Rule

  • Regulations
  • 11/17/2021

Key insights

  • The final rule reverses changes to the IPO and ASC CPLs.
  • CMS finalizes significant increases in financial penalties for failure to comply with existing price transparency requirements.
  • The rule finalizes revisions to the mandatory RO Model and sets a start date of 2023.
  • CMS finalizes an OPPS market basket increase of 2.0%.

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On November 2, 2021, the Centers for Medicare & Medicaid Services (CMS) released the final 2022 Outpatient Prospective Payment System (OPPS) and ambulatory surgical center (ASC) payment system rule. This regulatory advisor will cover key changes, but not everything in the rule. To review in full, download the final rule (CMS-1753-FC) from the Federal Register.

I. OPPS payment updates

Market basket

CMS finalizes increasing the OPPS rates for 2022 by 2.07%. The increase is based on the hospital inpatient market basket percentage increase of 2.7% reduced by a productivity adjustment of 0.7 percentage points. Based on this update, CMS estimates total payments to OPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for calendar year (CY) 2022 would be approximately $82.078 billion, an increase of approximately $5.913 billion compared to estimated CY 2022 OPPS payments.

Conversion factor

CMS finalizes a conversion factor of $84.177 for 2022.

Budget neutrality factor

CMS finalizes an overall budget neutrality factor of 1.0000 to reflect wage index changes.

Outlier payments

CMS finalizes a multiplier threshold of 1.75 times the APC payment rate and a fixed-dollar amount threshold of $6,175.

Use of 2019 data

CMS indicates that, due to the pandemic, they have determined CY 2019 data is a better approximation for CY 2022 than CY 2020 data and used that to set CY 2022 OPPS and ASC payment rates.

Sole Community Hospitals (SCH)

CMS will continue its current policy of a 7.1% payment adjustment that is done in a budget neutral manner for rural SCHs for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the passthrough payment policy, and items paid at charges reduced to costs.

Device pass-through payments

CMS approved three applications for device pass-through payment.

340B payments

CMS continues its ongoing policy of paying for drugs acquired under the 340B program at ASP minus 22.5%.

Drug and biologicals pass-through payments

  • CMS ends pass-through payment status in CY 2022 for 26 drugs and biologicals
  • CMS finalizes it will continue pass-through payment status in CY 2022 for 46 drugs and biologicals
  • Due to the pandemic, CMS extends pass-through payment status for 27 drugs and biologicals and one device that would have expired

II. Policy updates

a. Inpatient Only (IPO) list

CMS put into place policies in the 2021 final OPPS rule related to the IPO list. However, CMS finalizes changes to the IPO list as well as the ASC covered procedures list, which is covered later, in this rule. The IPO changes are:

  • CMS halts the entire policy to eliminate the IPO list
  • CMS reinstates its criteria for removing procedures from the IPO list
  • CMS uses its reinstated criteria to review the 298 previously removed procedures and assess stakeholder feedback
  • CMS finalizes it is reinstating and placing all codes back onto the IPO list in 2022 except for CPT codes 22630 (Lumbar spine fusion), 23472 (Reconstruct shoulder joint), 27702 (Reconstruct ankle joint) and their corresponding anesthesia codes

b. Price transparency requirements

CMS discusses the existing requirements for all hospitals related to having a machine-readable list of standard charges and another list of 300 shoppable services. CMS discusses concerns with noncompliance with these requirements. CMS finalizes multiple changes to address this.

CMS finalizes without modifications increased penalties for noncompliance. CMS will use a scaling approach for Civil Monetary Penalties (CMP). See table 76 from the final rule.

Table 75 (recreated): Application of CMP Daily Amounts for Hospital
Noncompliance for CMPs Assessed in CY 2022 and Subsequent Years
Numbers of Beds Penalty Applied Per Day Total Penalty Amount for Full CY of Noncompliance
30 or fewer $300 per hospital $109,500 per hospital
31 up to 550 $310 – $5,500 per hospital (number of beds times $10) $113,150 – $2,007,500 per hospital
>550 $5,500 per hospital $2,007,500 per hospital

Your next steps on price transparency
CMS is clearly continuing the push for price transparency. Expect this focus to continue.

  1. Review the requirements in detail and assess whether your hospital meets these requirements.
  2. Understand these potential new financial penalties if noncompliant.
  3. Consider adding non-mandatory information to your website to help explain pricing but also quality and other valuable metrics.

CMS finalizes multiple requirements for how and where information is to be posted on hospital websites. For example, hospitals may not hide these documents but must allow them to be found via automated search and through direct file downloads without any barriers, such as requiring an email, registration, or agreeing to terms and conditions.

CMS also deems that state forensic hospitals have met these requirements.

CMS continues to review and monitor.

c. Radiation Oncology (RO) Model

CMS finalizes the RO model will start of January 1, 2022. It will run through December 31, 2026. The RO Model was finalized in 2020 but then statutorily delayed until January 1, 2022. CMS indicates that is sufficient time to prepare and is not delaying the model any longer. It is designed as an episode payment model.

CMS finalizes various policies and model modifications, a few of which are:

Next steps on RO Model
The RO Model is a mandatory model. To determine if you are mandated to participate, review the list of ZIP codes CMS randomly selected. Second, review the RO Model summary. Reach out if you have questions.

  • Model exclusions and opt-outs:
    • Adjusts the “low-volume opt-out” criteria to include any physician group practice, freestanding radiation therapy center, or hospital outpatient department that furnishes fewer than 20 episodes in all of the selected core based statistical areas in the calendar year that is two years prior to the start of the performance year (instead of most recent year with claims data available)
    • Modifies the exclusion for those in the Pennsylvania Rural Health Model (PARHM) so that only hospital outpatient departments (HOPD) participating in the PARHM are excluded, not those that have been identified as eligible to participate. The latter will not be excluded from the RO Model
    • Excludes HOPDs participating in the Community Health Access and Rural Transformation Model
  • Removes liver cancer as one of the eligible cancer types
  • Removes brachytherapy as an included modality
  • Establishes the discount factor of 3.5% for the professional component and 4.5% for the technical component
  • Creates three tracks for participants for clarity purposes:
    • Track One will be for RO participants who comply with all RO requirements, including CEHRT
    • Track Two will be for those RO participants who comply with all RO requirements except for CEHRT
    • Track Three will be for all other RO participants
  • Defines “extreme and uncontrollable circumstance” to be a circumstance that is beyond the control of one or more RO participants, adversely impacts such RO participants’ ability to deliver care in accordance with the RO Model’s requirements, and affects an entire region or locale

III. Hospital Outpatient Quality Reporting (OQR) updates

CMS finalizes various changes to the OQR program. These include:

  • Removing the OP-02: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival measure beginning with the CY 2025 payment determination
  • Removing the OP-03: Median Time to Transfer to Another Facility for Acute Coronary Intervention measure beginning with the CY 2025 payment determination
  • Adopting with several modifications the COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) measure beginning with the CY 2024 payment determination
  • Adopting without modification the Breast Screening Recall Rates measure beginning with the CY 2023 payment determination
  • Adopting without modification the ST-Segment Elevation Myocardial Infarction (STEMI) electronic clinical quality measure (eCQM) beginning with voluntary reporting for the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/CY 2026 payment determination
  • Making voluntary the reporting of the OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based measures beginning with the CY 2023 reporting period and mandatory beginning with the CY 2024 reporting period/CY 2026 payment determination
  • Making mandatory with modifications the reporting of the OP-31: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery measure beginning with the CY 2025 payment determination

IV. Ambulatory surgical centers (ASC) updates

Market basket payment update

CMS finalizes an ASC payment update for CY 2022 of 2.0%. This increase is based on a finalized hospital market basket percentage increase of 2.7% reduced by a productivity adjustment of 0.7 percentage points.

Conversion factor

For CY 2022, CMS finalizes adjusting the CY 2021 ASC conversion factor ($48.952) by a wage index budget neutrality factor of 0.9997 in addition to the productivity-adjusted hospital market basket update of 2.0%, which results in a final CY 2022 ASC conversion factor of $49.916 for ASCs meeting the quality reporting requirements.

Covered Procedures List (CPL)

Consistent with its finalized policies on the IPO list, CMS finalizes it will reverse its approach to adding procedures to the CPL. Instead, it will re-adopt the ASC CPL criteria that were in effect in CY 2020. In the proposal rule, CMS had proposed to remove 258 of the 267 procedures that were added to the ASC CPL in CY 2021. However, CMS finalizes that it will remove 255, leaving three codes that were proposed for removal on the CPL list. The retained are CPT codes 0499T, 54650, and 60512.

V. ASC Quality Reporting (ASCQR) program updates

CMS finalizes the following in forthcoming years:

  • Adopt the COVID-19 Vaccination Coverage Among HCP measure beginning with the CY 2024 payment determination with one modification
  • Resume data collection for four measures beginning with the CY 2025 payment determination: (a) ASC-1: Patient Burn; (b) ASC-2: Patient Fall; (c) ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant; and (d) ASC-4: All-Cause Hospital Transfer/Admission
  • Require the ASC-11: Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery measure beginning with the CY 2025 reporting period/CY 2027 payment determination Require the ASC-15a-e: OAS CAHPS survey-based measures with voluntary reporting beginning with the CY 2025 reporting period/ CY 2027 payment determination

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