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The Centers for Medicare & Medicaid Services (CMS) proposed Medicare payment rates for hospital outpatient and ambulatory surgical center (ASC) services. Review a breakdown of the major provisions.

Navigating health reform

CMS Releases 2022 Proposed Medicare Hospital Outpatient Rule

  • Jennifer Boese
  • 9/2/2021

Key insights

  • The proposed rule reverses changes to the IPO and ASC CPLs.
  • CMS proposes significant increases in financial penalties for failure to comply with existing price transparency requirements.
  • The rule includes revisions to the mandatory RO Model and sets a start date of 2023.
  • CMS proposes an OPPS market basket increase of 2.3%.

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On July 19, 2021, the Centers for Medicare & Medicaid Services (CMS) released the proposed 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 proposed rule (CMS-1753-P) from the Federal Register.

I. OPPS payment updates

Market basket

CMS proposes to increase the OPPS rates for 2022 by 2.3%. The increase is based on the proposed hospital inpatient market basket percentage increase of 2.5% reduced by a proposed productivity adjustment of 0.2 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 $82.704 billion, an increase of approximately $10.757 billion compared to estimated CY 2021 OPPS payments.

Conversion factor

For the OPPS conversion factor for 2022, CMS proposes to increase the CY 2021 conversion factor of $82.797 by 2.3%. This results in a conversion factor of $84.457.

Budget neutrality factor

CMS proposes an overall budget neutrality factor of 1.0012 to reflect wage index changes.

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 will use that to set CY 2022 OPPS and ASC payment rates.

Device pass-through payments

CMS received eight applications for device pass-through payment. One application was through the fast-track alternative pathway. CMS solicits comments on the applications.

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 proposes to end pass-through payment status in CY 2022 for 26 drugs and biologicals
  • CMS proposes to continue pass-through payment status in CY 2022 for 46 drugs and biologicals
  • Due to the pandemic, CMS proposes to extend 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 finalized policies in the 2021 final OPPS rule related to the IPO list. CMS makes numerous changes to the IPO list as well as the ASC covered procedures list, which is covered later. The IPO changes are:

  • CMS reverses 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
  • CMS then reinstates all 298 and places them back onto the IPO list in 2022

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 proposes multiple changes to address this.

CMS proposes increased penalties for noncompliance. Current policy is set at $300/day of noncompliance. Instead, CMS will use a scaling approach for Civil Monetary Penalties (CMP). See table 63 from the proposed rule.

Table 63 (recreated): Proposed 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 proposed 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 proposes 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 continues to review and consider additional changes.

c. Radiation Oncology (RO) Model

CMS proposes to start the RO Model on January 1, 2022. It would run through December 31, 2026. The RO Model was finalized in 2020 but then statutorily delayed until January 1, 2022 at the earliest. It is designed as an episode payment model.

CMS proposes a variety of 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
  • Reduces the discount factor from 3.75% to 3.5% for the professional component and 4.75% to 4.5% for the technical component

III. Hospital Outpatient Quality Reporting (OQR) updates

CMS proposes 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 the COVID-19 Vaccination Coverage Among Health Care Personnel (HCP) measure beginning with the CY 2024 payment determination
  • Adopting the Breast Screening Recall Rates measure beginning with the CY 2023 payment determination
  • Adopting 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 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
  • Proposing various data submission and certification requirements for certain measures

CMS also seeks comment on potential future issues, including:

  • Development and inclusion of a patient-reported outcomes measure following elective total hip and/or total knee arthroplasty (THA/TKA)
  • Expand current disparities methods to include reporting by race and ethnicity
  • Consider potential actions and priority areas that would enable the continued movement towards digital capture of data and use of the FHIR standard

IV. CMS seeks comments on rural emergency hospital (REH) designation

CMS asks for stakeholders’ feedback on the new statutory REH designation enacted by Congress in the Consolidated Appropriations Act, 2021. An REH is designed to address rural hospital closures and would allow certain critical access hospitals or small rural PPS hospitals to convert to an REH. An REH would have no inpatient hospital beds but would be required to always provide emergency department services, observation care, and could also provide other outpatient services as desired. CMS seeks comments on all aspects of the new REH designation, including the application of health and safety standards, payment policies, enrollment/application process, and quality and reporting requirements as it develops its policies around this new provider type.

V. Ambulatory surgical centers (ASC) updates

Market basket payment update

CMS proposes an ASC payment update for CY 2022 of 2.3%. This proposed increase is based on a hospital market basket percentage increase of 2.5% reduced by a proposed productivity adjustment of 0.2 percentage points. Based on this proposed update, CMS estimates that total payments to ASCs (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2022 would be approximately $5.16 billion, a decrease of approximately $20 million compared to estimated CY 2021 Medicare payments.

Low-volume APCs

CMS proposes a low-volume APC policy for CY 2022 and subsequent calendar years applicable to a clinical APC, brachytherapy APC, or new technology APC with fewer than 100 claims per year. These would be designated as a low-volume APC. As such, CMS proposes to use up to four years of claims data to establish a payment rate for each item or service as currently done for low-volume services assigned to new technology APCs. The payment rate for a low-volume APC would be based on the highest of the median cost, arithmetic mean cost, or geometric mean cost calculated using multiple years of claims data.

Conversion factor

CMS proposes to adjust the CY 2021 ASC conversion factor ($48.952) by the proposed wage index budget neutrality factor of 0.9993 in addition to the productivity-adjusted hospital market basket update of 2.3%, which results in a proposed CY 2022 ASC conversion factor of $50.043.

Covered Procedures List (CPL)

Consistent with its proposals on the IPO list, CMS proposes to re-adopt the ASC CPL criteria that were in effect in CY 2020 and to remove 258 of the 267 procedures that were added to the ASC CPL in CY 2021.

VI. ASC Quality Reporting (ASCQR) program updates

CMS proposes the following in forthcoming years:

  • Adopt the COVID-19 Vaccination Coverage Among HCP measure beginning with the CY 2024 payment determination
  • 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 payment determination
  • Require the ASC-15a-e: OAS CAHPS survey-based measures with voluntary reporting beginning with the CY 2023 reporting period and mandatory reporting beginning with the CY 2024 reporting period/CY 2026 payment determination

In addition, CMS seeks comments on future measures, including the potential developing and inclusion of a patient-reported outcomes measure following elective total hip and total knee arthroplasty, addressing social risk factors that influence health disparities, and a measure to assess pain management for surgical procedures performed in ASCs.

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