August 10, 2021

CMS Releases CY 2022 OPPS and ASC Proposed Rule

Holland & Knight Alert
Suzanne Michelle Joy

Highlights

  • The Centers for Medicare & Medicaid Services (CMS) released its calendar year (CY) 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule. CMS proposes a positive 2.3 percent payment update for hospitals that satisfy quality reporting requirements and would generally use pre-2020 data for rate-setting because of the pandemic.
  • Also, CMS proposes to reverse previous policies to move hundreds of inpatient services to the outpatient setting. It will add back 298 services to the OPPS inpatient only list and remove 258 services that were added to the ASC covered procedures list.
  • CMS proposes to substantially increase price transparency maximum penalties for hospitals with larger bed counts, up to $5,500 daily and more than $2 million per year.

The Centers for Medicare & Medicaid Services (CMS) on July 19, 2021, released its calendar year (CY) 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule.

CMS proposes a positive 2.3 percent payment update for hospitals that satisfy quality reporting requirements and would use 2019 data for rate-setting because of the pandemic. Also, CMS proposes to reverse previous policies to move hundreds of inpatient services to the outpatient setting. It will add back 298 services to the OPPS inpatient only list and remove 258 services that were added to the ASC covered procedures list.

Other key highlights proposed by CMS include numerous changes to outpatient quality reporting programs, several changes and clarifications to the Radiation Oncology Model, including lower discount factors (pending finalization of other policies in this rule), and soliciting feedback in numerous areas, including how to effectively transition to digital quality measurement, implementation of rural emergency hospitals (a new provider type in 2023) and whether temporary COVID-19 flexibilities should be made permanent.

Comments are due Sept. 17, 2021. A final rule is expected in early November.

For more information, access the following CMS resources:

This Holland & Knight alert summarizes a number of key provisions in the rule. Unless otherwise noted, provisions would generally go into effect on Jan. 1, 2022. This analysis focuses on policies that changed from CY 2021. Unless otherwise noted, policies in place in CY 2021 would generally remain in effect in CY 2022. The policies in this rule are proposed and subject to change in the final rule.

OPPS Payment Rates and Updates

For 2022, CMS proposes a positive increase of 2.3 percent based on the proposed hospital inpatient market basket percentage increase of 2.5 percent for inpatient services reduced by a proposed productivity adjustment of 0.2 percentage point. This assumes that the hospital meets quality reporting requirements. Due to the COVID-19 Public Health Emergency (PHE), CMS proposes to use CY 2019 data for CY 2022 rate-setting.

CMS proposes to continue additional payments to cancer hospitals to bring their payment-to-cost ratio (PCR) in line with the weighted average PCR for other OPPS hospitals, which it proposes to maintain at 0.89 for CY 2022.

Additional information on proposed CY OPPS 2022 payment rates, including code changes, accompanying ambulatory payment classifications, status indicator assignments and payment values, can be found in the separate addendums to the rule.

ASC Payment Rates and Updates

CMS proposes a matching positive payment increase of 2.3 percent for ASCs in CY 2022, assuming that they meet quality reporting requirements. Proposed new and revised codes from the CY 2021 ASC quarterly updates are listed in Tables 39-41, which CMS seeks comment on. Implementation timeframes can be found in Table 42. Additional coding and payment information can be found in the ASC addendums to the rule.

Inpatient Only (IPO) List

CMS proposes to halt elimination of the IPO list and proposes to add back the 298 services previously removed from the IPO list (summarized in Table 35), explaining that more time is required to evaluate the implications for each service, particularly on patient safety. The agency seeks stakeholder input on which services would be appropriate to remove in the future, along with supporting evidence. The agency proposes to codify the five longstanding criteria for removal and seeks comment on whether it should seek to eventually eliminate the list completely or scale it back but retain some IPO services based on standards of practice. It also seeks comment on a reasonable time frame for removing services in the future. CMS proposes to rescind the indefinite exemption to the two-midnights rule and reinstate the current two-year exemption for services removed from the IPO list.

ASC Covered Procedures List (CPL)

CMS proposes to readopt the ASC CPL criteria that were formerly in effect in CY 2020 and to remove 258 of the 267 procedures that were added in CY 2021 to allow for more evaluation, particularly on patient safety. The services proposed for removal are listed in Table 45. The agency requests comments on whether any of those procedures meet the reinstated criteria. CMS proposes to establish a new stakeholder nomination process to add new covered procedures to the list, which would start in CY 2023. Nominations would be due by March 1 of the year prior to the rulemaking cycle (with implementation presumably the following year).

Price Transparency Requirements: Public List of Standard Charges

CMS proposes to significantly increase potential maximum penalties for hospitals with larger bed counts (based on the most recent cost report). Penalties would be assessed according to a sliding scale summarized in Table 63 with annual penalties maxing out at more than $2 million. If the number of beds cannot be determined from cost report data, CMS would rely on documentation provided by the hospital. If a hospital does not supply the needed documentation, it would automatically receive the maximum penalty. The agency seeks comment on this scaled approach and any alternative approaches, such as applying a universal higher, flat penalty, as well as any additional considerations it should take into account, such as revenue.

CMS proposes to specify that hospitals must ensure standard charge information is easily accessible and without barriers. This includes (but is not limited to) ensuring that the information is accessible to automated searches and direct file downloads through a link posted on a publicly available website. The agency seeks comment on additional barriers that it should specifically prohibit, whether it should more prescriptively define what constitutes a "prominent manner" for posting purposes, whether it should standardize elements of the machine-readable file, such as certain data elements or file formats, to allow for more consistent comparisons across hospitals and whether it should post all of the files to one central online location.

When a hospital chooses to offer an online price estimator tool as an alternative to presenting their standard charge information, CMS clarifies that the price estimator tool should provide a single dollar amount that is tailored to the individual and reflects the amount that the hospital anticipates will be paid, absent unusual or unforeseeable circumstances. CMS seeks input on potential additional requirements, including clarifying the definition of "plain language."

CMS proposes to exclude from these requirements state forensic hospitals, which are public psychiatric hospitals that provide treatment for individuals in the custody of penal authorities.

Imputed Floor Wage Index

CMS proposes to implement provisions of the American Rescue Plan Act, which reinstates the imputed floor wage index increases for hospitals in all-urban states effective in FY 2022. These states include New Jersey, Rhode Island, Delaware, Connecticut and Washington, D.C.

Universal Low Volume Policy

CMS proposes to adopt a universal low volume ambulatory payment classification (APC) policy that would apply to clinical, brachytherapy and new technology APCs with fewer than 100 eligible claims in which it would use the highest of the geometric mean, arithmetic mean or median based on up to four years of claims data. Table 36 contains additional information.

340B-Acquired Drugs and Biologicals

CMS proposes no significant policy changes to 340B Program requirements.

Pass-Through Drugs, Biologicals and Radiopharmaceuticals

CMS seeks comment on the eight applications for device pass-through payments it received for CY 2022 and will make final determinations in the final rule. As a result of its proposal to use CY 2019 data, CMS proposes to provide up to a year of separate payment at average sales price (ASP) plus 6 percent for 46 devices, drugs and biologicals whose pass-through payment status is set to expire in FY 2022, listed in Table 38. For certain policy-packaged drugs (Table 30), CMS proposes to deduct from the pass-through payment the portion of the otherwise applicable fee schedule amount.

Non-Pass-Through Drugs, Biologicals and Radiopharmaceuticals

CMS proposes a packaging threshold for CY 2022 of $130. Items with a per day cost greater than $130 would qualify as separately payable unless they are policy-packaged. Table 31 summarizes the Healthcare Common Procedure Coding System (HCPCS) codes to which the CY 2022 drug-specific packaging determination methodology would apply. For CY 2022, CMS proposes to continue a 3 percent add-on (instead of a 6 percent add-on) for drugs that are paid based on wholesale acquisition cost.

Non-Opioid Pain Management Drugs and Biologicals

CMS proposes to allow non-opioid pain management drugs and biologicals as eligible for separate payment under the ASC payment system. CMS proposes that they must have U.S. Food and Drug Administration (FDA) approval, an FDA-approved indication for pain management or analgesia and a per-day cost in excess of the OPPS drug packaging threshold of $130 for CY 2022. According to the CMS, both existing products (Exparel and Omidria) would meet this new criteria. The CMS seeks suggestions for additional criteria, additional products that should be separately reimbursed and on whether nondrug products should be separately evaluated as its own distinct category. CMS seeks comment on whether it should extend this policy to separately pay for non-opioid pain management drugs to the hospital outpatient department (HOPD) setting (rather than bundling them into the cost of the procedure) and alternative payment approaches such as a flat, add-on payment.

Device-Intensive Procedures

CMS would use CY 2020 claims data to determine device offset percentages for 11 qualifying device-intensive procedures with no CY 2019 claims data. The full list of proposed CY 2022 device-intensive procedures can be found in Addendum P. In an attempt to align rate-setting for device-intensive status under the OPPS and ASC payment systems, CMS proposes that if a procedure is assigned device-intensive status under the OPPS, but does not meet the device-intensive threshold under the ASC methodology, the procedure will be assigned device-intensive status under the ASC payment system with a default device offset percentage of 31 percent. CMS also clarifies that its existing policy for partial credits would apply in 2022 and beyond.

Beneficiary Coinsurance for Colorectal Cancer Screening Tests

CMS proposes to codify the change stipulated by the Consolidated Appropriations Act (CAA) that any additional surgical procedures furnished on the same date as a planned screening colonoscopy or planned flexible sigmoidoscopy would also have reduced patient copays.

Office-Based Covered Surgical Procedures

Because of the PHE, CMS proposes to temporarily designate certain services as office-based for CY 2022, including nine existing services listed in Table 43 and two new services listed in Table 44.

Mental Health Services Composite Ambulatory Payment Classification (APC)

CMS proposes that when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service exceeds the maximum per diem payment rate for partial hospitalization services, those services would be paid through composite APC 8010, which CMS proposes to set at payment for APC 5863, the maximum partial hospitalization per diem payment rate.

Quality Reporting Programs (QRPs)

CMS seeks comment on several areas across the programs, including: 1) a future patient-reported outcomes measure following elective total hip and/or total knee arthroplasty in both the outpatient and ASC settings; 2) suggestions for future measures that would assess patient safety in outpatient settings as more services are transitioned out of inpatient settings, and 3) how to address health equity, including potentially collecting and disaggregating data by race, ethnicity and other patient demographic or social risk factors.

Hospital Outpatient Quality Reporting Program. Hospitals that fail to report required data will continue to incur a 2 percent reduction. Hospitals would be required to use certified technology updated consistent with the 2015 Edition Cures Update starting with CY 2023.

CMS proposes changes to the measures set as summarized in the table below.

 

Proposed Change

Measure

Effective Reporting Year (Affects $$ Two Years Later)

Removal

Fibrinolytic Therapy Received within 30 Minutes of ED Arrival

2022

Addition

Median Time to Transfer to Another Facility for Acute Coronary Intervention

2023

Addition

COVID-19 Vaccination Coverage Among Health Care Personnel

2022

Addition

Breast Screening Recall Rates

2021

Addition

ST-Segment Elevation Myocardial Infarction (STEMI) eCQM

Voluntary reporting in 2023; mandatory reporting in 2024 starting with one quarter of data

Mandatory Reporting (Previously Optional)

Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery Measure

2023

Mandatory Reporting (Previously Optional)

Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures

2024

The complete Hospital Outpatient QRP measures sets for CY 2022 onward are summarized in Tables 46-49. Quarterly data submission deadlines for CY 2022 can be found in Table 50. CMS proposes to align submission deadlines for Electronic Clinical Quality Measures (eCQM) data with the Promoting Interoperability Program starting in CY 2023, so data would be due by the end of February following the relevant calendar year. Corrections could be made to eCQM data up until the data submission deadline.

CMS also proposes new data submission, certification and validation requirements. Information for OAS CAHPS measures can be found at oascahps.org. For eCQMs, starting in CY 2023, data would have to be submitted via the Quality Reporting Data Architecture (QRDA) Category I (QRDA I) file format. Hospitals may report a zero for measures for which no patients meet denominator requirements and this would constitute successfully reporting the measure. The case threshold exemption would align with that for the Medicare Promoting Interoperability Program, which is five or fewer outpatient discharges per quarter or 20 or fewer per year (all payer types). Hospitals would no longer be allowed to send paper copies of, or CDs, DVDs or flash drives for data validation purposes and would instead be required to submit medical files electronically. The time period to do so would also be reduced from 45 calendar days to 30 calendar days. The existing hardship policy would be expanded to cover hardships preventing hospitals from electronically reporting data.

ASC Quality Reporting Program. ASC payment updates would continue to be reduced by 2 percent for failing to report data. In addition to existing measures, CMS proposes to adopt a new COVID-19 vaccination coverage among healthcare personnel measure for CY 2022 reporting. The complete proposed CY 2022 measure set can be found in Table 52. CMS also proposes several measures for reporting starting in 2023 and seeks feedback on including a future measure that would assess pain management surgical procedures performed in ASCs.

Radiation Oncology (RO) Model

Discount Factors. CMS proposes to lower discount factors for the professional and technical components from 4.75 percent to 4.5 percent and 3.75 percent to 3.5 percent respectively, provided proposals to remove brachytherapy and liver cancer are both finalized.

Model Timeline and Financial Calculations. Given the statutory delayed start date of the model to Jan. 1, 2022, CMS makes several technical changes to adjust relevant dates including defining the baseline period as CYs 2017-2019 (pending any further delays). Table 62 summarizes proposed data sources and time periods for pricing calculations. Proposed national base rates are summarized in Table 58. CMS is also analyzing the impact of the COVID-19 PHE on 2020 data and will consider removing 2020 data from baseline or trend factors accordingly.

Legacy TINs. To prevent gaming, CMS proposes to create "legacy" Tax Identification Numbers (TINs) and CMS Certification Numbers (CCNs) defined as one previously used by an entity to bill Medicare for eligible radiotherapy (RT) services that are no longer in use. New TINs or CCNs would not be able to opt out under the low-volume policy if a legacy CCN or TIN affiliated with the same entity did not qualify during the baseline period. CMS also proposes to calculate case mix and historical expenditure adjustments based on legacy TINs/CCNs. Model participants would be required to report TIN or CCN changes at least 90 days in advance, but would no longer be required to report new clinical or business relationships.

Excluded Entity Types. CMS proposes to preclude from participating in the model entities that: 1) furnish RT services only in Maryland, Vermont or U.S. territories; 2) are classified as ASC critical access hospitals (CAHs); 3) are classified as prospective payment system (PPS)-exempt cancer hospitals; 4) are participating in or are eligible to participate in the Pennsylvania Rural Health Model; or 5) are participating in the Community Transformation Track of the Community Health Access and Rural Transformation Model.

Claim Attribution Methodology. CMS proposes 16 cancer types for inclusion, which can be found (with corresponding codes) in Tables 56-57. Following stakeholder feedback, CMS proposes to remove brachytherapy as an included modality. The agency also proposes to exclude claims from excluded entity types (see above), which would be excluded before episodes are constructed or attributed. CMS would also exclude entire episodes that are: attributed to providers or suppliers located in ZIP codes not assigned to a Core Based Statistical Area; not assigned an included cancer type; or that have a $0 total allowed amount under model pricing. CMS would use a broad list of cancer diagnoses, including those not included in the model, to initially assign cancer type to episodes. It would assign all claims to an episode, then exclude episodes attributed to an excluded cancer type. This is to ensure that no cancer claims for treatment of an excluded cancer type are erroneously attributed. CMS would count claims as long as the initial treatment planning service for the episode occurred during the baseline period.

Quality Reporting. Given the model's delay, CMS proposes that professional and dual participants must submit quality data starting Jan. 1 of the first performance year, even if the start date of the model itself is delayed to later in the year. The 2 percent quality withhold and quality reconciliation payment amount would apply to all five performance years. For performance year one, professional and dual participants would be required to report four measures: 1) Plan of Care for Pain; 2) Screening for Depression and Follow-Up Plan; 3) Advance Care Plan; and (4) Treatment Summary Communication–Radiation Oncology. The first three would be evaluated on a pay-for-performance basis, the fourth on a pay-for-reporting basis (until the third performance year). A CMS-approved contractor will begin administering the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Cancer Care Survey on behalf of RO participants as soon as there are completed RO episodes, no sooner than the fourth month of the first performance period.

Qualifying as an Alternative Payment Model (APM) Under the Medicare Quality Payment Program (QPP). CMS expects that dual and professional participants who meet all of the requirements of participation under RO Model would qualify as an Advanced APM and MIPS APM under the Medicare QPP. However, those that fail to meet all model requirements would be considered in "Track Two" of the model, and would not qualify as participating in an Advanced APM (though that is subject to change if they later come into full compliance). CMS is considering ways to make the requirements less stringent and/or permit participants to retain some or all of Advanced APM bonuses depending on the severity of the noncompliance. By virtue of not reporting quality data, all technical participants would be considered "Track Two." If they begin providing the professional component, they must notify CMS within 30 days, and would be required to report quality measures by the next reporting period and could then become "Track One" participants.

Certification of Individual Practitioner Lists. CMS proposes to give participants until Aug. 31 of the relevant performance year to review, certify and notify CMS of any changes to individual practitioner lists (as opposed to 30 days from receipt).

Reconciliation Payment Calculations for Incomplete Episodes. For beneficiaries that cease to have traditional Medicare coverage before all included services in the episode have been furnished, CMS proposes to reconcile the episode payment for the professional and technical component that was paid to the participant with what the fee-for-service (FFS) payments would have been, rather than paying only the first installment of an episode. Coinsurance would be 20 percent of the applicable FFS amount for services rendered.

Extreme and Uncontrollable Circumstance Policy. In the rule, CMS reserves authority to revise model performance periods; eliminate or delay certain reporting requirements; and revise payment methodologies as appropriate, which would be decided case-by-case based on the severity and circumstances of the hardship.

CMS Requests for Information (RFIs)

RFI on Rural Emergency Hospitals (REHs). The CAA established REHs as a new provider type starting in CY 2023. The agency seeks feedback on a range of topics, including health and safety standards, payment policies, conditions of participation, licensure requirements, enrollment policies, quality reporting requirements and strategies to advance health equity.

RFI on Temporary Policies for the COVID-19 PHE. CMS seeks comment on whether any temporary policies under the COVID-19 PHE should be extended or made permanent. Specifically, the agency seeks comment on home-based telehealth services for mental health, direct supervision via telehealth (and whether a modifier should be required), and whether CMS should continue reimbursing for COVID-19 specimen collection beyond the PHE.

RFI on Advancing to Digital Quality Measurement and the Use of Fast Healthcare Interoperability Resources (FHIR). CMS aims to move fully to digital quality measurement for all CMS quality reporting and value-based purchasing programs by CY 2025. The agency seeks feedback to guide future rulemaking, particularly on: 1) defining digital quality measures (dQMs); 2) moving current eCQMs to the FHIR standard; and 3) its four-pronged strategy to transition to digital quality measurement, which includes obtaining all EHR quality data via provider FHIR-based application programming interfaces (APIs), redesigning quality measures for end-to-end reporting, aggregating data from multiple sources using third-party tools such as health information exchanges and clinical registries, and aligning measurement across federal reporting programs (and the private sector, where appropriate).

RFI on Safe Use of Opioids – Concurrent Prescribing Measure

CMS seeks comment on potential changes to reporting and submission requirements for the Safe Use of Opioids–Concurrent Prescribing electronic clinical quality measure in the Hospital Inpatient Quality Reporting Program and Appropriate Use Program.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


Related Insights