On November 2, 2021, CMS published the final rule to update the payment policies and rates for services furnished under the Medicare Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgery Center (ASC) Payment System for calendar year (CY) 2022. The highlights of the CY 2022 final rule include increasing the civil monetary penalties (CMPs) for noncompliance with the price transparency rules, halting the elimination of the inpatient only list, changing the list of covered procedures, and continuing the payment rate of Average Sales Price (ASP) minus 22.5 percent for 340B drugs.

PAYMENT RATE UPDATES

Hospitals should see increased reimbursements for services provided in accordance with the Outpatient Department (OPD) fee schedule. CMS is increasing the payment rates under the OPPS by an OPD fee schedule increase factor of 2.0 percent instead of the proposed 2.3 percent that includes a 2.7 percent market basket increase and a productivity adjustment of negative 0.7 percent. The previous conversion factor of $82.797 will be increased to $84.177 for CY 2022. Due to COVID-19 Public Health Emergency (PHE)-related factors, CMS will be using the CY 2019 claims data to set the CY 2022 OPPS and ASC payment system rates instead of CY 2020.

PRICE TRANSPARENCY RULES

The CY 2022 final rule increases the CMPs for hospitals that fail to comply with the Price Transparency Rule. CMS is applying a scaling factor to the CMPs for noncompliance. A hospital’s maximum daily penalty will be scaled based on the number of beds reported by the hospital in its most recently settled Medicare cost report. CMS adopted the proposed scale of $300 per day for a hospital with 30 beds or less (annual maximum of $109,500); $310-$5,500 per day ($10/bed/day) for 31-550 beds (annual maximum of $113,150 - $2,007,500); and $5,500 per day for a hospital with over 550 beds (annual maximum of $2,007,500).

CMS also made updates to the Price Transparency Rule requirement that hospitals post standard charges in a single machine-readable file on a publicly available website. CMS found that some hospitals had implemented barriers to accessing these files including implementing CAPTCHA in web applications and using methods that made it difficult to search for the files. In response, CMS added to the rule that the files must be accessible to automated searches and direct file downloads to remove these barriers to access.

Finally, CMS changed the rule so that forensic hospitals are deemed to have met the Price Transparency Rule’s requirements to decrease the burden on those state-funded hospitals providing services exclusively to individuals who are in custody and not the general public.

PAYMENT FOR 340B-ACQUIRED DRUGS

In the CY 2022 proposed rule, CMS proposed to continue its policy of paying ASP minus 22.5 percent for 340B-acquired drugs and biologicals. CMS first introduced this policy in the CY 2018 final rule. Since that time, the policy has been the subject of ongoing litigation. That litigation is now pending before the Supreme Court, which is scheduled to hear oral argument on the case on November 30, 2021.

Several commenters to the CY 2022 rule called on CMS to suspend its 340B-acquired drugs payment policy pending the outcome of the litigation. CMS declined to do so. Several hospitals also commented that they are paying more for 340B-acquired drugs than they are receiving from Medicare because ASP minus 22.5 percent does not represent the minimum discount that hospitals receive when they acquire drugs through the program. CMS disagreed, responding that 22.5 percent is actually a conservative estimate, and that its own survey indicated that the average discount was closer to 34.7 percent. CMS stated it “would not expect any 340B hospital to have acquisition costs for any acquired drug that are greater than ASP minus 22.5 percent.”

Other commenters suggested that CMS has not provided adequate evidence that its 340B payment policy remains budget neutral because the agency has not recalculated the impact since 2018 to account for changes in inflation or 340B drug utilization. CMS responded that it does not think it is necessary to revisit the budget neutrality estimate.

Notwithstanding the comments in opposition, CMS finalized without modification its proposal to continue paying ASP minus 22.5 percent for 340B-acquired drugs and biologicals.

RESTORATION OF THE INPATIENT ONLY LIST

In the CY 2021 final rule, CMS eliminated the inpatient only (IPO) list over a period of three years. The agency started with removing 298 services from the IPO list in CY 2021.

In the CY 2022 proposed rule, CMS proposed to halt the elimination of the IPO list, and to restore the 298 services that were eliminated from the IPO list in CY 2021. CMS explained that it believes the IPO list safeguards patient safety. Instead of eliminating the IPO list wholesale, CMS proposed that any service removed from the list should be evaluated against the longstanding criteria for removal from the IPO list: whether outpatient departments are equipped to provide the service to the Medicare population, whether the simplest procedure described by the code can be furnished in most outpatient departments, whether the procedure is related to codes that have already been removed from the IPO list, whether the procedure is being furnished in numerous hospitals on an outpatient basis, and whether the procedure can be appropriately and safely furnished in an ASC.

Commenters generally supported CMS’s proposal to halt the elimination of the IPO list. In particular, commenters noted that when a procedure is removed from the IPO list, many payers, including Medicare Advantage plans, will consider outpatient status to be the assumed baseline site of service for the procedure, notwithstanding the patient characteristics or physician’s clinical assessment. Commenters also stated that eliminating the IPO list would create new operational challenges for both practitioners and facilities that would require additional time and resources to adjust to. In light of these comments, CMS restored the 298 services that were removed from the list in CY 2021. CMS also codified its five longstanding criteria for assessing whether a given service can safely be removed from the list.

CHANGES TO THE ASC COVERED PROCEDURES LIST

In the CY 2021 final rule, CMS revised the safety criteria for including surgical procedures in the ASC Covered Procedures List (ASC CPL). The new criteria provided that the ASC CPL would include all procedures that are separately payable under the OPPS, are not on the IPO list, and can only be reported using an unlisted CPT code. The criteria that CMS used prior to CY 2021 for excluding procedures from the ASC CPL were repurposed to serve as safety factors for physicians to consider on a patient-by-patient basis. Based on the revised criteria, CMS added 267 procedures to the ASC CPL in CY 2021.

In the CY 2022 proposed rule, CMS proposed to restore the safety criteria for determining procedures to be added to the ASC CPL that were in place prior to CY 2021. Under this proposal, the ASC CPL would include procedures separately paid under the OPPS that are not expected to pose a significant safety risk to a Medicare beneficiary when performed as an ASC and for which standard medical practice dictates that the beneficiary would not typically be expected to require active medical monitoring and care at midnight following the procedure. Furthermore, the general exclusion criteria would once again exclude procedures that (1) generally result in extensive blood loss, (2) require major or prolonged invasion of body cavities, (3) directly involve major blood vessels, (4) are generally emergent or life threatening in nature, (5) commonly require systemic thrombolytic therapy, (6) are designed as requiring inpatient care, and (7) can only be reported using a CPT unlisted surgical procedure code. CMS further proposed to remove 258 of the 267 procedures that were added to the ASC CLP in CY 2021 under the revised criteria.

CMS received mixed feedback for this proposal. While some commenters supported restoring the old criteria, others contended that the criteria adopted in CY 2021 more appropriately deferred to the clinical judgment of physicians, expanded beneficiary choice, and reduced costs. Notwithstanding these objections, CMS finalized without modification its proposal to restore the safety criteria for determining procedures to be added to the ASC CPL that were in effect prior to CY 2021. CMS also elected to remove 255 of the 258 procedures it had proposed to remove. The three codes that were not removed were 04997, 54650 and 60512.

PAYMENT FOR NON-OPIOID DRUGS AND BIOLOGICALS

Based upon comments received, CMS decided to revise its current non-opioid pain management policy to require that evidence-based non opioid alternatives for pain management must have Food and Drug Administration (FDA) approval either under a new drug application or an abbreviated new drug application, or if it is a biological product, be licensed under Public Health Service Act section 351. CMS also decided to implement its proposal that the drug or biologic must have a per-day cost in excess of the OPPS drug packaging threshold and have an FDA-approved indication for pain management or analgesia. Non-opioid pain management drugs that meet these criteria may be unpackaged and paid separately at ASP plus six percent when they are furnished in the ASC setting and function as surgical supplies. CMS noted that four supplies were eligible for separate payment under this policy.

CHANGES TO QUALITY REPORTING MEASURES

In the CY 2022 final rule, CMS adopted three new measures for the Hospital Outpatient Quality Reporting (OQR) Program. First, CMS will implement the COVID-19 vaccination coverage among healthcare personnel (HCP) measure that will require hospitals to report the percentage of HCP who have received a complete vaccination course against COVID-19. The measure will assess all HCP working in all inpatient or outpatient units that are physically attached to the hospital or the CCN. This measure will begin with the CY 2022 reporting period for the CY 2024 payment period. Although this would not be an outcome measure, CMS says that it will publicly report this data on a quarterly basis.

CMS also adopted a breast screening rate recall measure. This measure will calculate the percentage of Medicare beneficiaries for whom a diagnostic mammography, digital breast tomosynthesis (DBT), ultrasound of the breast, or magnetic resonance imaging of the breast is performed within 45 days of a traditional mammography or DBT. The measure will use data from the period July 1 through June 30 from 3 years before the applicable calendar year, beginning with CY 2023 payment determinations, which will use data from July 1, 2020 through June 30, 2021.

Third, CMS has adopted a measure to determine the percentage of emergency department (ED) patients with a diagnosis of STEMI who receive timely delivery of guidelines-based reperfusion therapies appropriate for the care setting. Specifically, the denominator will include all ED patients aged 18 or older who do not have contraindications to fibrinolytic, antithrombotic, and anticoagulation therapies. The numerator will include (1) ED-based STEMI patients whose time from ED arrival to fibrinolytic therapy is 30 minutes or fewer, (2) Non-transfer ED-based STEMI patients who received PCI at a PCI-capable hospital within 90 minutes of arrival, and (3) ED-based STEMI patients who were transferred to a PCI-capable hospital within 45 minutes of ED arrival at a non-PCI-capable hospital. Reporting will be voluntary during the 2023 reporting period and become mandator in 2024 for CY 2026 payment determinations and subsequent years.

RADIATION ONCOLOGY MODEL

The Radiation Oncology (RO) Model is meant to test whether radiation therapy (RT) services payments made to physician groups and hospital outpatient departments that are not based on setting or type of care delivered over time increases the quality of care furnished to Medicare beneficiaries while also reducing incentives to provide less care. The RO Model was originally set to start on January 1, 2021. However, implementation was delayed until January 1, 2022 giving CMS time to propose additional modifications to the model. Now, the RO Model will begin on January 1, 2022 and end on December 31, 2026.

CMS’s modifications to the RO Model include, but are not limited to:

• Moving the baseline period from 2016-2018 to 2017-2019;

• Changing the discounts to 3.5 percent (professional component) and 4.5 percent (technical component);

• Paying brachytherapy on a fee-for-service basis instead of including it in the RO Model;

• Paying the traditional Medicare rate for beneficiaries who switch from traditional Medicare to Medicare Advantage before treatment is complete;

• Permitting CMS to use an extreme and uncontrollable circumstances policy that gives CMS the ability to shift the model performance period and adjust the pricing model provided that CMS will notify participants on the RO Model website and in written correspondence;

• Excluding hospital outpatient departments that are participating in the Pennsylvania Rural Health Model from participating in the RO Model;

• Removing liver cancer from the RO Model because it does not meet the cancer inclusion criteria; and

• Working on the definition of Track Three (one of three tracks) for the RO Model.

RURAL EMERGENCY HOSPITALS

Section 125 of the Consolidated Appropriations Act, 2021 established Rural Emergency Hospitals (REHs)—a new provider type that will be eligible to enroll in the Medicare program effective January 1, 2023. In the CY 2022 proposed rule, CMS solicited comments regarding the health and safety requirements that should apply to REHs, and conditions of participation that should apply to them. While CMS received numerous comments on this topic, it did not address them in the final rule. In the press release that accompanied the issuance of the final rule, CMS said that it “looks forward to taking each of those comments into consideration during the rulemaking process for the development of the REH requirements.” Since January 1, 2023 is the statutory implementation deadline for REHs, CMS is expected to implement them in the CY 2023 rulemaking.

TEMPORARY POLICIES FOR COVID-19

CMS sought comment on the extent to which stakeholders were using the flexibilities available under the COVID-19 waivers and whether those waivers should be made permanent. CMS specifically sought comment on furnishing services by hospital staff remotely through telehealth technology; remote supervision of certain services such as cardiac rehabilitation and pulmonary rehabilitation services; and the need for COVID-19 related specimen collection coding and payment under the OPPS. CMS stated that it will consider the comments received for future rulemaking.

The final rule is available here, and the CMS fact sheet is available here.