August 4, 2021

Last month, the Centers for Medicare and Medicaid Services (CMS) released its 2022 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System Proposed Rule (PR). To help explain the PR, the agency also released an extensive fact sheet summarizing the massive set of proposals. The following will provide some of the key highlights arising from this CMS synopsis.

Price Transparency

On January 1, 2021, the Hospital Price Transparency final rule became effective, implementing certain sections of the Public Health Service Act. This law requires hospitals to establish and make public an annual list of standard charges for items and services provided by the hospital, including for diagnosis-related groups (DRGs) established under section 1886(d)(4) of the Social Security Act.

In terms of price transparency, the 2022 PR calls for the following changes:

Proposed Increase in Civil Monetary Penalties (CMP). There would be a minimum CMP of $300/day that would apply to smaller hospitals with a bed count of 30 or fewer and apply 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. Under this proposed approach, for a full calendar year of noncompliance, the minimum total penalty amount would be $109,500 per hospital, and the maximum total penalty amount would be $2,007,500 per hospital.

Proposing to Deem State Forensic Hospitals as Having Met Requirements. CMS proposes to modify the hospital price transparency regulation’s deeming policy to include state forensic hospitals as having met requirements, so long as such facilities provide treatment exclusively to individuals who are in the custody of penal authorities and do not offer services to the general public.

Proposing to Prohibit Additional Specific Barriers to Access to the Machine-Readable File. CMS proposes to update the list of activities that present barriers to access to the machine-readable file, specifically to require that the machine-readable file is accessible to automated searches and direct downloads.

Price Estimate Tool. CMS is clarifying that an online price estimator tool must provide a cost estimate to an individual that takes the individual’s insurance information into account, and that the estimate reflects the amount the hospital anticipates will be paid by the individual for the shoppable service, absent unusual or unforeseeable circumstances.

Payment Rates

In accordance with Medicare law, CMS is proposing to update OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.3 percent. The agency is also proposing an update to the ambulatory surgery center (ASC) rates for 2022 by 2.3 percent.

As an aside, CMS believes that the 2020 data do not represent the best set of measurements for estimating the expected outpatient hospital services in 2022. Instead, they are using 2019 data—the most recent year of data prior to the public health emergency (PHE)—as their basis for OPPS rate-setting in 2022.

Inpatient Only List

By way of background, you will recall that, in the 2021 OPPS/ASC Final Rule, CMS finalized a policy to eliminate the inpatient only (IPO) list over a three-year period. That Rule also removed 298 services from the IPO list in the first phase of the elimination. However, based on certain feedback since received by CMS, those plans have now changed.

In a major move that will bring some surprise, the 2022 PR rescinds the elimination of the IPO list and actually adds the 298 services removed from the IPO list in 2021 back to the IPO list beginning in 2022. Furthermore, CMS is proposing to codify the longstanding criteria for removal of procedures from the IPO list to make clear in regulatory text how the agency will evaluate future procedures for removal.

Two-Midnight Rule

In the 2021 OPPS/ASC Final Rule, CMS established a policy in which procedures removed from the IPO list beginning January 1, 2021 would be indefinitely exempted from certain medical review activities related to the two-midnight policy. For 2022, CMS is proposing to revise the exemption for procedures removed on or after January 1, 2021 from the IPO list to the exemption period that was previously in effect (e.g., two years), so that all services paid for under the OPPS are eventually subject to medical review.

OPPS Payment for Drugs

Section 340B of the Public Health Service Act allows participating hospitals and other providers to purchase certain covered outpatient drugs from manufacturers at discounted prices. In the 2018 OPPS/ASC Final Rule, CMS reexamined the appropriateness of paying the Average Sale Price (ASP) plus six percent for drugs acquired through the 340B Program, given that 340B hospitals acquire these drugs at steep discounts. Beginning January 1, 2018, Medicare adopted a policy to pay an adjusted amount of ASP minus 22.5 percent for certain separately payable drugs or biologicals acquired through the 340B Program.

In the 2022 PR, CMS maintains the payment rate of ASP minus 22.5 percent for certain separately payable drugs or biologicals acquired through the 340B Program. Under this proposal, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be excepted from this policy.

Payment for Non-Opioid Products

The law requires the secretary of Health and Human Services (HHS) to review payments under the OPPS and ASC for opioids and evidence-based non-opioid alternatives for pain management to ensure there are no financial incentives to use opioids instead of non-opioid alternatives. For 2022, CMS is proposing to modify its current policy to provide for separate or modified payment for non-opioid pain management drugs and biologicals that function as supplies in the ASC setting when those products meet certain criteria, as determined by CMS.

Payment for Drug, Device and Biological Pass-Through

For 2022, CMS received eight applications for device pass-through payments. One of these applications (the Shockwave C2 Coronary Intravascular Lithotripsy (IVL) catheter) received preliminary approval for pass-through payment status through a quarterly review process. CMS is also proposing to use its equitable adjustment authority to provide up to four quarters of separate payment for 27 drugs and biologicals and one device category whose pass-through payment status will expire between December 31, 2021 and September 30, 2022.

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We will provide further details on the 2022 OPPS Proposed Rule in an upcoming article. In the meantime, if you have questions about the PR, please go to CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS-1753-P) | CMS. If you have questions for us, please contact us at info@miramedgs.com.