Regulatory Bulletins

Bulletin 12 – OPPS

 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule


On July 19, 2021, CMS released the anticipated CY 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule (CMS-1753-P), offering clarification and guidance on many high-profile items. CMS is intensifying efforts related to price transparency and value-based purchasing. At the same time, it is reverting to its previous approach to determining the appropriateness and safety of services in the inpatient, outpatient, and ambulatory surgical center settings of care. Challenges created by COVID-19 are also evident throughout the proposed rule, including its impact on Ambulatory Payment Classification (APC) rate-setting activities as well as policies designed as part of the Public Health Emergency (PHE).

Inpatient Only List (IPO) and Ambulatory Surgical Center Covered Procedures List (ASC CPL)

After careful evaluation, consideration of stakeholder comments, and data collected, CMS has decided to halt the elimination of the Inpatient Only List. Also, it has proposed a codification of the five longstanding criteria used to remove a service from the IPO to ensure clear and consistent regulatory guidance is followed in determining future IPO removals.

Additionally, the 298 services removed from the IPO effective January 1, 2021, will be re-added to the list beginning January 1, 2022. CMS does not believe these procedures met its established criteria for removal. CMS cited claims data as one of the reasons provided for the rule reversal:

“An initial review of 2021 billing data through May 21, 2021, supports our proposal to halt the elimination of the list, revealing that 131 of the 298 codes removed from the IPO list in last year’s final rule appeared on either zero or one OPPS claims and 269 of the 298 codes appeared on fewer than 100 claims.

These data indicate that fewer than 3 percent of the services removed from the IPO list in 2021 have seen notable volume in the outpatient setting following their removal from the IPO list.” (CMS-1753-P)

CMS has also proposed to halt the indefinite medical review exemption granted to any service removed from the IPO list effective January 1, 2021. Instead, CMS has proposed reinstituting the 2-year exemption from medical reviews including from site-of-service, Beneficiary and Family-Centered Care Quality Improvement Organization (BFCC-QIO) referrals to Recovery Audit Contractor (RAC) for persistent noncompliance with the 2-midnight rule, and RAC reviews for “patient status.”

Changes have also been proposed to the ASC CPL. Specifically, CMS has proposed reinstatement of the CY 2020 (and prior) criteria for adding procedures to the ASC CPL, coupled with a recommended removal of 258 of the 267 surgical procedures that were just added to the list in CY 2021 under the revised safety criteria.

While CMS always request comments to proposed rules, CMS asked and is requesting comments on specific questions related to the IPO list:

    • “Should CMS maintain the longer-term objective of eliminating the IPO list? If so, what is a reasonable timeline for eliminating the list? What method do stakeholders suggest CMS use to approach removing codes from the list?
    • Should CMS maintain the IPO list but continue to streamline the list of services included on the list and, if so, suggestions for ways to systematically scale the list back to allow for the removal of codes, or groups of codes, that can safely and effectively be performed on a typical Medicare beneficiary in the hospital outpatient setting so that inpatient only designations are consistent with current standards of practice?
    • What effect do commenters believe the elimination or scaling back of the IPO list would have on safety and quality of care for Medicare beneficiaries?
    • What effect do commenters believe elimination or the scaling back of the IPO list would have on provider behavior, incentives, or innovation?
    • What information or support would be helpful for providers and physicians in their considerations of site-of-service selections?
    • Should CMS’s clinical evaluation of the safety of a service in the outpatient setting consider the safety and quality of care for the typical Medicare beneficiary or a smaller subset of Medicare beneficiaries for whom the outpatient provision of a service may have fewer risk factors?
    • Are there services that were removed from the IPO list in CY 2021 that stakeholders believe meet the longstanding criteria for removal from the IPO list and should continue to be payable in the outpatient setting in CY 2022? If so, what evidence supports the conclusion that the service meets the longstanding criteria for removal from the IPO list and is safe to perform on the Medicare population in the outpatient setting?” (CMS-1753-P)

Price Transparency

CMS has noted it will NOT be repealing the “Hospital Price Transparency Rule” but instead proposed several modifications designed to increase compliance and reduce hospital burden beginning January 1, 2022.

Among the most significant ‘modifications,’ CMS has proposed increasing the civil monetary penalties associated with non-compliance to a minimum penalty of $300/day (for hospitals with up to 30 beds) and a penalty of $10/day/bed for hospitals with more than 30 beds with a maximum penalty set at $5,500/day. Although CMS is open to comment and proposed alternative computation suggestions, this would potentially result in civil monetary penalties ranging from $109,500 to $2,007,500 over the course of 1-year of non-compliance.

CMS has clarified the requirements related to what “display prominently,” “easily accessible,” and “without barriers” means and specifically proposes requiring the file be available on a user-friendly website that allows for automated searches and direct downloads.

CMS will continue to refine guidance on transparency data submissions and the cost-estimator tool alternative. The Final Rule is anticipated to provide additional insight into this topic as CMS addresses the many comments on how best to reduce hospital burden.

Payment Policy

CMS also addressed the OPPS and ASC payment rates. CMS is proposing to use CY 2019 utilization data instead of CY 2020 data to set CY 2022 APC relative weights due to pandemic-related anomalies in the CY 2020 data. As a result, Hospital Outpatient Departments (HOPDs) will not see much change in underlying APC relative weights in CY 2022. The proposed rule also includes an aggregate 2.3% update to all rates.

Notably, while APC relative weights will remain stable this year, hospital outpatient departments can expect more variation next year when CY 2021 data will likely replace the CY 2019 data.

Also, because of the use of CY 2019 data, CMS will grant an additional year of pass-through status to new drugs and devices that would have otherwise expired.[1] CMS expects to evaluate seven proposals for new pass-throughs.

CMS also clarified proposed adjustments to the 340B Discount Drug Program payment rate in the CY 2022 OPPS. Despite prior suggestions to reduce the payment rate by nearly 30%, CMS has reversed course and has now proposed keeping the historic payment rate of the Average Sales Price (ASP) minus 22.5% for separately payable drugs or biologicals acquired through the program.

Value-based Purchasing

CMS is moving full steam ahead on the mandatory Radiation Oncology (RO) alternative payment model, which previously was delayed due to congressional action. The RO payment model will pay based on radiation therapy episodes of care. The program is designed to test whether making site-neutral, modality agnostic, prospective episode-based payments to HOPDs and physician group practices (including freestanding radiation therapy centers) for radiation episodes of care preserves or enhances the quality of care furnished to Medicare beneficiaries while reducing or maintaining Medicare spending.

Public Health Emergency

Finally, CMS also used this Proposed Rule comment period as an opportunity to solicit recommendations regarding whether and to what extent the flexibilities granted under the recently extended public health emergency (PHE) should continue, be modified, or become permanent. Both the Section 1135 Waivers provided under the Social Security Act and the Emergency Use Authorization (EUA) authority of the U.S. Food and Drug Administration require a current declaration of a national public health emergency. Conditions of participation, prior authorization, certifications and even state licensure requirements have all been relaxed to a certain extent during the pandemic; therefore, this is an important opportunity for health care providers to weigh in on the impact and potential long-term necessity of these temporary modifications.

Comments Requested

One additional interesting take-away is the emphasis CMS placed on the solicitation for comments. Although it is traditional for a proposed rule to be open for public feedback, the frequency with which this is being reiterated throughout the proposal is unique. The proposed rule has a mandatory 60-day comment period from its July 19, 2021, release, which will end on September 17, 2021. The Final OPPS Rule should be released sometime in November.

Versalus Health is analyzing relevant claim data to assist our clients in determining the impact of these proposed changes. Although we continue to stress that these changes are still only proposed, we are fully prepared to discuss the potential impact our clients may experience once the Final Rule is published.

[1] The pass-through payment policy allows CMS to facilitate access for beneficiaries to new and truly innovative drugs and devices by allowing for adequate payment for these treatments while the necessary cost data is collected to incorporate the costs for these devices into the procedure APC rate.

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