Regulatory Bulletins

Bulletin 13 – OPPS

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


On November 2, 2021, CMS released the anticipated CY 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule (CMS-1753-FC), finalizing this year’s Medicare payment rates for hospital outpatient and ASCs as well as regulatory guidance regarding several high profile policies for hospitals. CMS evaluated industry feedback to the proposed modifications, including the halting of the elimination of the Inpatient Only list (IPO), the broadening of the impact of the Hospital Price Transparency Rule, and other updates such as the mandatory Radiation Oncology alternative payment model. The Rule is scheduled to be published in the Federal Register on November 16, 2021.

Changes to the Inpatient Only List

In the Proposed Rule, CMS suggested reinstating the 298 services removed from the IPO list effective January 1, 2021, with an effective add-back date of January 1, 2022. In the Final Rule, CMS paused the elimination of the Inpatient Only list due in part to the overwhelming stakeholder feedback received arguing that patient safety would be at far greater risk with a total elimination.

The Final Rule adds back to the IPO list all the services removed in 2021 except for three (3) distinct procedures, and their associated anesthesia codes. The services described by the following CPT codes will remain off the IPO list:

    • 22630 (Lumbar Spine Fusion)
    • 23472 (Reconstruct Shoulder Joint)
    • 27702 (Reconstruct Ankle Joint)
    • the anesthesia codes corresponding to these procedures.

Additionally, CMS also announced it is re-classifying CPT code 0643T (Transcatheter left ventricular restoration device implantation including right and left heart catheterization and left ventriculography when performed, arterial approach (specifically referencing the AccuCinch® procedure)) as an inpatient only procedure.

It is important to consider that, as in the previous rulemaking (85 FR 86087; 84 FR 61354; 82 FR 59384; 81 FR 79697), CMS emphasized that “the removal of a service from the IPO list does not require the service to be performed only on an outpatient basis.” And providers should keep in mind that:

“It is a misinterpretation of CMS payment policy for providers to create policies or guidelines that establish the hospital outpatient setting as the baseline or default site of service for a procedure based on its removal from the IPO list. As stated in previous rulemaking, services that are no longer included on the IPO list are payable in either the inpatient or hospital outpatient setting.” (CMS-1753-FC pg. 587/1394 and 84 FR 61354; 82 FR 59384; 81 FR 79697]

Codification of the Medical Review Criteria

CMS further finalized its proposed codification of the five (5) longstanding review criteria used to determine the appropriateness of any procedure for removal from the IPO list.

This formality essentially results in these historic criteria having the same force as statutory law. The Final Rule codifies these criteria in a new section 42 CFR §419.23. The review criteria that will be used to exclude procedures from the IPO list are:

    1. Most outpatient (OP) departments are equipped to provide the service to the Medicare population.
    2. The simplest procedure described by the code may be furnished in most outpatient departments.
    3. The procedure is related to codes that CMS has already removed from the IPO list.
    4. CMS determines that the procedure is being performed in numerous hospitals on an outpatient basis.
    5. CMS determines that the procedure can be safely furnished in an Ambulatory Surgery Center (ASC) and is on the list of approved ASC services (or has been proposed for addition to the ASC list).

Not all criteria must be satisfied for a procedure to be removed from the IPO list.

Medical Review Exemption Policy for Procedures Removed from the List

In the CY 2022 Proposed Rule, CMS noted that because most of the procedures initially removed from the IPO list were now being re-added to the list, they would be reinstituting the 2-year exemption from:

    • Site-of-service denials,
    • 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.”

In the Final Rule, CMS finalized its proposal to revise the exemption for procedures removed from the IPO list on or after January 1, 2022, to the 2-year exemption period that was previously in effect. This exemption does not prevent the Beneficiary and Family Centered-Care Quality Improvement Organization (BFCC-QIO) from reviewing procedures that have been removed from the IPO list “for educational purposes” regarding the application of the 2-Midnight Rule to such cases, but the Final Rule does not allow the contractor to deny these cases during the 2-year exemption.

Ultimately, we are reminded that the IPO list is designed to distinguish services that Medicare will reimburse only when the services are provided in the inpatient hospital setting. Given the changing rules related to the IPO list, there is a high risk for error. To ensure appropriate payment for care provided to Medicare beneficiaries undergoing procedures reinstated on the IPO list, hospitals should revisit internal processes and provide education to impacted providers. For procedures that are no longer on the IPO list, hospitals should ensure that the 2-Midnight Rule is being utilized and confirm that an inpatient order is present when a physician expectation of a two-midnight stay is documented in the chart.

Hospital Price Transparency Rule

CMS has confirmed they will not be repealing the “Hospital Price Transparency Rule” but instead made modifications designed to increase compliance with the Rule. Beginning January 1, 2022, hospitals failing to comply with the price transparency provisions in the CY 2022 OPPS Final Rule may also be subject to the following Civil Monetary Penalties (CMP) associated with non-compliance:

    • The daily penalty for hospitals with up to 30 beds will be $300/day;
    • The daily minimum penalty for hospitals with more than 30 beds will be $10/day/bed, with the maximum penalty set at $5,500/day;
    • The maximum civil monetary penalties for 1-year failed compliance would range from $109,500 for smaller hospitals and stretch to $2,007,500 per hospital for larger systems.

CMS has also updated the machine-readability requirements of the files hospitals must make available, including what needs to be displayed and accessible.

Payment Policy

For 2022, CMS is increasing Hospital Outpatient Department (HOPD) payment under OPPS by 2.0 percent. Hospitals that do not meet outpatient quality reporting requirements continue to be subject up to a 2.0 percentage negative adjustment.

For CY 2022 OPPS and ASC rate setting process, CMS would typically use the most updated claims and cost report data available. However, due to pandemic-related anomalies, CMS finalized its proposal to use CY 2019 utilization data to set CY 2022 OPPS and ASC payment rates instead of CY 2020 data. Since pass-through status is granted to collect data over a two-year timeframe before setting payment rates, as a result of using CY 2019 data, CMS is extending pass-through status for some drugs and biologics until two years of data are available for use in rate setting next year.

CMS did not add any new comprehensive APCs (C-APCs) in CY2022.

CMS also withdrew its previous 340b reimbursement proposal and will continue to pay Average Sales Price (ASP) minus 22.5%.

Alternative Payment Models: Radiation Oncology (RO)

CMS finalized its mandatory Medicare Fee-for-Service (FFS) Radiation Oncology (RO) alternative payment model, effective January 1, 2022, for those facilities located in selected Core Based Statistical Areas (CBSAs). The RO model is designed to evaluate whether making site-neutral, modality agnostic, prospective episode-based payments to Hospital Outpatient Departments (HOPDs), physician group practices, and freestanding radiation therapy (RT) centers preserves or enhances the quality of care furnished to Medicare beneficiaries while reducing or maintaining Medicare FFS spending. The RO model requires adherence to new billing and payment guidelines and will pay based on episodes of care for 15 cancer diagnoses. The RO model will likely have a negative financial impact on impacted HOPDs.


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