2022 Medicare OPPS/ASC Proposed Rule includes updated reimbursement rates, new policies, and reversals of recent policy changes

On July 19, 2021, the Centers for Medicare and Medicaid Services (CMS) released the Calendar Year (CY) 2022 Hospital Outpatient Prospective System (OPPS) and Ambulatory Surgical Center (ASC) Proposed Rule (Proposed Rule). In addition to proposing new payment rates for OPPS and ASC services for CY 2022, the Proposed Rule contains a number of other noteworthy proposals, including several that reverse course on policies CMS just finalized last year. We highlight a number of those proposals below.

Rate setting for outpatient hospital and ASC services
CMS is proposing to update OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.3 percent next year. The proposed update for ASC payment rates is also 2.3 percent, despite MedPAC’s recommendation that there be no payment increase for 2022 because current payment rates appear to be adequate based on available indicators (beneficiaries’ access to care, quality of care and provider access to capital), but that without ASC cost data to calculate a Medicare margin, a complete analysis of payment adequacy cannot be done.

The COVID-19 public health emergency (PHE) impacted Medicare’s rate setting process for next year. The best available claims data is usually the most recent set of data, which would be from two years prior to the calendar year that is the subject of rulemaking. But for 2022, that would be 2020, and CMS indicated in its fact sheet about the Proposed Rule that “[D]ue to a number of COVID-19 PHE-related factors, CMS believes that the CY 2020 data are not the best overall approximation of expected outpatient hospital services in CY 2022. Instead, we believe the CY 2019 data, as the most recent complete calendar year of data prior to the COVID–19 PHE, are a better approximation of expected costs for CY 2022 hospital outpatient services for rate setting purposes.” As a result, CMS is proposing to use CY 2019 data to set the 2022 OPPS and ASC payment rates.

Reversal of last year’s changes to Inpatient-Only list
In the CY 2021 OPPS/ASC Final Rule, CMS finalized a policy to eliminate the Inpatient-Only (IPO) list over a three-year period, removing 298 services (primarily musculoskeletal-related services) from the IPO list in the first phase. But after receiving a large number of comments opposing elimination of the IPO due to patient safety concerns, in this rulemaking, CMS is now proposing to halt the elimination of the IPO list and add the 298 services removed from the IPO list in CY 2021 back to the IPO list beginning in CY 2022. CMS is also proposing to codify its longstanding criteria for removal of procedures from the IPO list to make clear how it will evaluate future procedures for removal. CMS also solicits comments on whether it should maintain the longer-term objective of eliminating the IPO list or whether it should just scale back the list “so that inpatient only designations are consistent with current standards of practice.”

Services subject to review under Two-Midnight Rule
To go along with the elimination of the IPO list, the CY 2021 OPPS/ASC Final Rule 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. With the proposal to halt elimination of the IPO list, CMS is now proposing to revise the exemption for procedures removed on or after January 1, 2021, from the IPO list to instead only exempt such removed services from medical review for two years.

Reversal of last year’s changes to ASC Covered Procedures List
CMS is also proposing to reverse another change it finalized last year related to how surgical procedures are added to the ASC Covered Procedures List (ASC CPL). In the CY 2021 OPPS/ASC Final Rule, CMS eliminated criteria it previously used and adopted a notification process for surgical procedures the public believes can be added to the ASC CPL. Under that the process, CMS added 267 surgical procedures to the ASC CPL beginning in CY 2021. The criteria CMS had previously used to add surgical procedures to the list were instead to be used as factors physicians should use in deciding whether a specific beneficiary should receive a particular surgical procedure in an ASC or in a hospital. Now, CMS is proposing to reinstate the criteria (which related to patient safety) for adding a procedure to the ASC CPL prior to the CY 2021 rulemaking and to remove from the ASC CPL 258 of the 267 procedures that were added in CY 2021. CMS is requesting comment on whether any of the 258 procedures proposed for removal from the ASC CPL meet the proposed reinstated criteria.

No change to 340B
Not unexpectedly, given that there is litigation pending before the United States Supreme Court related to Medicare payment for drugs obtained through the 340B Drug Discount Program, CMS is proposing no changes to its current payment policy for such drugs. In the Proposed Rule, CMS proposes to maintain the payment rate of ASP minus 22.5 percent for certain separately payable drugs or biologicals acquired through the 340B Drug Discount Program.

Separate payment for non-opioid pain management drugs/biologicals used in ASC setting
Section 6082 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act) requires that the Secretary of the Department of Health and Human Services (HHS) must review payments under the OPPS and ASC for opioids and evidence-based non-opioid alternatives for pain management to ensure there are not financial incentives to use opioids instead of non-opioid alternatives. For CY 2022, CMS proposes 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. CMS proposes that beginning on or after January 1, 2022, a non-opioid pain management drug or biological that functions as a surgical supply in the ASC setting would be eligible for separate payment when it is FDA approved and indicated for pain management or as an analgesic, and with a per day cost above the OPPS/ASC drug packaging threshold. CMS is also proposing to continue separate payment in the ASC setting in CY 2022 for the two products currently receiving separate payment under this policy – Exparel and Omidria – since they meet the proposed criteria. 

CMS is soliciting comments on two issues related to this topic:  

1. An application process through which an external party could submit an application for separate payment for a non-opioid pain management drug or biological that functions as a surgical supply.
2. Additional criteria that could be implemented through future rulemaking, such as the presence of peer-reviewed literature that demonstrates a clinically significant decrease in opioid use for the surgical procedure and post-operative period.

Solicitation of comments on utilization of flexibilities implemented during the COVID-19 PHE
Although HHS just extended the COVID-19 PHE for another 90 days on July 19, 2021, and areas of the country are currently seeing new surges of COVID-19, CMS is looking to when the PHE ends, seeking comment on the extent to which providers utilized certain flexibilities implemented during the PHE and whether there are certain policies that should be made permanent. Specifically, CMS is seeking comments on:

1. The extent to which hospitals have been billing for mental health services furnished to beneficiaries in their homes through communication technology during the PHE, and whether continued demand for such care is anticipated.
2. Whether there are any changes that CMS should make to account for shifting practice patterns that rely on communication technology to provide mental health services to beneficiaries in their homes.
3. The degree to which providers relied on the flexibility to allow the presence of the physician for purposes of the direct supervision requirement for pulmonary rehabilitation, cardiac rehabilitation and intensive cardiac rehabilitation services to include virtual presence through audio/video real-time communications technology when use of such technology is indicated to reduce exposure risks for the beneficiary or practitioner.
4. Whether CMS should keep HCPCS code C9803 (Hospital outpatient clinic visit specimen collection for COVID-19), any specimen source) active beyond the conclusion of the PHE and whether it should extend or make permanent the OPPS payment associated with specimen collection for COVID-19 tests after the PHE ends.

CMS will accept comments on these and the rest of the proposals contained in this Proposed Rule until 60 days after the Proposed Rule is filed for public inspection at the Federal Register.