CMS Issues Outpatient Prospective Payment System Proposed Rule for CY 2022

King & Spalding

On July 19, 2021, CMS published a proposed rule to update the payment policies, payment rates and other provisions for services furnished under the Medicare Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgery Center (ASC) Payment System in calendar year (CY) 2022 (the Proposed Rule). The highlights of CMS’s proposals include increasing the civil monetary penalties 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 ASP minus 22.5 percent for 340B drugs. CMS is also soliciting comments and information on whether it should make permanent certain temporary policies adopted during the public health emergency for COVID-19, and the implementation of policies for Rural Emergency Hospitals. Comments to the Proposed Rule are due by September 17, 2021.


CMS proposes to update the conversion factor for OPPS and ASC payments by 2.3 percent, which includes a market basket increase of 2.5 percent and a negative 0.2 percent productivity adjustment. CMS further proposes to adjust the OPPS conversion factor by a 1.0012 wage index budget neutrality factor, and a 0.32 percentage decrease for the difference in pass-through spending. After all adjustments, the OPPS conversion factor for CY 2022 would be $84.457. (The CY 2021 conversion factor was $82.797.) Under the proposal, hospitals that fail to meet the quality reporting requirements would be subject to a 2.0 percentage reduction to the OPPS conversion factor.


CMS proposes to increase the civil monetary penalties (CMPs) for hospitals that fail to comply with the Price Transparency Rules. Under the proposal, a noncompliant hospital’s maximum daily penalty would scale based on the number of beds reported by the hospital in its most recently settled Medicare cost report. For hospitals with less than 30 beds, the maximum daily CMP amount would be $300. For hospitals with between 31 and 550 beds, the maximum daily CMP would be $10 per bed. For hospitals with more than 550 beds, the maximum daily CMP would be $5,500. These CMP amounts would be subject to annual adjustment based on the Consumer Price Index for All Urban Consumers (CPI-U). If finalized, this proposal would take effect on January 1, 2022.

CMS also considered but declined to propose additional scaling factors, such as the nature, scope, and severity of the noncompliance, and the hospital’s reason for noncompliance. But CMS is soliciting comments about potentially adopting additional scaling factors in future rulemakings.

CMS is also proposing to modify the price transparency rules to specify that hospitals must ensure that standard charge information is easily accessible to automated searches and direct file downloads through a link posted on a publicly available website. CMS explains that the purpose of this proposal is to prohibit hospitals from using “blocking codes” or CAPTCHA and requiring users to agree to terms and conditions or submit other information to access price transparency data.


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 Proposed Rule, CMS is soliciting comments regarding what health and safety requirements should apply to REHs. In addition, CMS is requesting stakeholder input on the barriers and challenges to delivering emergency department services in rural and underserved communities that may require different or additional conditions of participation, what outpatient services performed at REHs that Medicare should cover, the appropriate staffing requirements for REHs, how REHs can address issues in health equality, how REHs should collaborate with other providers, the quality measures that should apply to REHs and the payment provisions and enrollment process for REHs.


In the CY 2021 final rule, CMS finalized a policy to eliminate the inpatient only (IPO) list over a period of three years. As part of that plan, CMS removed 298 services from the IPO list in CY 2021.

In the Proposed Rule, CMS is proposing to halt the elimination of the IPO list. CMS explains in the Proposed Rule that “we continue to believe that the inpatient only list is a valuable tool for ensuring that the OPPS only pays for services that can safely be performed in the hospital outpatient setting.” In addition, CMS proposes to restore the 298 services that were eliminated from the IPO list in CY 2021. CMS determined that “none of the services removed in CY 2021 have sufficient supporting evidence that the service can be safely performed on the Medicare population in the outpatient setting.” CMS is also soliciting comments on whether it should consider eliminating the IPO list over a longer term.


CMS proposes to re-adopt the ASC Covered Procedures List (CPL) criteria that were in effect in CY 2020 and to remove 258 of the 267 procedures that were added to the ASC CPL in CY 2021. Additionally, CMS proposes to add a process for stakeholders could nominate procedures they believe meet the requirements to be added to the ASC CPL. The nomination process is slated to begin in CY 2023.


CMS proposes to continue its current policy of paying an adjusted amount of average sales price (ASP) minus 22.5 percent for drugs and biologicals acquired under the 340B program while continuing to pay Rural SCHs, PPS-exempt cancer hospitals and children’s hospitals at ASP plus 6 percent (the statutory default under 1833(t)(14)(A)(iii)(II) of the Social Security Act).

CMS’s policy to pay most 340B-acquired drugs at ASP minus 22.5 percent was introduced in the CY 2018 OPPS/ASC final rule. Since that time, CMS’s 340B policy has been the subject of ongoing litigation. Most recently, on July 2, 2021, the Supreme Court granted a petition for a writ of certiorari and directed the parties to argue whether the petitioners’ suit challenging HHS’s 340B drugs payment adjustment is precluded by section 1833(t)(12).


Under section 1833(t)(22)(A) of the Social Security Act, the Secretary must review payments 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.

In accordance with that review, CMS proposes to continue to pay separately for two drugs currently receiving separate payment in the ASC setting as non-opioid pain management drugs that function as surgical supplies. CMS also proposes to modify the current non-opioid pain management payment policy and regulatory text to require that evidence-based non opioid alternatives for pain management must have Food and Drug Administration (FDA) approval, an FDA-approved indication for pain management or analgesia, and for the drugs and biologicals to have a per-day cost in excess of the OPPS drug packaging threshold, which is proposed at $130 for CY 2022. Finally, CMS is soliciting comment on potential additional requirements the Secretary should consider establishing for this policy, as well as whether any additional products meet the proposed criteria for CY 2022.


With many of the COVID-19 regulatory flexibilities set to expire at the conclusion of the public health emergency (PHE), CMS is seeking comment as to whether certain policies should be made permanent. Specifically, CMS is seeking comment on:

  • 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;

  • 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;

  • 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; and

  • Whether CMS should keep HCPCS code C9803 (Hospital outpatient clinic visit specimen collection for severe acute respiratory syndrome coronavirus 2 (sars-cov-2) (coronavirus disease [covid-19]), any specimen source) active beyond the conclusion of the COVID-19 PHE and whether it should extend or make permanent the OPPS payment associated with specimen collection for COVID-19 tests after the COVID-19 PHE ends. This code was established in response to the significant increase in specimen collection and testing for COVID-19 in hospital outpatient departments and is expected to be retired at the end of the COVID-19 PHE.


The RO Model tests whether making site-neutral payments to hospital outpatient departments and physician group practices for radiation therapy preserves or enhances the quality of care furnished to Medicare beneficiaries while reducing or maintaining Medicare spending. The model was originally slated to begin on July 1, 2021 and run through December 31, 2025. The Consolidated Appropriations Act, 2021, however, prohibited the implementation of the RO Model until January 1, 2022.

In light of the delay, CMS proposes additional modifications to the model’s timing and design. These proposed modifications include but are not limited to:

  • Beginning the RO Model on January 1, 2022, with a 5-year model performance period (ending December 31, 2026);

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

  • Lowering the discounts to 3.5 percent (Professional Component) and 4.5 percent (Technical Component);

  • Removing brachytherapy from the list of included modalities under the RO Model so that it would still be paid FFS;

  • Revising the cancer inclusion criteria under the RO Model;

  • Excluding from the model instances where a beneficiary switches from traditional Medicare to Medicare Advantage;

  • Adopting a policy to provide flexibility for reporting requirements, and/or payment methodology adjustments as necessary when extreme and uncontrollable circumstances exist; and

  • Removing liver cancer from the RO Model as it does not satisfy the model’s cancer inclusion criteria.


CMS is proposing to adopt three new measures for the Hospital Outpatient Quality Reporting (OQR) Program. First, CMS is proposing the COVID-19 vaccination coverage among health care personnel measure, which would “assess the proportion of a hospital’s health care workforce that has been vaccinated against COVID-19.” CMS is also proposing to adopt this measure for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program. If finalized, this measure would begin with the CY 2022 reporting period for the CY 2024 payment period.

Second, CMS is proposing to adopt a breast screening recall rate measure for the OQR Program and states, “[w]e intend for this measure to move facilities towards the 5 to 12 percent range of recall rates.” If finalized, this measure would be used to determine payments in CY 2023 based on data from June 1, 2020, through June 30, 2021.

Third, CMS proposes to adopt a measure to determine the percentage of ED patients with a diagnosis of STEMI who receive timely delivery of guideline-based reperfusion therapies appropriate for the care setting. If finalized, this measure would be voluntary for the CY 2023 payment period and transition to a mandatory measure for the CY 2024 payment period.

CMS is proposing changes to the OQR Program in accordance with Executive Order 13985, which requires federal agencies to pursue a comprehensive approach to advancing equality for all. Specifically, CMS is soliciting comments on stratifying quality results by race, dual-eligible status, disability status, LGBTQ+ and socioeconomic status.

The Proposed Rule is expected to be published in the Federal Register on August 4, 2021, but the display copy is available here. CMS’s Fact Sheet is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© King & Spalding | Attorney Advertising

Written by:

King & Spalding

King & Spalding on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.