2022 Hospital Outpatient Payment Rule Finalizes Provisions on Payment Rates, Price Transparency, RO Model

November 3, 2021

On November 2, 2021, the Centers for Medicare & Medicaid Services (CMS) released the 2022 Hospital Outpatient Prospective Payment System (OPPS) final rule. The Association for Clinical Oncology (ASCO) will analyze the rule in greater detail in the coming days, while initial highlights are outlined below.

Payment Rates

For 2022, CMS is increasing the payment rates under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 2.0%. Based on this update, it is estimated that total payments to OPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for calendar year (CY) 2022 would be approximately $82.078 billion, an increase of approximately $5.913 billion compared to estimated CY 2022 OPPS payments.

CMS is continuing to implement the statutory 2.0 percentage point reduction in payments for hospitals that fail to meet the hospital outpatient quality reporting requirements by applying a reporting factor of 0.9804 to the OPPS payments and copayments for all applicable services.

CMS would normally use the most updated claims and cost report data available for rate setting.

However, because the CY 2020 claims data include services furnished during the COVID-19 Public Health Emergency (PHE), which significantly affected outpatient service utilization, CMS determined that CY 2019 data would better approximate expected CY 2022 outpatient service utilization than CY 2020 data. As a result, the agency is utilizing CY 2019 data to set CY 2022 OPPS and Ambulatory Surgical Center (ASC) payment rates.

340B Acquired Drugs

For CY 2022, CMS is continuing its current policy of paying an adjusted amount of ASP minus 22.5% for drugs and biologicals acquired under the 340B drug pricing program. CMS is continuing to exempt rural sole community hospitals (SCHs), prospective payment system (PPS) -exempt cancer hospitals, and children’s hospitals from this 340B payment policy.

Hospital Price Transparency

CMS is amending several hospital price transparency policies to encourage compliance, including increasing the amount of the penalties for noncompliance through the use of a scaling factor based on hospital bed count and finalizing a requirement that the machine-readable file be accessible to automated searches and direct downloads. In addition, the agency also clarifies the expected output of hospital online price estimator tools when a hospital chooses to use an online price estimator tool in lieu of posting its standard charges for the required shoppable services in a consumer-friendly format.

Radiation Oncology (RO) Model

CMS is finalizing its proposal that the RO model performance period will begin January 1, 2022, and end December 31, 2026. CMS finalized an Extreme and Uncontrollable Circumstances (EUC) policy that would allow CMS flexibility in responding to national, regional, or local circumstances that adversely impact RO participants’ ability to deliver care in accordance with the RO Model’s requirements, including the COVID-19 PHE. CMS would apply EUC policy only if the magnitude of the event calls for the use of special authority to help providers respond to the emergency and continue providing care.

CMS has determined that there is currently an EUC based on the ongoing COVID-19 public health emergency (PHE). Unless the Secretary of the U.S. Department of Health and Human Services terminates their renewal of the COVID-19 PHE prior to January 1, 2022, CMS intends to invoke provisions of the EUC policy on that date.   

CMS intends to grant all RO participants certain exceptions to RO Model requirements. CMS plans to revise the RO Model’s pricing methodology during its first performance year (2022). CMS does not intend to amend the model performance period under the EUC policy. 

The specific RO Model flexibilities in the first performance year (PY1—January 1, 2022, through December 31, 2022) are: 

  • The requirement that RO participants collect and submit quality measures and clinical data elements will be optional.
    • Because this requirement will be optional, the 2% quality withhold will not be applied to RO Model professional episode payments. 
  • The requirement that RO participants actively engage with an Agency for Healthcare Research and Quality (AHRQ)-listed patient safety organization (PSO) will be optional. 
  • The requirement that RO participants conduct Peer Review (audit and feedback) on treatment plans will be optional. 

The rule also finalized the following modifications:

  • Adjusting the pricing methodology, including updating the baseline period to 2017-2019 and lowering the discounts to 3.5% and 4.5%, for the professional component and technical component, respectively.
  • Removing brachytherapy from the included modalities.
  • Removing liver cancer from the included cancer types.
  • Finalizing that in cases where a beneficiary switches from traditional fee-for-service (FFS) to Medicare Advantage during an episode before treatment is complete, CMS will consider this an incomplete episode and radiotherapy services will be paid FFS as opposed to the bundled payment.
  • The current overlap policy for the Pennsylvania Rural Health Model (PARHM) will only exclude hospitals participating in PARHM, not PARHM-eligible hospitals.
    • CMS is adding an overlap policy for the Community Track of the Community Health Access and Rural Transformation (CHART) Model.
    • CMS will follow the same overlap policy for the RO Model and Medicare Shared Savings Program accountable care organizations (ACOs) within the CHART ACO Transformation Track.
  • In light of the current PHE and several recent natural disasters, CMS is adding an extreme and uncontrollable circumstances (EUC) policy, which will provide flexibility and reduce the administrative burden associated with RO Model participation.

Learn more about the RO Model.

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