Medicare Payment and Reimbursement

CMS finalizes changes to the price transparency penalty, inpatient-only list and more for 2022

November 7, 2021 2:01 am
  • Medicare payments for outpatient services will increase by 2% for 2022 without factoring in scheduled across-the-board cuts to the program.
  • Previously proposed changes to the penalty for noncompliance with price transparency regulations and to the inpatient-only list were finalized.
  • Two new measures are being added to the Outpatient Quality Reporting program.
  • Hospitals are disappointed that the reduced payment rate for 340B drugs will be retained as a Supreme Court review looms.

Key Medicare policies affecting price transparency, the inpatient-only list and more will take effect Jan. 1 after CMS published its 2022 final rule for payments to hospital outpatient departments and ambulatory surgical centers (ASCs).

The outpatient payment increase for hospitals that meet quality-reporting requirements will be 2%, down from 2.3% in the proposed rule. The change stems from a larger-than-projected productivity adjustment, which is determined by a formula that reflects economy-wide productivity increases. The payment increase for ASCs likewise is 2%.

CMS confirmed that claims data from 2019 were used to determine both the outpatient and ASC payment updates. Normally, 2020 data would have been used, but the COVID-19 pandemic made that year an outlier.

The net update for both outpatient services and ASCs actually will be a 4% reduction, however, unless Congress takes action before the end of this year. The 2% increase would be canceled out by the scheduled restoration of the 2% Medicare sequester. In addition, a 4% cut is slated to go into effect as a statutory pay-for in relation to the March 2021 COVID-19 relief legislation.

Price transparency

CMS finalized its proposal to change the penalty for noncompliance from $300 per day for all hospitals to a sliding scale based on bed count. Specifically, the penalty will increase by $10 per day for each additional bed beyond 30, up to a maximum of $5,500 per day for hospitals with at least 550 beds. The penalty for a full year of noncompliance would range from $109,500 to slightly more than $2 million.

The approach “affirms the administration’s commitment to enforcement and public access to pricing information,” CMS wrote.

The updated regulations specify that machine-readable files with price information must be accessible to automated searches and direct downloads.

“We are very concerned about the significant increase in penalties for noncompliance with the hospital price transparency rule, particularly in light of the many demands placed on hospitals over the past 18 months, including both responding to COVID-19 as well as preparing to implement additional, overlapping price transparency policies,” Stacey Hughes, executive vice president of the American Hospital Association, said in a written statement.

Inpatient-only list

CMS finalized its proposal to overturn a regulation that would have eliminated the IPO list over a three-year period, a process that started with the removal of 298 services in 2021.

Almost all of those services will be added back to the IPO list in 2022, except for three services and their corresponding anesthesia codes. The three services that will remain eligible for coverage if performed in an outpatient setting are:

  • Lumbar spine fusion (CPT code 22630)
  • Reconstruct shoulder joint (23472)
  • Reconstruct ankle joint (27702)

For any service removed from the IPO list in the future, the exemption from medical review activities related to the two-midnight policy will revert to a two-year time frame. The 2021 rule had extended the exemption indefinitely as an accommodation for the large number of procedures that were in line to be removed from the list.

ASC covered procedures list

The new rule also mostly nullifies a 2021 provision that added 267 surgical procedures to the ASC CPL in conjunction with a change to longstanding safety criteria.

This year’s proposed rule included reinstating the criteria and removing 258 of the procedures from the ASC CPL. Based on feedback, CMS will go ahead with removing 255 of those 258 procedures.

The three that will remain are:

  • Cystourethroscopy, with mechanical dilation and urethral therapeutic drug delivery for urethral stricture or stenosis, including fluoroscopy, when performed (CPT code 0499T)
  • Orchiopexy, abdominal approach, for intra-abdominal testis (54650)
  • Parathyroid auto-transplantation (60512)

Hughes lauded the rollback of the 2021 changes to the ASC CPL and the IPO list, calling it “a win for patients’ safety, health and quality of care.”

Quality reporting requirements

The Hospital Outpatient Quality Reporting Program requires hospitals to report on certain measures or face a 2% reduction in their annual payment update. Changes to reporting requirements for 2022 include the addition of two mandatory measures:

  • COVID-19 Vaccination Coverage Among Healthcare Personnel
  • Breast Cancer Screening Recall Rates

Validation processes are being updated, including by requiring electronic-only submission of medical records to the CMS Data Abstraction Center and reducing the turnaround time after a validation request from 45 to 30 days.

Drug and device payments

Medicare payment for separately payable drugs acquired through the 340B Drug Pricing Program will remain average sales price minus 22.5%, the same rate that has applied since 2018.

“We remain disappointed that CMS will continue deep payment cuts to 340B hospitals, which threatens their ability to care for their patients and communities and goes against Congress’s intent in establishing the 340B program nearly 30 years ago,” Hughes said. “Continuation of these cuts will undoubtedly exacerbate the strain on 340B hospitals, especially as the COVID-19 pandemic continues.”

In November, the Supreme Court is scheduled to review the legality of the payment reduction.

CMS finalized a proposal to make nonopioid pain management drugs and biologicals eligible for separate payment in cases when a drug functions as a surgical supply in the ASC setting and is FDA-approved.

Three devices have been approved for pass-through status for FY22, as have 46 drugs and biologicals.

Radiation Oncology Model

A program of the Center for Medicare & Medicaid Innovation, the RO Model is designed to test the viability of making radiotherapy service payments that do not vary based on care setting or the volume or intensity of care. Participation is mandatory for providers and suppliers of radiation therapy in randomly selected markets.

The final rule updates various aspects of the model, including establishing a start date of Jan. 1, 2022. Among other changes, payment discounts are being lowered from 3.75% to 3.5% for the professional component and from 4.75% to 4.5% for the technical component, and brachytherapy has been removed from the model and will continue to be paid on a fee-for-service basis.


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